CHENG YIU TONG (鄭耀棠)
THE COMMISSIONER OF POLICE
On 24 November 2016, Wong & Co, Solicitors acting; Mr Albert N B Wong and Mr Jason Szeto, instructed by Wong & Co
Mr Jenkin Suen, SC; Mr Peter Dong; the Department of Justice
- Coleman
CHENG YIU TONG v. THE COMMISSIONER OF POLICE
[2026] HKCFI 227
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HCAL 520/2023 [2026] HKCFI 227 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST NO 520 OF 2023 ________________________
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___________________ J U D G M E N T ___________________ A. Introduction 1. This case is another case arising from the existence and operation of a regime (“LNC Regime” or “No Consent mechanism”) where the Police issue Letters of No Consent (“LNCs”) in respect of dealings with bank accounts. 2. By his Amended Form 86 dated 20 July 2023, the Applicant sought, and I granted, leave to apply for judicial review so as to challenge:
3. By way of relief, in the form ‘finessed’ at the oral hearing, the Applicant seeks:
4. At the substantive hearing, the Applicant was represented by Mr Albert Wong and Mr Jason Szeto of Counsel. The CP was represented by Mr Jenkin Suen SC and Mr Peter Dong of Counsel. The Interested Parties did not appear and were not represented. At the end of the hearing, I reserved my decision to be handed down later. 5. This is my Judgment. B. Background 6. The Applicant is a Hong Kong permanent resident. 7. On 13 January 2013, the Applicant was arrested for the offence of “possession of apparatus fit and intended for inhalation”, contrary to section 36(1) of the Dangerous Drug Ordinance Cap 134. 8. On 16 January 2013, the Applicant surrendered himself, and was arrested for “Dealing with Property Known/Believed to Represent Proceeds of Indictable Offence”, contrary to section 25(1) of OSCO. 9. The CP issued LNCs against bank accounts under the name of the Applicant held at Bank of China (Hong Kong) (“BOCHK”) and Hang Seng Bank Limited (“HSB”). 10. On 4 February 2016, the Applicant was released temporarily, pending further criminal and financial investigation. Notwithstanding that, it was made clear to the Applicant that criminal investigation remained ongoing, and that further arrest and/or a charge for such offence may be made. 11. On 24 November 2016, Wong & Co, Solicitors acting for the Applicant, wrote to request the Narcotics Bureau to review the case file and give consideration to the request to return all of the Applicant’s belongings and properties which were seized. 12. On 8 December 2016, Ms Tsang of HKPF by telephone call replied that the investigation was not concluded and was pending the outcome of legal advice. 13. On 9 July 2018, Wong & Co once again wrote to the Narcotics Bureau, requesting the Narcotics Bureau to inform them of the present progress of the case, which “had now been dragged for over 5 years”, and whether consideration had been given to return the seized belongings and properties to the Applicant and to lift the ban from operating the frozen items. 14. By letter dated 15 August 2018, the Narcotics Bureau replied stating they did “not consider unfreezing the bank accounts”, as they were investigating a case of “dealing with property known or believed to represent proceeds of an indictable offence” contrary to section 25(1) of OSCO. 15. By letter dated 8 May 2019, Wong & Co wrote to the Narcotics Bureau to inquire upon the recent development of the case. No reply from the Narcotics Bureau was received, leading to a chaser letter on 29 October 2019. 16. By letter dated 26 November 2019, the Narcotics Bureau informed Wong and Co that the Financial Investigations Division Team 1D was investigating the case in relation to the Applicant’s bank accounts and safe deposits boxes. The letter also reminded the effect of section 25(1) of OSCO, and stated that “As such, for investigation purpose, it is necessary to maintain the status quo of all relevant bank accounts and safe deposits boxes”. 17. By letter dated 21 February 2020, Wong & Co (amongst other things) asserted that the CP’s decision to withhold and/or freeze and/or deny the Applicant’s access and/or operation of his safe deposit box and bank accounts was without legal basis, and threatened legal proceedings. 18. By letter dated 21 April 2020, expressed to serve as a “final reply” to the letter of 21 February 2020, the Narcotics Bureau repeated the existence of the investigation and the statutory provision, and stated (sic):
19. As an aside, it can be noted that – as with their other correspondence – the language used suggests that the Police thought that they had the power to freeze or unfreeze the bank accounts, and that LNCs were issued or lifted for that purpose and with that effect. However, despite that would seem to be correct as a matter of fact or practicality it has since been decided that that is not the correct legal analysis (see below). 20. By letter dated 5 May 2020, Wong & Co stated that the Applicant would give consideration to the invitation for interview if the Narcotics Bureau would “provide him with materials and/or information in which his bank accounts are involved for perusal in advance in order to rouse his recollection towards the transactions under such bank accounts”. 21. By letter dated 8 May 2020, Wong & Co requested the Narcotics Bureau to give instructions and authorisation to the bank to sell funds in an account. 22. By letter dated 2 June 2020, the Narcotics Bureau refused to give approval for the sale of funds as suggested. 23. By letter dated 19 September 2022, Wong & Co again threatened proceedings. 24. On 23 February 2023, Wong & Co wrote to the CP requesting that the CP provide all of the LNCs that were issued to the relevant banks in relation to the Applicant so that the Applicant could identify and clarify with banks that he is free to exercise his constitutional rights and access his bank accounts, or alternatively to issue consent to the relevant banks. The letter placed reliance upon my own decision in the Tam Sze Leung case, but that was subsequently overturned on appeal (see below). 25. On 24 February 2023, Wong & Co sent letters to BOCHK and HSB, noting that as of 11 February 2023, the Applicant still could not access his accounts, further requiring the banks to provide service to the Applicant. By a letter dated 24 February 2023, BOCHK replied stating they are “prohibited by law from disclosing information about the subject matter”. By a letter dated 15 March 2023, solicitors for HSB replied stating that the Applicant should contact the Financial Investigation Division, Section 1 D for further information. 26. On 1 March 2023, the CP informed Wong & Co that the Applicant was “subject to an investigation by the Financial Investigation Division of Financial Intelligence and Investigation Bureau (FIIB) for the offence of ‘Dealing with property known or believed to represent proceeds of an indictable offence’ contrary to section 25(1) of OSCO. As of today, the investigation is still ongoing”. 27. On 3 May 2023, the Applicant was rearrested and charged with 5 counts of “Dealing with Property Known/Believed to Represent Proceeds of Indictable Offence” and 1 count of “Conspiracy to Dealing with Property Known/Believed to Represent Proceeds of Indictable Offence”, contrary to section 25(1) of OSCO. 28. On 8 June 2023, the Secretary for Justice applied for, and Yau J granted, a restraint order (i.e. RO) against the assets of the Applicant. As a result, the relevant LNCs were lifted on 26 June 2023. In passing, I suppose it might be said that the fact that the Court was satisfied it was appropriate to grant the RO implies that it was probably a good idea, or at least not inappropriate, to have issued and maintained the LNCs (though that may not directly address the particular questions arising from the challenge in these proceedings). 29. From the date of granting the LNCs to the date of granting of the RO and the subsequent lifting of the LNCs, the LNCs were in effect for a period of over 10 years. C. Force Procedures Manual 30. Before dealing with other questions, it is helpful also to set out the material provisions of the Police’s Force Procedures Manual (“FPM”) at Chapter 27 (27-19), which regulate what is there referred to as the use of the ‘No Consent’ Mechanism (i.e. the LNC Regime). It is the FPM which the CP relies upon as having guided the issue of the LNCs in this case, and the subsequent repeated extensions of them on a monthly basis for a period long after what has been described elsewhere as the “usual six month period”. 31. The FPM states that the mechanism applies to cases where property held or managed by financial institutions, e.g. funds in bank accounts, are known, believed or suspected to be proceeds of crime or terrorist property. Hence, if there is neither knowledge, belief nor suspicion, then there is no application of this part of the FPM. 32. Material paragraphs include those as follows:
33. Hence, by way of summary, it can be seen that the FPM at 27-19 recognises and/or provides as follows:
34. On the point underpinning the present judicial review challenge, it can be noted that the FPM specifically references the judicial review Court’s approval of the “No Consent” mechanism as operating fairly as having included consideration of the time limit under which the LNC operates. That time limit is essentially one of six months, albeit subject to extension in exceptional circumstances. D. Grounds of Review 35. The Amended Form 86 raised five grounds of judicial review. In essence, the challenge deals with the question of whether the power to give consent under section 25A(2) OSCO should be construed to mandate consideration of the lengthy period of time being taken for an investigation as against other factors including the impact on the person whose accounts are affected, notwithstanding the existence of suspicion. 36. The Applicant is not challenging the LNC Regime as a whole, but the maintaining of ‘No Consent’ by LNC for an extended period of 10 years, beyond the standard 6 months prescribed in the FPM. 37. It seems to me that there is obviously some degree of overlap between the various grounds, but it is convenient to deal with them separately as they have been advanced. In summary, the five grounds are as follows:
E. Is the Intended Challenge Academic? 38. In light of the fact that the RO was granted and the LNCs in this case were withdrawn, Mr Suen submitted that these proceedings had become academic. 39. Where it is contended that the question before the Court is academic or hypothetical, the factors which will feature in the Court’s approach were established in Chit Fai Motors v Commissioner for Transport [2004] 1 HKC 465 at §20 – whilst remembering that the factors there listed are by no means exhaustive, since the question can arise in a number of different contexts. 40. In this case, the situation is one where the real dispute that drove the parties to litigation happened no longer to be in existence at the time of the hearing. In that situation, the Court does have jurisdiction to hear and determine the question in issue. However, in deciding whether or not to do so (and this is a matter of discretion), the Court will closely examine the relevance or utility of any decision. This is sometimes easier to demonstrate in the public law sphere, rather than in relation to private rights, because very often in public or administrative law cases, the duties of public bodies fall to be exercised on a continuing basis not only in relation to the parties before the Court, but other parties. The exercise of those duties under relevant powers may already have occurred, as well as may occur in the future. 41. The present challenge seems to me to raise issues of real public importance in respect of a frequently operated regime – i.e. the LNC Regime – with potential application to any bank account held in Hong Kong by any person or corporation. 42. Despite the fact that a similar challenge to the LNC Regime was considered and rejected by the Court of Appeal in Interush Limited v Commissioner of Police [2019] 1 HKLRD 892 (“Interush”) and the Court of Final Appeal (“CFA”) in Tam Sze Leung v Commissioner of Police [2024] 27 HKCFAR 288 (“Tam Sze Leung (CFA)”), it seems to me that there are different underlying factual circumstances that justify proper consideration in this case. 43. I keep in mind that the CFA noted at §102 that, in that case, restraint orders had in fact been obtained so that the earlier actions, preserving the position, had been overtaken by court orders which kept the ‘freeze’ in place. The CFA considered that as the LNCs had fallen away, the declaration sought regarding the lawfulness of the so-called ‘No Consent Regime’ had become academic. But, as I will cover below, I do not think that stops a “decision challenge” of the sort made in this case. That is different from a challenge to the constitutionality of a rule or policy itself, and is instead a challenge to an impugned act or decision taken pursuant to the relevant rule or policy. As I have already noted, the Applicant is not challenging the LNC Regime as a whole, but the maintaining in this case of ‘No Consent’ by LNC for an extended period of 10 years, well beyond the standard 6 months prescribed in the FPM. 44. If there is merit in the intended challenge, appropriate relief could perhaps be provided in the form of declarations of the sort proposed by Mr Wong. F. Statutory Framework 45. The statutory framework of the LNC Regime has been traversed in several previous decisions, but can usefully be introduced again as follows. 46. OSCO has a long title which specifies that its purpose is:
47. Obviously, as the long title identifies, one of the purposes of OSCO – see Part III ‘Confiscation of Proceeds of Crime’ – is to seek to prevent persons benefiting from proceeds of crime, ultimately by their confiscation, preferably before such proceeds have been either partly or completely dissipated. Indeed, there can be no doubt as to the importance and undisputed need for provisions to combat money laundering and to facilitate the pursuit and confiscation of proceeds of crime. 48. To that end, Part IV ‘Enforcement, etc of Confiscation Orders’ makes provision, amongst other things, for the enforcement of confiscation orders, and for the preservation of assets, through restraint orders and charging orders in advance of an application for a confiscation order. These powers are triggered when an arrest warrant is issued or the defendant has been arrested, charged and/or indicted. 49. Sections 14, 15 and 16 of OSCO deal with restraint orders and charging orders. The provisions of sections 14 and 15 are as follows:
50. Section 16 of OSCO makes similar provision as regards the making of charging orders in respect of land, securities etc. 51. As has been pointed out elsewhere, those sections make provision for a careful and detailed regime, with the relevant powers conferred on and to be exercised by the Court of First Instance. It is unnecessary for the purposes of the present case to detail all of those particular features. But it may be relevant to note the permitted length of time that restraint orders may be in place. Hence:
52. Whilst depriving perpetrators of crime of the proceeds of their conduct is one of the purposes of the legislative scheme, a second is to ensure that, under pain of penalty, those who know or even suspect that relevant monies constitute such proceeds will report that knowledge or suspicion to the authorities, to facilitate further investigation. 53. Hence, Part V ‘Miscellaneous’ creates various criminal offences including, as is material for present purposes, the offences of (1) dealing with proceeds of indictable offence (section 25), and (2) failing to disclose a suspicious transaction (section 25A). 54. The focus in this case is upon section 25(1) and section 25A(1) and (2). However, in full, sections 25 and 25A of OSCO provide as follows:
55. Sections 25 and 25A are complimentary, and two purposes stand out. First, by the identification of what has come to be called money-laundering, the legislative scheme deprives perpetrators of crime of the proceeds of their conduct. Secondly, the scheme ensures that under pain of penalty those who know, or even suspect, that relevant monies constitute such proceeds will report that knowledge or suspicion to the authorities, to facilitate further investigation. 56. Section 25 is designed to make it more difficult for those engaged in illegal activity to dispose of the proceeds of that activity without the transactions coming to the knowledge of the authorities. Section 25A deals with the requirement of disclosure to the authorities, which has always been a central feature of the legislative scheme. 57. Further, in section 25A(2)(a), there is a statutory immunity to the dealing offence, where the person concerned has reported a suspicious transaction and has obtained the consent of an authorised officer to deal with the property in question. G. The Tam Sze Leung Case 58. I have already mentioned above the fact that there was reference in the correspondence to my first instance decision in Tam Sze Leung v Commissioner of Police [2022] 1 HKLRD 480 (“Tam Sze Leung (CFI)”). In short, I held that the LNC Regime was ultra vires and not ‘prescribed by law’. 59. The appeal in that case had been heard and determined by the time of the argument in the present case: see Tam Sze Leung v Commissioner of Police [2023] 2 HKLRD 839 (“Tam Sze Leung (CA)”). The appeal was allowed and the Court of Appeal decided that the LNC Regime was not ultra vires, did not have an improper purpose, and did not fall foul of the ‘prescribed by law’ requirement. Further, the Court of Appeal held there to be no disproportionate interference with property rights. 60. However, between the date of the argument in the present case and this Judgment, there was a further appeal to the CFA – leading to its decision in Tam Sze Leung (CFA). The CFA mostly agreed, but in part disagreed, with the Court of Appeal. Not least because it is the binding authority, it is appropriate and helpful to canvass here the CFA decision and its effect. 61. At §45, the CFA set out seven relevant steps as the likely sequence of events involving the use of LNCs. Then, by reference to those steps and dealing with the nature and purpose of the LNCs, the key finding at §§47-52 was that it was the banks who dealt with the accounts instead of the Police, and that LNCs did not freeze the accounts directly. Those paragraphs state:
62. I shall return later to the design of LNCs being temporarily to prevent dissipation of assets, with a view to later invoking the Court’s jurisdiction to grant a restraint order if the matter is to be pursued. Indeed, it is perhaps this supposedly temporary nature of the LNCs which is at the heart of the present judicial review challenge. 63. But, in passing, the CFA’s reference in §52 to the LNC being “a temporary and provisional expedient with an initial six-month limit to its duration (with a possible extension for a further six months if that can be justified)” must, with respect, be mistaken. I say this despite the obvious apparent good sense in any extension period being for no longer than the originally permitted period. It may be that the error arises from confusion with the making of an RO which does have an initial six-month limit with a possible extension of a maximum further six months: see section 14(1A)(b) and section 14(1B)(c). But, on the statutory terms of section 25A, the giving of “No Consent” – in practice effected by LNC – has no express temporal limit. Nor is there any upper limit imposed in the FPM, unless the words “a lapse of six months” in the last sentence of 27-19 §5(h) – see above – are read as “a lapse of a further six months”, which is plainly not how the police read it. Nor have previous Courts: see, for example, SJ v Johnson Cynthia [2016] (HCMP 1789/2016, 4 August 2016), where the LNC had lasted for about 2 years and 10 months. Indeed, the CFA’s own description of Step 6, given at §45(f), also did not read it as “a lapse of a further six months”. It was stated that (emphasis added):
64. Nevertheless, at §§53-56, the CFA went on to look at the timing in the particular case – which, incidentally, was within an initial six-month plus further six-month period – and stated:
65. Whilst recognizing the “usual six months” period for a LNC, the emphasis is on: (1) avoiding a gap which would otherwise arise during the period before investigations are sufficiently advanced to justify applying for a restraint order; (2) that the use of LNCs is not indiscriminate; and (3) the policy emphasises necessity, proportionality and reasonableness as specified factors to take into account. 66. In dealing with the constitutionality and proportionality of the LNCs and No Consent mechanism, the CFA first found that the No Consent mechanism was constitutional, and that property rights were not engaged in the CP’s act of withholding consent:
67. On the proportionality issue, the CFA found that the impugned actions (i.e. freezing of bank accounts through the No Consent mechanism) satisfied all 4 steps in the analysis identified in Hysan Development v Town Planning Board [2016] 19 HKCFAR 372 (“Hysan”). At §§ 84-87, it was stated:
68. That last passage may be important to the present challenge. One of the reasons why the regime as a whole was found to be proportionate was expressly because it was only a temporary measure, of a limited nature and finite duration. 69. However, the reference to a “limited and finite duration” may hark back to the idea expressed by the CFA in its §52 (see above) that a LNC is “a temporary and provisional expedient with an initial six-month limit to its duration (with a possible extension for a further six months if that can be justified)” – which I have respectfully suggested is mistaken. Nevertheless, if the LNC Regime was considered to be proportionate on the basis that it did have a limited and finite duration of a maximum six-plus-six i.e. 12 month duration – that is very far from the facts of this case where the LNC had a duration more than 10 times 12 months. There is obviously room for thinking that continuation of the LNCs again and again on a monthly basis over a period of more than 10 years is in reality more akin to an open-ended process, rather than one of “limited and finite duration”. The limit and the finite duration were known in this case long after the “usual six months” and long after a further six months, and only when the application was eventually at last made for the RO after 123 months. 70. Before leaving the CFA’s decision in Tam Sze Leung (CFA), it may also be relevant to note that the CFA made the following further points:
71. With the benefit of the CFA’s binding decision, I can now turn to the Grounds of review in this case. H. Ground 1: Operational Proportionality Ground 72. The reference to “operational proportionality” in the Amended Form 86 derives from a distinction drawn by the Court of Appeal between “systemic proportionality” and “operational proportionality” in Leung Kwok Hung v Secretary for Justice (No 2) [2020] 2 HKLRD 771, where it was stated:
73. This has since been modified in Ng Ngoi Yee Margaret v HKSAR [2024] 27 HKCFAR 434, where it was said that the scope of “systemic proportionality” and “operational proportionality” should be broadened to distinguish between types of constitutional challenges:
74. Thus, the Applicants are making a “decision challenge”. 75. The proportionality concept has been explained in Hysan, as summarized at §133-136. The proportionality analysis involves a four-step process of asking (1) whether the intrusive measure pursues a legitimate aim, (2) if so, whether it is rationally connected with advancing that aim, (3) whether the measure is no more than necessary for that purpose, and (4) whether a reasonable balance has been struck between the societal benefits of the encroachment and the inroads made into the constitutionally protected rights of the individual, asking in particular whether pursuit of the societal interest results in an unacceptably harsh burden on the individual. 76. It should be noted that “fair balance” (or reasonable balance) is used in more than one sense in the case law. It is often said generally to be an inherent objective, and in some cases “fair balance” has been equated with a standard of reasonable necessity in applying a proportionality test. But relevantly for present purposes, “fair balance” has been given a meaning reflecting the 4th step which mandates striking a fair balance “between the demands of the general interest of the community and the requirements of the protection of the individual’s fundamental rights”. 77. As seen above, as a starting point, the LNC should normally last no more than 6 months from the date of issue. Only where there are exceptional circumstances will the LNC continue beyond the 6-month period, which would require the Formation Commander critically to review the case and the “No Consent” considerations. 78. The LNC is, or is likely to be, operated at a relatively early stage in investigations. Ultimately, the No Consent mechanism is intended to be a preliminary tool that lasts no longer than 6 months, following which the police should, if intending to continue the freezing effect of the LNCs, seek a RO “as soon as practicable”. At any time when the circumstances do not justify the continued operation of a LNC, the operation of the LNC must cease as soon as practicable. Indeed, in this case, on 25 November 2014 ROs were granted against 5 defendants allegedly involved in the operation (albeit not the Applicant). 79. Reference can also be made to what Cheung JA said specifically on the availability of the RO regime in Interush at §6.49:
80. I keep in mind that distinction in ‘standards’, and that the distinction is applicable between the “investigation stage” and the “prosecution stage”, rather than any particular temporal limit. 81. If the Formation Commander is satisfied that a LNC should continue beyond the 6-month period, he should ensure the exceptional circumstances and reasoning are fully documented and submitted to the JFIU monthly through the STREAMS, and be prepared to account for the decision. In Tam Sze Leung (CFA) at §56, it was emphasized that LNCs are not issued indiscriminately and that the FPM requires the factors of necessity, proportionality and reasonableness to be heeded. In the Court of Appeal’s decision in Interush, it was stressed that Formation Commanders are required strictly to adhere to the monitoring guidelines for the issue and extension of LNCs, critically to review the justifications for the extension of LNCs, and only to authorize extensions where sufficient grounds exist. It can, of course, also be noted that in Interush at §6.41, it was pointed out that in Hong Kong criminal law there is no time frame imposed for the investigation of any criminal offence. There is also no specific time limit at common law for the prosecution of any indictable offence. 82. Indeed, it is also important to note that there is no apparent upper limit for the extension of LNCs – though query whether the CFA proceeded on this basis when considering proportionality: see above. 83. I have also already noted the CFA’s identification of the importance of avoiding the gap as might otherwise arise during the period before investigations are sufficiently advanced to justify applying for a restraint order. Hence, it appears to me that a LNC can be extended insofar as exceptional circumstances that would justify its extension do and continue to exist. Again, on the facts of SJ v Johnson Cynthia [2016] (HCMP 1789/2016, 4 August 2016), it was noted at §14 that the LNC there had lasted for about 2 years and 10 months – though the 10-year period in the present case is obviously of a different scale. 84. Essentially, each case must turn on its own circumstances. But it is also settled that the Court should exercise great caution in interfering with any prosecutorial decision. In short, not least as a consequence of the provision in Article 63 of the Basic Law, the Courts have consistently refused to intervene absent any dishonesty, bad faith or some other exceptional circumstances. Similarly – as I pointed out in Tam Sze Leung (CFI) at §§138-139, and in Yeung Wing Kit v Commissioner of the Independent Commission Against Corruption [2021] HKCFI at §§32-33 – the Court will likely be even more reluctant to review the investigation process, unless wholly exceptional circumstances are present. Under the common law, the CP enjoys a broad operational discretion on how to carry out his investigative duties, and such discretion includes deciding if an ongoing investigation should be continued or terminated. It is well recognized in law that the exercise of such discretion in the law enforcement context involves making (sometimes difficult) judgments as to how best to utilise resources and manpower in addressing the statutory duties and objectives. Where there are unquestionably reasonable grounds initially to suspect the person under investigation, the Court should be very slow to second-guess the police in deciding at what point he can be dismissed from the inquiry, or by what point the inquiry should have concluded. Indeed, the continuance of an investigation is a factual rather than a legal state of affairs, without formal status and where there is no public action taken until proceedings are commenced by a charge. Investigations may, depending on their circumstances, continue at various levels of intensity and over varying periods of time. 85. The following investigative matters and timetable have been identified in the evidence filed for the CP in this case (in my summary of it):
86. In the present case, despite the extremely lengthy period involved after the issue of the LNCs, monthly reviews under the FPM had indeed been carried out by the police between March 2013 to June 2023 (being the date of the granting of the RO). 87. Since November 2015, the Monthly Reviews were recorded using a computerized review system known as STREAMS, which included a column titled “exceptional circumstances”. The “exceptional circumstances” column remained empty until October 2022, whereby an entry under this column read: “the case was a joint-operation with NB OPS in which involved cross-border drug traffickers, large amount of transactions and accounts, as well as large number of APs and counterparties in the investigation”. This entry in the “exceptional circumstances” column remained the same in all subsequent Monthly Reviews until June 2023, when the LNCs were lifted. 88. Mr Wong submitted that, before November 2015, the Monthly reviews were submitted by way of memo, with no mention of “exceptional circumstances”. Mr Suen contended that this was merely a matter of formatting/presentation of the monthly review. He said by reference to the evidence that the specific entry of “exceptional circumstances” was only introduced to STREAMS beginning October 2022. Prior to this date, any exceptional circumstances would have been recorded under “status of investigations/justifications”, and that references to any exceptional circumstances have always been there. I agree with Mr Suen. 89. Mr Wong submitted that when considering time in the context of granting of LNCs, it is necessary to try to make an estimate of a reasonably accurate time scale. As such, an LNC granted and maintained only for the period of 3 months, well within the period provided for in the FPM and the Guidelines, would undoubtedly be a different balancing exercise to the granting and maintaining of an LNC over the period of close to 10 years. Surely it would be the case that being unable to access his accounts and assets for an aggregate period of 10 years would pose a far greater burden to the Applicant than 3-6 months. There is obviously some force in that submission. 90. On the other hand, Mr Suen argued that, insofar as time is concerned, this was a question of how much time it would take for the police to obtain an RO; this was a factor that was taken into account in the monthly reviews. In 2014, the Secretary for Justice obtained ROs against 5 other respondents, including 3 natural persons and 2 related companies believed to be associates of the Applicants. The ROs were obtained against these respondents at the time because there was heightened risk of dissipation in relation to their assets (and in addition the 3 natural persons were subject to charges in relation to offences under the Dangerous Drugs Ordinance Cap 134). 91. These ROs had been extended, but were subsequently discharged in October 2015 upon the application of the Secretary for Justice (not the respondents), because further time was required for investigations to be completed and such investigations could not be completed within the time limit for ROs as provided under section 14(1A) and (1B) of OSCO. There is, therefore, perhaps some irony in the facts that some of the persons under investigation were relatively quickly able to access their bank accounts because the maximum period for an RO expired, whereas some other persons continued to be unable to access their bank accounts in part because no application for an RO was made until many years later. 92. Nevertheless, I accept that an attempt was made at balancing the pursuit of the societal interest, i.e. the prevention of crime by the police and the intention to prevent the use of the proceeds of crime, with the burden on the individual Applicant. The LNCs were issued in support of an investigation into the Applicant. Monthly reviews were conducted in accordance with the FPM’s guidelines, which would and did inherently involve a balancing of the “exceptional circumstances” that justified the extension of the LNCs with the burden on the Applicant being unable to access his funds in the frozen accounts. Furthermore, as Mr Suen raised, the police had informed the Applicant multiple times that investigations were ongoing, and had made attempts at inviting him for interviews but failed to reach him. 93. Further, I keep in mind what the CFA said in Tam Sze Leung (CFA) at §§67-68. It is the bank which disables and freezes its customer’s account when it decides that the suspicion is not dispelled, and the bank is not the agent of the police in this connection. Hence, the bank is obliged to and does exercise its own judgment. 94. Though this was apparently not one of them, there may well be cases where the bank is quite satisfied in the light of its customer due diligence records and after making inquiries of its customer, that the police suspicions are unfounded. Indeed, a bank might well take the view that if, after many years, the police are unable to apply for a RO or otherwise to pursue a prosecution, then it may proceed to operate the customer’s account (which is not frozen) notwithstanding information earlier received from the police. 95. The CFA also emphasised that it is unfounded to suggest that upon hearing of suspicions from the police, banks would regard such communications as ‘instructions, which would invariably be obeyed, that the accounts of any person, company, or other entity should be frozen’. I suppose that might be all the more so after any lengthy passage of time. On the other hand, there is room for thinking that this case is paradigmatic of the practical reality that the police’s actions in refusing consent mean that the bank will freeze the accounts and simply will not permit the accounts to be operated (even if the theory is that they could). 96. I confess to having more than significant doubt as to whether those who drafted section 25A of OSCO, and those who passed it into legislation, could ever have conceived that a LNC might be in place for a period of over 10 years before an application is made for a RO. It is particularly difficult to think that anyone might have conceived that a LNC – a professed “temporary and provisional expedient” (see Tam Sze Leung (CFA) at §52) – might be in place not just for a period more than twice as long as the ordinary maximum period under the FPM, but for a period significantly longer (in multiples) than the maximum period even for a RO, which is subject to the kind of Court supervision absent from the LNC Regime. 97. However, on the basis of the materials, and on the particular facts of this case set out above, I accept that the relevant police investigations in this case were extremely complex and on the identified “extraordinary scale”. 98. Hence, if the correct test is that the LNC may be extended as long as there appears to be justification in the exceptional circumstances for continued extensions, then there seems to have been genuine justification in this case, notwithstanding the passage of a length of time which in a vacuum might otherwise be thought to have become unjustifiable. 99. I am told by binding authority that, where there is no express statutory time limit, reasonableness is not measured by the Court reading in time limits. But, of course, even on the basis that there is no upper temporal limit for LNCs (beyond one seen as reasonably necessary in exceptional circumstances), there must be cases where at some point it will be seen that the line must have been crossed from operational proportionality to operational disproportionality. At first blush, this case might seem to be one of them. 100. However, after anxious scrutiny, and applying the binding authorities, I am not sure that line has been crossed in this case. As such – though not without considerable hesitation – I am driven to the conclusion that the extension of the No Consent mechanism in this case was not operationally disproportionate. 101. Nevertheless, even had I found for the Applicant on this Ground 1, I do not think it logically leads to the relief claimed. First, I take into account that this was not really a systemic challenge. But, further, the declaration sought – that the exercise of the power to give or withhold consent under section 25A(2) of OSCO must strike a fair balance and consider whether the withholding of consent for an extended period of time would result in an unacceptably harsh burden on the individual – in short is unnecessary where that fair balancing exercise in effect is or should be built into the operation of the LNC Regime through the FPM (which was part of the overall procedural aspects leading to the CFA’s holding that the regime/mechanism was lawful, prescribed by law, proportionate and not ultra vires). I. Ground 2: Breach of Policy Ground 102. This Ground is a fact-specific challenge. The question to be asked is whether the extension of the LNC by 10 years in this case meant that the CP did or did not comply with his own “necessary, proportionate and reasonable” policy, to be assessed in the circumstances of the case. 103. As already identified above, pursuant to §27-19.5(c) of the FPM, each case must be decided on its own facts and merits with justification. The underlying principle is that the use of the No Consent mechanism is necessary, proportionate and reasonable. In the deliberation, the SPI may take into consideration a number of factors, including the reasonable prospect of successfully obtaining a confiscation order (which in turn requires the SPI to take into account the nature and seriousness of the offence, the laying of a charge and the reasonable prospect of successfully obtaining a conviction) and the reasonable likelihood of obtaining a restraint order. 104. Under 27-19 §5(g) of the FPM, if the continuity of “No Consent” is considered justifiable on the basis of necessity, proportionality and reasonableness, the Formation Commander will endorse the continued operation of “No Consent” electronically through the STREAMS. 105. By the inclusion of the underlying principle that the use of the No Consent mechanism is “necessary, proportionate and reasonable”, the proportionality test is essentially imported into the No Consent mechanism or LNC Regime and the FPM. 106. In the Tam Sze Leung case, the LNCs were maintained for a period of roughly 10 months, at which point a RO was obtained against the Applicants. The exceptional circumstances which justified an extension of the LNCs were said to be “due to the complexity of the case, the number of entities and transactions and the volume of documents involved. The evidence was that there were suspected manipulative activities by the Applicants and other persons in relation to 10 different stocks over a period of some 26 months (September 2018 to November 2020); over 100 securities accounts and bank accounts were involved; over 10,000 pages of bank and trading records had been gathered since production orders were obtained in April 2021”: see Tam Sze Leung (CA) at §90). 107. In Interush, the LNCs were maintained for a longer period of 1 year and 5 months. The exceptional circumstances justifying a continuation of the LNC were stated to be the large scale of investigation due to the volume of transactions and applicants being spread over several provinces in China; the long cross-border investigation; little cooperation from one of the Applicants; and the case being one of the largest pyramid sales cases in Hong Kong: see §5.1. 108. In SJ v Johnson Cynthia [2016] (HCMP 1789/2016, 4 August 2016), the LNC lasted for an even longer period of about 2 years and 10 months (twice as long as in Interush). 109. In the current case, the LNCs were first issued on 15 January 2013, and were maintained until 8 June 2023, when the RO was granted against the Applicant. The LNCs were in place for a total period of 10 years and 3 months, over 20 times the length of the recommended initial six month period provided for in the FPM. 110. I have also already set out in the previous section of this Judgment some more of the detail of the explanation for the time taken between the first issue of the LNCs and the application for the RO. In short, the exceptional circumstances asserted by the police are that “the case was a joint operation [redacted] with NB OPS in which involved cross-border drug traffickers, large amount of transactions and accounts, as well as large number of APs and counterparties in the investigation”. This is what was stated in the Monthly Review dated 6 October 2022, and thereafter repeated in all Monthly Reviews until 7 June 2023. 111. In Interush, the applicants argued on a fact-specific challenge that that the respondents acted unconstitutionally (or otherwise unfairly and unreasonably) against the applicants by using the No Consent mechanism to bypass the procedural safeguards for restraint order applications under section 15 of OSCO. It was submitted that if, by mid to late 2014 (i.e. more than 6 months after the issuance of LNCs), the respondents did not think they could prove there was reasonable cause to believe that the applicants committed a specific offence, they clearly had no rational basis to informally freeze the applicants’ funds by continuing to withhold consent. This was rejected by the Court of Appeal at §§6.54-6.56:
112. Taking into mind these considerations, I do not find that the Commissioner has acted in bad faith or in breach of the policy identified in the FPM. This is not a situation where the LNCs were maintained despite the investigation being completed, thus justifying the grant of a RO. As the Monthly Reviews reflect, this was a lengthy and complicated case involving elements of drug trafficking and money laundering/proceeds of crime offences. I have already accepted that there may of course be some legitimate concern about the length of time during which the LNCs were maintained, but there is no basis in the evidence to suggest any delay by the investigator or the prosecutor. The Applicant has not adduced any evidence of actual hardship suffered as a result of the LNC either. The Applicant failed to respond to the police’s requests to attend interviews and dispel their suspicions. 113. In the circumstances, I reject the fact-specific challenge that the CP has breached his policy to ensure the issue of LNCs and the use of the No Consent Regime is “necessary, proportionate and reasonable”. J. Ground 3: Ultra Vires Ground 114. On the ultra vires ground, Mr Wong submitted that the No Consent mechanism is a temporary measure, and that the formal freezing of the operation of the Applicant’s accounts should instead be enacted by a RO, which is comprehensively set out under sections 14 and 15 of OSCO. Mr Wong further submitted that, by freezing the Applicant’s assets for a decade, the decision to grant and maintain, and the refusal to lift, the LNCs frustrated the purpose of the No Consent mechanism as a temporary stop-gap measure and bypassed the procedural safeguards for RO applications under section 15 of OSCO, including the right to seek compensation and the right to apply for the discharge or variation of the restraint order, and as such is ultra vires. 115. On the other hand, Mr Suen submitted that maintaining the LNCs for the purpose of preventing dissipation of property pending investigation is a permissible purpose, and there is no suggestion in the present case that the CP had maintained the LNCs for any ulterior purpose other than investigation of the reasonable suspicions against the Applicant. 116. I have already noted that the CFA held in Tam Sze Leung (CFA) that the appellants had mischaracterized the acts of the police as freezing the accounts by the issuance of LNCs to the relevant banks, finding instead that acts did not involve the police freezing or ordering the banks to freeze the accounts. Instead, it is the bank which disables and freezes its customer’s account when it decides that the suspicion is not dispelled, and the bank is not the agent of the police in this connection: see §§67 and 68. 117. Further, the CFA held at §69 that, since the actions of the police do not involve the freezing of bank accounts, a search for statutory authorisation to operate such a freeze is misguided, and it is fallacious to conclude, when such search proves fruitless, that the (mischaracterised) police action is ultra vires. The acts fall within the usual statutory powers and duties of the police under the PFO. 118. I have also noted where the CFA at §71 criticized the contention that the act of freezing by the police is not authorized by OSCO because the only lawful means of immobilizing an account is by obtaining a restraint order under section 15 of OSCO. 119. Simply put, the police’s actions do not have to be authorized by OSCO. Such powers to issue LNCs to the relevant banks were included in the ample authority provided by the PFO, in particular section 10. That allows the police to take lawful measures for preventing and detecting crimes and offences, and for preventing injury to life and property. This is further supplemented by the common law duty of police constables to take all steps which appear necessary for preventing crime and protecting property from criminal injury. 120. As such, by issuing LNCs to the relevant banks under the No Consent mechanism, the police/CP were taking lawful measures: to prevent the crime of money laundering; to seek information in aid of their investigations aimed at detecting crime; and to prevent the flight and dissipation of (and thus loss and injury to) property suspected of being the proceeds of crime with a view to its possible confiscation: see Tam Sze Leung (CFA) at §65. 121. Nonetheless, as the CFA clarified in Tam Sze Leung (CFA), the bank is obliged to and does exercise its own judgment. There may indeed be cases where the bank is quite satisfied in the light of its customer due diligence records and after making inquiries of its customer, that the police suspicions are unfounded, and can then proceed lawfully to operate the customer’s account (which is not frozen) notwithstanding information received from the police. 122. Therefore, it seems to me there is an implication that even with the LNCs in place against a person’s bank accounts, that person can nonetheless approach the bank directly and ask them to operate the account. It may be thought that there is a difference between this theory and the practical likelihood, but that does not change the analysis adopted by the CFA. 123. In the circumstances, I do not find that the Decision is ultra vires. K. Ground 4: Fettered Discretion Ground 124. In relation to the Refusal specifically, Mr Wong relied on Interush characterizing the actions of the CP as “withholding consent”, and submits that where there is no longer any lawful basis for “withholding consent”, then the statutory duty is for the CP to give consent, so that the Applicant can once again exercise his constitutional right to property. (This submission must now be considered against the holding in Tam Sze Leung (CFA) that there is in fact no interference with any constitutional right to property – see above). 125. Mr Wong further submitted that the CP is under a continuing duty to consider giving consent in individual cases on their merits, and therefore fettered his discretion by failing to give any consideration to the possibility of giving consent. With respect, it is difficult to see how this submission can survive the fact that there was a monthly review which specifically required the Formation Commander (acting for the CP) to consider whether or not to extend the LNC, or in the alternative to cease its extension such that there should be the giving of consent. 126. Mr Suen relied on the fact that monthly reviews were conducted by the police, and he also submitted that the CP was not obliged to give consent. The default position under OSCO is that, where there is reasonable suspicion or doubt that the money represents the proceeds of crime, the money cannot be dealt with: it would be an offence subject only to the giving of consent by police. The purpose of the default position is to prevent the dissipation of proceeds of crime. Therefore, if the police see operational reasons to give consent, they can indeed do so. Otherwise, in the absence of such factors, the default position should not be disturbed (however long it lasts). 127. In particular, Mr Suen drew attention to the February and March 2023 reviews, where it was recorded that legal advice was pending and criminal charges were likely to be laid against the Applicant. It was further submitted that the Applicant had not substantiated any particular hardships that lay in favour of lifting the LNCs. 128. The principle against a public authority unlawfully fettering their discretion is well-settled. A decision-maker must not allow his policy to fetter his decision. In other words, he must not apply his policy blindly and rigidly. The policy must not preclude the decision-maker from departing from it or from taking into account circumstances and merits of the particular case in question. As it is sometimes put, the decision-maker must always be willing to listen to anyone with something new to say, and the policy must have an exceptions procedure worthy of the name. 129. But, it must be recalled that the particular policy in this case has the built-in proportionality exercise, because of the need to consider necessity, proportionality and reasonableness. 130. The position is stated in the FPM; the granting of LNCs is itself a procedure that requires the investigating units to “have sufficient ground and exercise due care”. Although it is not a mechanism that is used exceptionally, it is one that should be “properly used and stringently controlled”. There must be underlying reasons for the granting of an LNC that must be properly documented and submitted electronically through the STREAMS system. Furthermore, the default length of a LNC is determined to be no longer than 6 months from the date of issue. Only where there are exceptional circumstances will the LNC continue beyond the 6-month period. 131. In some ways, it might be thought that the application of the policy leads to a binary decision either to make/maintain the LNC or not to. But, another way of viewing it would be as against the default position identified above, where there is thought to be a reasonable basis of suspicion. On the other hand, it is clear that the extension of the LNC for longer than six months can only occur in “exceptional circumstances”. Therefore, the relevant exception – which is a process worthy of its name – is to continue the LNC in circumstances where it would usually not be continued. Hence, when looking at necessity, proportionality and reasonableness, it seems to me that the Formation Commander will necessarily consider whether the usual or exceptional course should be followed. 132. In so far as the Applicant’s case requires consideration of whether there should be an exception to the exception, I also think that consideration is in effect built into the policy. 133. Mr Wong made the point that the FPM requires the decision-maker to demonstrate balancing in the documentation for the purposes of review, and that the CP cannot ask the Court to assume this has happened in the absence of real evidence in support of such a balancing exercise. He further submitted that there is not a single mention of a balancing of the Applicant’s interests, and the alleged “exceptional circumstances” are merely a description of the investigation. Mr Wong submitted that at each consecutive advice stage until 19 April 2023, the conclusion must have been that there was insufficient evidence to arrest, prosecute or obtain a RO. 134. But, the Formation Commander/CP plainly must have been aware of the “extraordinary length of time” taken for investigation. This must be a factor that was taken into account, and one that the CP likely felt was outweighed by the complex nature and circumstances of the investigation that justified its extension. It was not a situation where the CP maintained the LNC for no reason; an investigation against the Applicant was ongoing, albeit slowly. This is reflected in the monthly reviews from March 2013 to June 2023 (a total of 123 months). As I have canvassed above, various analyses of the involved bank accounts were conducted by the police and in the TA Report, documents were obtained and suspects and witnesses interviewed, and legal advice was sought and obtained from the DOJ culminating in the Applicant being re-arrested and charged with offences. The CP must have decided, in the circumstances that were continuously evolving in the investigation of the Applicant over the course of 10 years, that there was a need to maintain No Consent. 135. In any case, the Court exercises a supervisory jurisdiction on review only, and the issue at question is whether the CP exercised his discretion in a manner that accords with his duty to promote the statutory purpose for which the discretion is given. It is not for the Court to substitute its own views in place of that of the Commissioner on the facts. 136. But in any event, I do not find that the CP fettered his discretion. L. Ground 5: Procedural Unfairness Ground 137. This Ground appears to be a challenge as to the question of whether the power to grant or withhold consent under section 25A of OSCO is exercisable within the duration of a RO. 138. I am not sure how this really arises on the facts of this case. Almost as soon as the RO was obtained, the LNCs were lifted. That seems to me to be sufficient to deal with this ground. 139. In any event, I have previously dealt with the issue of general procedural unfairness of LNCs in Tam Sze Leung (CFI) – in a part not doubted on appeal. In general, fairness will often require the right to notice of a decision, the right to make worthwhile representations and the right to disclosure of at least the gist of the case which the affected person has to answer. Fairness often also requires adequate reasons to be given for a decision. On the other hand, it is not enough to argue that some procedure other than the one adopted by the decision-maker would be better or fairer; rather, what must be shown is that the procedure adopted is actually unfair. Importantly, natural justice does not require the courts to supplement statutory procedures by requiring additional steps which would frustrate the statutory purpose. 140. It was my finding that the CP’s failure to give reasons for issuing the LNCs and failure to disclose anything relating to the investigation did not constitute procedural unfairness: see §§127, 128 and 129:
141. I do not accept there was any procedural unfairness in this case as suggested by Ground 5. M. Summary 142. Therefore, on substantive review, none of the Grounds of review is made out. N. Damages 143. In light of my finding that none of the Grounds of review is made out, the claimed relief relating to matters of damages falls away. There is no need to consider the giving of any potential directions. I would simply add the following points. 144. Order 53 rule 9(5) provides that where the relief sought is a declaration, an injunction or damages and the Court considers that it should not be granted on an application for judicial review but might have been granted if it had been sought in an action begun by writ by the applicant at the time of making his application, the Court may, instead of refusing the application, order the proceedings to continue as if they had been begun by writ; and Order 28 rule 8 shall apply. 145. The Applicant has not definitively indicated that he will claim damages from the CP and, if so, on what basis. Furthermore, the Applicant has failed to particularize and substantiate his alleged loss and damage in support of a claim for damages. In fact, as I have already noted, the Applicant has failed to identify any specific prejudice to him arising from the inability to access the relevant bank accounts. 146. In any case, the proper venue to pursue such a claim (if any) would be pursuant to section 29 of OSCO. O. Result 147. Though there was clearly a strong argument in the circumstances of this case in relation to at least Ground 1 (which overlapped with at least Ground 2), the Applicant’s application for judicial review is dismissed. 148. I have also already indicated that I do not think that I would likely have granted the primary declaratory relief sought, even had I thought that any ground of review had been made out. 149. As to costs, it seems to me that costs should follow the event, so that the Applicant should pay the CP’s costs of these proceedings, to be taxed if not agreed with certificate for two Counsel. However, I shall make that a costs order nisi in the first place, to become absolute after 14 days if neither side applies for a variation. Any variation application will be dealt with on paper.
Mr Albert N B Wong and Mr Jason Szeto, instructed by Wong & Co., for the applicant Mr Jenkin Suen, SC and Mr Peter Dong, instructed by the Department of Justice, for the respondent
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