P v. THE COMMISSIONER OF THE INDEPENDENT COMMISSION AGAINST CORRUPTION

FACC No. 11 of 2006

IN THE COURT OF FINAL APPEAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

FINAL APPEAL NO. 11 OF 2006 (CRIMINAL)

(ON APPEAL FROM HCCM NO. 17 OF 2006)

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J U D G M E N T

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Chief Justice Li:

1. Corruption is an evil which cannot be tolerated.  For the purpose of combating corruption, special powers of investigation have been conferred by statute on the Independent Commission Against Corruption (“the ICAC”).  These powers are necessary as crimes of corruption are inherently difficult to investigate and prove.  But as their exercise intrudes into the privacy of citizens, the statutory scheme provides that they are exercisable only after judicial authorization has been obtained.  In this way, the scheme seeks to balance the public interest in fighting corruption and the public interest in the protection of the individual.

2.  A judicial safeguard is thus introduced between the citizen and the state.  The need for independent scrutiny by the courts provides protection for the citizen against the unjustified use of the special investigatory powers.  This appeal raises questions of principle concerning the special investigatory power in s. 14(1)(d) of the Prevention of Bribery Ordinance, Cap 201 (“the POBO”) and the proper functioning of the judicial safeguard. (References to sections in this judgment are to sections in the POBO save where otherwise stated).

The ex parte Order

3.  On 8 May 2006, upon the ex parte application of Mr Au Kwan-lung (“Au”), an investigating officer of the ICAC supported by his affirmation, Deputy Judge M Poon (“the Judge”) of the Court of First Instance (“the CFI” or “the court”) granted an order authorizing the Commissioner of the ICAC (“the Commissioner”) to issue a notice in writing under s. 14(1)(d) to the appellant (“the ex parte Order” or “the Order”).  This provision relates to the obtaining of information and documents from a non-suspect.  The application was dealt with on the papers without an oral hearing.  No draft notice was placed before the Judge.  The Order recited that it was made “upon hearing Counsel for the Applicant” and that the Judge was satisfied that there are reasonable grounds for suspecting that an offence or offences under the POBO has or have been committed.    The authorization given by the Order was in these terms:

“The Commissioner of the [ICAC] be authorised to issue a notice in writing under Section 14(1)(d) of the [POBO] to [the appellant].”

The Notice

4.  Nearly ten days later, on 17 May 2006, pursuant to the Order, the ICAC served a notice under s. 14(1)(d) dated 15 May 2006 on the appellant (“the Notice”).  It was signed by the Deputy Commissioner.  Para 1 stated that an investigation was being carried out into offences suspected to have been committed under the POBO by three named persons.  Para 2 stated:

“I believe that you are acquainted with facts relevant to the above investigation and in exercise of the powers conferred on me by Section 14(1)(d) of [the POBO], and pursuant to [the ex parte Order made on 8 May 2006] under Section 14(1) of [the POBO] (copy attached), I hereby require you to produce or deliver or otherwise furnish to [Au], an investigating officer of [the ICAC] the original or a copy of any document in your possession or under your control or to which you may reasonably have access (not being a document readily available to the public), namely the financial statements, general ledgers, profit and loss accounts, vouchers and deposit and withdrawal records of the safe(s) of [a named Mainland company] from 1st January 2002 to 31st December 2005, which, in his opinion, may be relevant to the said investigation.”

Para 3 specified the period of 28 days from the date of the notice for compliance.  The final paragraph referred to the criminal offences and penalties for failure to comply with the notice without reasonable excuse and for making any false statement in answer to the Notice.  As stated in the Notice, a copy of the Order was attached.

5.  Au’s affirmation in support of the application for the Order is protected by public interest immunity although such immunity will lapse at some stage.  R v Inland Revenue Commissioners, Ex parte Rossminster (“Rossminster”) [1980] AC 952 at 999B-D, 1001A-B, 1011A-1012D, So Wing Keung v Sing Tao Ltd (“Sing Tao”) [2005] 2 HKLRD 11 at 59F-J.  The notice of motion for the application may also be protected.  In accordance with the confidentiality provision in Order 119 r 5 of the Rules of the High Court, Cap 4 (“the Rules”), these documents have been placed in a sealed packet and no person is able to gain access thereto except by an order of a judge. 

The background

6.  The background to the Order can be shortly stated.  As stated in the Notice, the ICAC was conducting an investigation into offences under the POBO suspected to have been committed by three named individuals.  They were the chairman, the chief executive officer and the purchasing manageress of a listed company. Its wholly owned subsidiaries include two incorporated in Hong Kong and the Mainland respectively (“the HK subsidiary”  and “the Mainland subsidiary”).  The group is engaged in manufacturing and trading.  The Mainland subsidiary carries on manufacturing in Zhongshan in the Pearl River Delta close to Hong Kong.  It is the Mainland company named in the Notice.  Its documents specified in the Notice are located in Zhongshan.   The POBO offences which the three individuals were suspected to have committed related to their alleged involvement in soliciting and receiving illegal rebates from suppliers for placing orders.

7.  The ICAC had reason to suspect that the rebates were initially paid into bank accounts of the purchasing manageress.  Subsequently, a substantial part of the monies was paid into the HK subsidiary’s account.  Its accounting records did not show these sums as rebates or discounts.  Part of the sums were recorded as “inter-companies items held on behalf of [the Mainland subsidiary] for [its named contractor] in the Mainland” and the balance was booked into a “contra account” of the HK subsidiary.  The ICAC believed that substantial sums were subsequently withdrawn over a period from the HK’s subsidiary’s bank account by cash cheques and that a substantial sum in cash was taken to Zhongshan and placed in the Mainland subsidiary’s safe.

8.  The chairman is the controlling shareholder of the listed company and is the appellant’s father.  Over 10 months before the Order was made, on 20 June 2005, the chairman, the chief executive officer, the purchasing manageress and some suppliers were arrested by the ICAC.  Shortly thereafter in late June 2005, the appellant became the chairperson of the listed company upon her father’s resignation and an executive director.  Since August 2005, she, replacing her father, has been the managing director and the statutory representative of the Mainland subsidiary and its directors have consisted of the appellant, her sister and one other.

9.  On 21 June 2005, the day after the arrests, ICAC officers in the company of officers of the Anti-Corruption Bureau of the Guangdong Province People’s Procuratorate paid a visit to the premises of the Mainland subsidiary and its contractor (named in the accounting entry referred to above) in Zhongshan.  The Mainland subsidiary provided the ICAC with certain accounting records.  However, according to the ICAC, these records did not relate to the sums they were investigating.

The appellant’s challenge

10.  The appellant did not comply with the Notice.  Her excuse was that the Mainland subsidiary had rejected her request for the documents on the ground that providing them to her “to carry” to Hong Kong would contravene Mainland laws.  According to the appellant, she did not participate in the board’s deliberation on this matter.  On 14 June 2006, the appellant applied by summons to the Judge to set aside the ex parte Order, the Notice and its service.  Affirmations were filed by the appellant and Au of the ICAC in this application.  She contended that in law the ex parte Order and the Notice could not extend to documents outside Hong Kong.  Further, she relied on the non-disclosure by the ICAC on the ex parte application of the fact that they had obtained some documents from the Mainland subsidiary on their visit to their premises in Zhongshan on 21 June 2005.

The Judge

11.  On 28 September 2006, the Judge dismissed her application.  She held that (1) She has jurisdiction to set aside the ex parte Order and the Notice under Order 32 r 6; (2) The criteria laid down in the POBO do not require the court to consider where the documents are located; and (3) The alleged non-disclosure did not go to any issue she had to decide and was not material.

12.  In November 2006, the appellant was arrested by the ICAC and charged with the offence of non-compliance with the Notice.  The hearing of that case has been adjourned pending the hearing of this appeal.

Leave to appeal

13.  On 13 December 2006, the Appeal Committee certified the two points of law referred to below and granted leave to appeal on those points.

The questions

14.  The questions before the Court are:

(1)	Whether the CFI has the jurisdiction to set aside or vary the ex parte Order, and if so, what grounds may be entertained by the CFI in exercising this jurisdiction under the statutory scheme (“the jurisdiction question”).
(2)	Whether the ex parte Order was invalid (“the validity question”).
(3)	Whether the power of the court under section 14 to make an order authorizing the Commissioner of the ICAC to require a person to produce, deliver or otherwise furnish to him documents under section 14(1)(d) extends to documents outside Hong Kong (“the scope of the power question”).
(4)	If so, whether the fact that such documents are outside Hong Kong is relevant to the exercise of the court’s discretion whether or not to make such an order (“the discretion question”).

15.  Only the last two questions were certified by the Appeal Committee and leave to appeal was confined to those questions.  The first two questions were not raised at the leave stage and indeed the validity question was not even taken before the Judge.  However, on hearing the appeal the Court adopted the exceptional course of entertaining the first two questions.  Both are questions of law of public importance which affect the operation of the statutory scheme and the Court has had the benefit of full and helpful argument on them.  Before turning to these questions, it is necessary to discuss the proper functioning of the statutory scheme.

The statutory scheme

16.  Section 14 confers on the Commissioner the power to obtain information concerning suspected POBO offences from suspects and non-suspects after obtaining judicial authorization.  As corrupt activities are by their nature difficult to detect and investigate, let alone prove in the normal way, these special powers of investigation are necessary for the purpose of combating corruption.  This is well recognised by the courts.  See the decisions of the Court of Appeal in Attorney General v Hui Kin-hong [1995] 1 HKCLR 227 at 235 l 30-35 and HKSAR v Chan Sze-ting HCMA 106/1997 (unreported, 4 September 1997) at p 11.

17.  The process begins with the Commissioner or an investigating officer making an ex parte application to the CFI in chambers for an order under s. 14(1).  Such an application may be made, for the purpose of an investigation into, or proceedings relating to, an offence suspected to have been committed by any person under the POBO.   Section 14(1A).

18.  On such an application, the CFI may make an order authorizing the Commissioner by a notice in writing to require a person referred to in s. 14(1)(a) to (f) to furnish information as provided for therein where it “is satisfied that there are reasonable grounds for suspecting that an offence under [the POBO] has been committed”.  Section 14(1).  The person referred to in s. 14(1)(a) and (b) is a suspect whilst the person referred to in (c) to (f) is a non-suspect.

19.  Under s. 14(1)(d), the CFI may make an order authorizing the Commissioner by a notice in writing to require a non-suspect whom the Commissioner believes to be acquainted with any facts relevant to the investigation or proceedings:

“

[1]

to furnish to the investigating officer specified in such notice all information in his possession or to which he may reasonably have access (not being information readily available to the public) respecting such matters as are specified in the notice or, [2] as the Commissioner sees fit, to appear before the investigating officer specified in such notice or such other person specified in the notice and to answer orally on oath or affirmation any questions relevant thereto; and, [3] on demand by the investigating officer specified in such notice or such other person, to produce or deliver or otherwise furnish to him the original or a copy of any document in his possession or under his control or to which he may reasonably have access (not being a document readily available to the public) which, in the opinion of the investigating officer specified in such notice or such other person, may be relevant to such investigation or proceedings…” (The numbers in square brackets identifying the three limbs of the provision have been added).

The Notice relates to the third limb requiring the production of documents.

20.  But the CFI shall not make an order under s. 14(1)(d), unless on the ex parte application, it is satisfied:

“that there are reasonable grounds for suspecting that – (b) … that the person being the subject of the application has or may reasonably have access to information likely to be relevant to the investigation or the proceedings.”

Section 14(1B)(b).

21.  Accordingly, under the statutory scheme, before making an order authorizing the Commissioner to serve a notice on a non-suspect under s. 14(1)(d), the court has to be satisfied that there are reasonable grounds for suspecting that:

(1)	An offence under the POBO has been committed.  Section 14(1);
(2)	The information to be sought from the person being the subject of the application (“the subject”) is likely to be relevant to the investigation or the proceedings.  Section 14(1B)(b); and
(3)	The subject has or may reasonably have access to such information.  Section 14(1B)(b).

It will be convenient to refer to the above as “the statutory criteria”.  Where the court is satisfied of the statutory criteria, it is not bound to make an order.  It has a discretion in the matter.  Section 14(1) provides that the court may make an order. 

22.  The subject is bound to comply with its terms within the time specified therein or such further time as the Commissioner may authorize.  If he, without reasonable excuse, neglects or fails to comply with a notice, he is guilty of a criminal offence.  Section 14(4).  It is also a criminal offence for a person to wilfully make any false statement in answer to a notice.  Section 14(5).  Both offences are punishable by a fine of $20,000 and imprisonment for one year.

Order 119

23.  Order 119 of the Rules applies to applications to the CFI under Part III of the POBO, including applications for orders under s. 14(1).  The procedure for such an application is laid down.  It shall be made by ex parte notice of motion in Form 109 supported by affidavit (r 4).  Form 109 is in the usual form of a motion and refers to the court being moved at a specified time or as so soon thereafter as the applicant can be heard.  Rule 3 provides that an application “shall be heard by a judge in chambers”.  As has been noted, rule 5 provides for the confidentiality of the documents relating to any application.

The judge’s role

24.  The role of the judge is a fundamental feature of the statutory scheme.  Under it, the judge acts as the safeguard in the process.    The judge of course is not the investigator.  The ICAC as the investigator has the important responsibility of presenting the application fully and fairly to the court.  But the judge has the duty of considering the application and deciding whether the special investigatory tool in s. 14(1) should be made available to the ICAC in the case in question.  It is an important duty which judges of the CFI should discharge with great care so as to ensure that the judicial safeguard provided for in the scheme is a meaningful and effective one.

25.  As noted above, in an application for an order authorizing a notice under s. 14(1)(d) with which the present case is concerned, the three statutory criteria are applicable.  It is important to emphasise that it is the judge who must be satisfied of each criterion.  The assertion by the investigating officer that they are satisfied is insufficient.  The judge must himself be satisfied on the materials that they are met and that he should exercise his discretion in favour of granting the order. 

26.  Under the scheme, the judge is functioning at the investigatory stage of suspected crimes under the POBO.  That being so, the test under the statutory criteria is “reasonable grounds for suspecting”.  This relatively low threshold is appropriate for the investigating stage.  Suspicion is a state of conjecture or surmise where proof is lacking and is a far cry from prima facie proof.  See Hussien v Chong Fook Kam [1970] AC 942 at 948B (Lord Devlin) and Holgate-Mohammed v Duke [1984] 1 AC 437 at 443 E-H (Lord Diplock).

27.  The court has to be satisfied that there are reasonable grounds for suspecting that (1) an offence has been committed; (2) the information to be sought from the subject is likely to be relevant to the investigation or the proceedings, not that the information is or will be so relevant; and (3) The subject has or may reasonably have access to the information.   (See para 21).

Discretion

28.  As has been noted, even where the three statutory criteria have been satisfied, it does not follow that the court must make the order authorizing a s. 14(1)(d) notice.  The statute uses the word “may” and the court plainly has a discretion in the matter.

29.  Plainly, the statutory intent is that the integrity and effectiveness of the investigation, which is sought to be advanced by the use of the special investigative power in s. 14(1)(d) as authorized by a court order, should not be compromised.  Consistent with this intent, the scope of the court’s discretion is circumscribed.  Where the statutory criteria are satisfied, the test for the exercise of the discretion nevertheless to refuse an order is whether compliance with the s. 14(1)(d) notice would be oppressive to the subject.  That the proper test is one of oppression is not disputed by Mr McCoy SC for the appellant.  See Chan Cheung Yuk-lin v Harknett [1978] HKLR 123 at 126 where this test was used.

30.  This is a high test.  The statutory scheme contemplates that non-suspects may be compelled to supply information to the ICAC to assist in its investigation of suspected POBO offences.  Such assistance is necessary for society’s fight against corruption.  In order to comply with a s. 14(1)(d) notice, the subject may have to spend a tremendous amount of time and incur considerable effort and expense.  A heavy burden may be imposed on the subject.  But these matters would be insufficient to satisfy the high test.  What has to be established is that, having regard to what is involved for the subject, taking into account his circumstances, it would be oppressive for him to comply with the notice.  The circumstances in which this high test would be satisfied would be exceptional.

The order

31.  Where the court decides to make the order sought authorizing a notice under s. 14(1)(d), the order should recite that the court is satisfied in relation to the three statutory criteria.  The order cannot be a general one, simply authorizing the Commissioner to issue a notice under s. 14(1)(d) to the subject.  Such an order would give carte blanche to the Commissioner to decide the width of the notice.  The statutory scheme does not enable the court to grant an authorization in such general terms.  Functioning as a safeguard, the court has to decide whether to make an order authorizing the Commissioner to issue a notice to compel a non-suspect to supply the information sought.  The order must define the scope of the authorization granted.

32.  The most appropriate way of doing so is to annex the draft notice to the order.  As a matter of practice, the draft notice should be placed before the judge for his consideration and the draft notice in the terms accepted by the judge should be annexed to the order.  Mr Zervos SC for the Commissioner fairly agrees that this would not give rise to any practical difficulty.  If this were not done, the terms of the order itself would have to define the ambit of the authorization by stating the substance of what would be contained in the notice to be served.  Annexing the draft notice to the order would also have the benefit of ensuring that the notice served does not go beyond what was authorized by the order. 

33.  The statutory scheme contemplates that the time limit for compliance will be specified in the notice.  Section 14(4).  The draft notice placed before the judge should propose the time limit and the judge may change it as he thinks fit.  In granting the order annexing the draft notice specifying the time limit, the court is limiting the scope of the authorization to serving that notice setting out that time limit for compliance.  The time limit would in effect be part of the authorization order.

34.  Section 14(1)(d) contains the three limbs previously mentioned requiring the subject to: (1) furnish information; or (2) as the Commissioner sees fit, to appear before the specified person to answer questions orally on oath or affirmation; and (3) on demand by the specified person, to produce documents.  In principle, where the court considers it proper, it may make an order authorizing a s. 14(1)(d) notice which incorporates all three limbs. 

35.  X v Commissioner of the ICAC [2004] 1 HKC 228, (17 December 2003, Lugar-Mawson J) dealt with an order authorizing notices to a suspect under ss 14(1)(a) and (b), the statutory criteria for which are not identical to those applicable to a non-suspect.  The judgment expresses the view that the court should only address the statutory criteria (which carries the implication that there is no discretion in the matter) and also the view that it should not be concerned with the contents of the draft notice (at between 236F-237F).  Although the case was concerned with an order relating to a suspect, those views are inconsistent with the conclusions above and should not be followed.

The jurisdiction question

Judicial review not available

36.  As stated above, as a matter of practice, the order should annex the draft notice and thus properly define the scope of the authorization.  A challenge to the order would at the same time involve a challenge to the notice.  Even if the order defines the scope of the authorization by setting out the substance of the notice (as opposed to annexing it), the position would be similar.  The scenario of a challenge to the notice by judicial review whilst the order is not questioned and is accepted as valid is unlikely to arise and it is unnecessary to address it.

37.  As is common ground, judicial review by the CFI is not available as a remedy to challenge an ex parte order authorizing a notice under s. 14(1)(d) which is made by the CFI itself.  The CFI is a superior court, being part of the High Court which is court of unlimited civil and criminal jurisdiction.  Section 3(2) of the High Court Ordinance, Cap 4.  Its supervisory jurisdiction by way of judicial review is over lower courts and bodies of various kinds and cannot be invoked to challenge an order of the CFI itself.   In re Racal Communications Ltd [1981] AC 374 at 384 F-G, 392 G-H and ss 21I and 21K of the High Court Ordinance.

Rules of the High Court

38.  The Rules are made by the Rules Committee to regulate and prescribe the procedure and the practice to be followed in the High Court. Section 54(1) of the High Court Ordinance.  Order 1 r 2(1) of the Rules provides:

“Subject to the following provisions of this rule, these rules shall have effect in relation to all proceedings in the High Court.”

Order 1 r 2(3) provides:

“These rules shall not have effect in relation to any criminal proceedings other than any criminal proceedings to which … Order 119 applies.”

As has been noted, Order 119 applies to an application to the CFI under Part III of the POBO which includes an application for an order under s. 14(1).

39.  By virtue of Order 1 r 2(1) and r 2(3), the Rules shall have effect in relation to applications under Part III of POBO, notwithstanding that they relate to investigations into criminal offences under the POBO and are regarded by the Rules as criminal proceedings.  The intent is that a particular rule should apply to such an application if and in so far as the rule in question is appropriate for use in the application.  For example, many rules of the High Court only apply to actions begun by writ.  These rules clearly are irrelevant to applications under Part III of the POBO.

40.  Order 32 r 6 provides:

“The Court may set aside an order made ex parte.”

The question in the present case is whether this rule applies so that the court has the jurisdiction on the application of the subject to vary or discharge an ex parte order made authorizing a s. 14(1)(d) notice.  Although such an ex parte order does not involve any lis between parties, there is nothing to indicate that the rule is inappropriate for application in this context.    Order 32 r 6 applies to such an order and the CFI has the power to set aside the order or to vary it.  An application under this rule should normally be dealt with by the judge who had granted the ex parte order.  The Judge was correct in concluding that Order 32 r 6 applies.  She followed a similar conclusion reached in X v Commissioner of the ICAC  HCCM 49/2003 (unreported 20 October 2003, Lugar-Mawson J), which dealt with the jurisdiction question before the reported decision on the merits referred to above.    As the CFI has the jurisdiction under this rule, it is unnecessary to consider whether the court also has an inherent jurisdiction to discharge or vary such an ex parte order.

41.  In Jones v Vans Colina [1996] 1 WLR 1580, the question was whether, where a vexatious litigant has been given leave ex parte under the relevant statutory provision to institute legal proceedings, the defendant can apply to the court to set the ex parte order aside.  The English Court of Appeal held that he cannot do so.  It was held (at 1584H-1585A, 1586A-C) that Order 32 r 6 is not applicable.  It only applies to an order made in proceedings in which the person seeking to have it set aside is either a party or is entitled to be made one.  And the defendant is not entitled to be made a party in the vexatious litigant’s applications for leave.  This decision is consistent with the conclusion reached above that Order 32 r 6 applies in the present case.  The non-suspect is entitled to be made a party for the purpose of challenging the ex parte Order under that provision.

42.  Sing Tao was concerned with a different statutory scheme relating to the search and seizure of journalistic material contained in Part XII of the Interpretation and General Clauses Ordinance, Cap 1 (“the IGCO”).  That scheme contains an express provision (s. 87) enabling the person affected to apply to the CFI for discharge of an ex parte order it had made.  The Court of Appeal (Ma CJHC, Stuart-Moore VP and Stock JA) held (at p 53B) that the CFI’s jurisdiction to revisit the ex parte order made under that scheme rested on that express provision and not on Order 32 r 6.   But in the course of its judgment, the Court of Appeal appeared to express the general view (at p 49F-J) that, in the absence of an express provision such as that contained in s. 87 of the IGCO, the CFI would normally have no jurisdiction under Order 32 r 6 or otherwise to set aside or vary an ex parte order made by it authorizing the obtaining of materials in the investigatory process under any statutory scheme.  This view should be regarded as confined to the scheme under the IGCO and not having any general application.  Whether the CFI has the jurisdiction under Order 32 r 6 or otherwise to discharge or vary an ex parte order it had made in the context of an investigatory process depends on an examination of the statutory scheme concerned and the relevant rules of court.

Grounds which may be entertained

43.  Having concluded that the CFI has the jurisdiction to discharge or vary an ex parte order authorizing a s. 14(1)(d) notice under Order 32 r 6, the question arises as to the grounds which may be entertained by the court in exercising this power.

44.  The court may discharge such an ex parte order on the ground that, having regard to the proper interpretation of the provision, the order is invalid as it goes beyond what is contemplated by the statute.  Further, the court may discharge it on the ground that it was obtained by the ICAC by fraud.  This would involve establishing bad faith on the part of the ICAC and the cases in which this could properly be alleged would be rare.

45.  As has been pointed out, the clear statutory intent is that the integrity and effectiveness of the investigation, which is sought to be advanced by the use of the special investigative power in s. 14(1)(d) as judicially authorized, should not be compromised.  That being so, under the scheme, the court cannot entertain an application by the subject to discharge or vary it on the ground that the first two statutory criteria are not satisfied.  This is fairly accepted by Mr McCoy SC for the appellant.

46.  The rationale for this is clear.  These two criteria relate to the substance of the investigation.  The court has to be satisfied that there are reasonable grounds for suspecting that: (1) an offence under the POBO has been committed; (2) the information to be sought from the subject is likely to be relevant to the investigation or proceedings.  If it were open to the subject to apply on the ground that the court should not be satisfied that there are reasonable grounds for suspecting (1) and/or (2), there would be a serious risk of jeopardising the investigation.  The investigation would be dragged down by a contest at the investigatory stage as to whether the relatively low threshold of the first two criteria have been met.  This could not have been the legislative intent.  

47.  Different considerations however apply to the third statutory criterion.  Under this criterion, the CFI must be satisfied that there are reasonable grounds for suspecting that the subject has or may have access to the information.  If the CFI were to entertain an application by the subject to discharge or vary the order on the ground that this criterion is not satisfied, this would not give rise to the same degree of risk of compromising the investigation.  The intent of the scheme is not to preclude an application on this ground.

48.  But it is important for the court to deal with any application on this ground in a way which does not affect the integrity and effectiveness of the investigation, bearing in mind that undue delay in investigation may well affect its effectiveness.  The court should not conduct a trial with cross-examination and should decide the matter on the basis of the affidavit evidence, including that adduced by the subject.

49.  If the court is persuaded that the subject does not have access to the information sought, then the court’s view formed when making the ex parte order, that there were reasonable grounds to suspect that he has or may have access to the information, would be displaced.  The third criterion would then no longer be satisfied and the order should be discharged.  Where only part of the information sought is in issue, for example, documents over part of the period sought, the court may make an appropriate variation to the order.

50.  But if at the end of the day, the court is not so persuaded or is left in doubt, then the third criterion would continue to be satisfied and the application should be dismissed.  The court would conclude, that notwithstanding the materials adduced by the applicant, there continue to be reasonable grounds to suspect that the subject has or may have access to the information.  If the subject fails to comply and if a prosecution is brought, the criminal court would have to address the issue of reasonable excuse.

51.  The subject may adduce materials to seek to persuade the court that although the three statutory criteria are established, the court should as a matter of discretion discharge the ex parte order.  As discussed above, the test in this context is whether compliance with the notice would be oppressive for the subject.  As noted above, the circumstances in which it would be satisfied would be exceptional.  (See para 30).

52.  As noted above (see para 33), the time limit in the notice would in effect be part of the authorization order.  The Commissioner may extend the time limit.  Section 14(4).  Where the subject applies to the court to vary the order by extending the time limit in the notice annexed thereto, the court in exercising its discretion whether to do so has to apply the test of oppression; whether the time limit imposed is oppressive to the subject, taking into account all circumstances.

53.  As has been noted (see para 24), in applying for an ex parte order under s. 14(1)(d), the ICAC has the responsibility of putting the matter fully and fairly before the court.  But material non-disclosure in the sense in which it is used as a ground of discharge of interlocutory orders obtained ex parte in civil cases cannot be entertained as a ground for the discharge of an ex parte order authorizing a s. 14(1)(d) notice as such a ground would be incompatible with the statutory scheme.  The intent of the scheme is that the integrity and effectiveness of the investigation should not be affected.  And the documents relating to the application are protected by the confidentiality provision in Order 119 and public interest immunity.  In these circumstances, in order not to jeopardize the investigation, questions as to what has or has not been disclosed at the ex parte stage and whether the matter allegedly not disclosed is material cannot be meaningfully tested and the ground of material non-disclosure cannot apply in this context.  This ground should not have been entertained by the Judge in the present case.  In any event, the ICAC maintained that its visit to the Mainland subsidiary in Zhongshan on 21 June 2005 was not material and did not have to be disclosed as the records obtained did not relate to the sums they were investigating.

The validity question

54.  Mr McCoy SC relies on two grounds in support of the contention that the ex parte Order was invalid.  First, he submits that an oral hearing is required by the rules of court and its absence in the present case invalidated the Order.  Secondly, he points out that the Order is in general terms and argues that the statute does not enable the court to make an order in such general terms.

55.  Order 119 provides that an application should be made by ex parte notice of motion in Form 109 which refers to the court being moved at a specified time and that it shall be heard by a judge in chambers (rules 3 and 4).  But the phrase “shall be heard” does not necessarily involve an oral hearing.  In Chow Shun Yung v Wei Pih (2003) 6 HKCFAR 299 at 310A-D, the Appeal Committee was concerned with s. 18(2) of the Hong Kong Court of Final Appeal Ordinance, Cap 484 which provides that the powers of the Court to “hear and determine” applications for leave to appeal shall be exercised by the Appeal Committee.  It held (at 310A-D) that the term “hear and determine” in that provision does not necessarily involve an oral hearing and does not preclude it from dealing with applications, which have no reasonable grounds of success or are frivolous or fail to comply with the rules, on the papers without an oral hearing.  Whether a phrase such as “hear” or “hearing” in a particular statutory provision requires an oral hearing to be held depends on its context.  In the context of Order 119, one is concerned with the judicial safeguard.  In operating it,  the judge may deal with the application on the papers and may of course call for an oral hearing, if he considers it necessary or desirable.  There is no reason why its effective operation requires an oral hearing in every case.  So, the absence of an oral hearing is consistent with Order 119 and does not invalidate the ex parte order.  It should be noted that in any event, any non-compliance with rules of court shall be treated as an irregularity, for which an application may be made to set aside the relevant order, and does not nullify the proceedings.  Order 2.

56.  As to the second ground relied on, in the discussion above on the proper operation of the statutory scheme, it has been concluded that it does not enable the court to grant an authorization in general terms and that the order must define the scope of the authorization.  It is unnecessary to repeat the discussion and to restate the conclusions reached (see paras  31 to 35).

57.  The ex parte Order was in general terms simply authorizating the Commissioner to issue a notice under s. 14(1)(d) to the appellant.  It does not define at all the scope of the authorization.  It is likely that the scope of the authorization sought was set out in Au’s supporting affirmation and it may well be that the Judge had this in mind when making the ex parte Order.  But this does not provide an answer.  The terms of the Order are what matter.  As it was in general terms, it was invalid. 

58.  Subsequent to the hearing, Mr Zervos SC for the Commissioner applied for leave to advance the further argument that even if the Order were invalid on the ground that the authorization granted was in general terms, the defect was cured by the Judge at the inter partes stage in September 2006, when the Notice was before her.  This application was opposed by the appellant.  It is unnecessary to call for further submissions since this further argument must be rejected.  First, the Judge did not purport to vary the ex parte Order by annexing the Notice to it or incorporating its terms.  Nor did she purport to set aside the ex parte Order and replace it with a fresh authorization order to achieve the same result.   So the ex parte Order continued to stand.

59.  Secondly, even if the Judge had purported to vary the ex parte Order or to make a fresh authorization Order in this way, this could only take effect on 28 September 2006 when she gave judgment.  And a fresh notice would then have to be served pursuant thereto.  The variation or fresh order could not have retrospective effect back to 8 May 2006 when the ex parte Order was made and treated as authorizing the Notice dated 15 May 2006 and its service on 17 May 2006.  In mid-June 2006, the time for compliance with the Notice had expired and the appellant had failed to comply.  As from that time, she could be charged with the criminal offence for non-compliance and the question of reasonable excuse would be in issue.  It would not be right if subsequently, the ex parte Order could be varied or replaced with retrospective effect to authorize the Notice already served since this may adversely affect the appellant’s position in any criminal proceedings.

60.  The decision in R v Crown Court at Lewes ex parte Hill (1991) 93 Cr App R 60 at 69-70 relied on by Mr Zervos SC is of no assistance in this context.  Judicial review was sought of orders the police had obtained from a judge in the Crown Court under the relevant statutory scheme for production by banks of materials concerning certain accounts.  There was no question of the orders being defective having regard to their terms.  It was held that there were insufficient materials before the judge at the ex parte stage to justify the making of the orders but that this was cured at the inter partes stage.  Further, there was no question of any potential criminal liability arising for not complying with the orders.

61.  Accordingly, the ex parte Order, the Notice and its service on the appellant should be set aside.  But the ICAC is not precluded from seeking a fresh authorization order, if it thinks fit.

62.  Two further matters on the Order should be noted.  First, its recitals only recorded the court’s satisfaction with the first of the three statutory criteria.  This was rightly not pursued as a ground to support the contention of invalidity.  It does not follow from the failure to recite that the Judge was in fact not satisfied with the other two statutory criteria.  It is plain from her judgment on the application to set aside the ex parte Order that she was so satisfied at the ex parte stage.  However, as a matter of best practice, the order should recite satisfaction as to all three statutory criteria.

63.  Secondly, after considering the materials adduced by the appellant, the Judge was entitled to conclude that the third statutory criterion continued to be satisfied. The documents required by the Notice were in Zhongshan.  In not complying, the appellant relied on the fact that the Mainland subsidiary had rejected her request for the documents on the ground that providing them to her “to carry” to Hong Kong would contravene Mainland laws.  It is not clear whether the contravention alleged by the appellant relates to the originals or also to copies.  The alleged contravention was disputed by the ICAC.  In these circumstances, adopting the approach discussed above (paras 47 to 50), the Judge was entitled to come to the view that there continued to be reasonable grounds for suspecting that the appellant has or may reasonably have access to the documents in question.

The scope of the power question

64.  Whether the court’s power under s. 14(1) to make an order authorizing the Commissioner to require a non-suspect to produce documents under s. 14(1)(d) extends to documents outside Hong Kong depends on the proper interpretation of s. 14(1)(d).

65.  The appellant’s written case relied on the presumption that in the absence of clear and specific words to the contrary, an offence-creating provision is not intended to make conduct taking place outside Hong Kong an offence triable in Hong Kong.  See Air-India v Wiggins [1980] 1 WLR 815 at 819A-C (Lord Diplock).   It is fair to say that in oral argument, Mr  McCoy SC did not seriously pursue the argument that this presumption is applicable.

66.  As Mr Zervos SC submits, this presumption is plainly not engaged in this context.  In relation to a s. 14(1)(d) notice, the offence- creating provision (s. 14(4)) is directed towards a subject served in Hong Kong with the notice and penalises his conduct in Hong Kong in neglecting or failing to comply with it without reasonable cause.

67.  On its proper interpretation, s. 14(1)(d) plainly extends to documents outside Hong Kong.  The purpose of the provision is to confer special powers of investigation on the ICAC exercisable with judicial authorization.  The interpretation that s. 14(1)(d) covers documents outside Hong Kong is consistent with this purpose.

68.  Accordingly, the answer to the scope of the power question, which is a certified question, is in the affirmative.

The discretion question

69.  The answer to the discretion question, which is a further certified question, is also in the affirmative.  The fact that the documents required by a s. 14(1)(d) notice is outside the jurisdiction is relevant to the exercise of the court’s discretion whether or not to make an order authorizing the Commissioner to serve such a notice.  However, it must be emphasised that, as has been concluded, the test for the exercise of the discretion is oppression which is a high test (see para 30). 

70.  The court must examine all relevant circumstances.  The scenario involving only a few documents located at one place in close proximity outside Hong Kong would be quite different from the situation involving documents amounting to container loads in various locations at the furthest corners of the globe.

71.  In the present case, the Judge, following the view expressed in X v Commissioner of the ICAC, adopted the approach that the court needed only to address the statutory criteria and did not address the question of discretion.  As stated above (para 35), this view should not be followed.  Had the Judge considered whether her discretion should be exercised, she should have concluded that the test of oppression is not satisfied in the present case.  Although the documents are located in Zhongshan, there is nothing oppressive involved in compelling the appellant to bring copies to Hong Kong.

Disposal

72.  Accordingly, the appeal should be allowed and the ex parte Order, the Notice and its service on the appellant should be set aside.  An order should be made that leave should not be granted under r 72(1)(c) of the Hong Kong Court of Final Appeal Rules, Cap 484 for inspection of the documents referred to therein without affording the appellant an opportunity to be heard.

Costs

73.  The appellant has succeeded on the ground that the order was invalid.  This ground was not raised at the leave stage and indeed was not argued before the Judge.  In these circumstances, an order nisi should be made that each party should bear his or her own costs in the appeal to this Court (including the leave application) and in the proceedings in the court below.  Any party wishing to contend for a different order should lodge written submissions within 21 days.

Mr Justice Bokhary PJ and Mr Justice Chan PJ:

74.  Corruption is indisputably a grave threat to the well-being of any society.  And experience teaches that the detection and proof of corruption present particular, if not unique, difficulties.  They call for special powers, which we prefer to think of as remedies in the armamentarium of the law rather than as weapons in its armoury.  These remedies can have side-effects.  They can impact strongly not only on the rights of suspects but also on the rights of non-suspects whose assistance the authorities desire and require.  It is necessary therefore that the law – and how the courts administer the law – maintain an appropriate balance between those individual rights and the public interest in the detection and proof of corruption.  Being called upon to assist in these matters under special investigative powers can be a heavy burden to non-suspects.  But provided that it stops short of being oppressive, such a burden is no more than the price that people can properly be called upon to pay for the benefit of living in a society that manages to keep corruption in check.

75.  In our view, the judgment of the Chief Justice, with which we agree, achieves an appropriate balance between those rights and that interest while arriving at the just and proper result in this appeal.

Mr Justice Ribeiro PJ:

76.  I agree with the judgment of the Chief Justice.

Lord Millett NPJ:

77.  I agree with the judgment of the Chief Justice.

Chief Justice Li:

78.  The Court unanimously allows the appeal and sets aside the ex parte Order, the Notice and its service on the appellant.  The Court makes the order concerning the inspection of documents under r 72(1)(c) of the Hong Kong Court of Final Appeal Rules set out in the penultimate paragraph of my judgment.  And the Court makes the costs order nisi and gives the direction set out in the concluding paragraph of my judgment.