TAM SZE LEUNG AND OTHERS v. COMMISSIONER OF POLICE

HCAL 191/2021

[2022] HKCFI 772

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST NO 191 OF 2021

________________________

________________________

______________________________

DECISION ON RELIEF
AND COSTS

_____________________________

A.  Introduction

1.  In this Decision, I shall continue to adopt the definitions and abbreviations used in my Judgment dated 30 December 2021, [2021] HKCFI 3118 (“Judgment”).

2.  The Judgment dealt with the Applicants’ public law challenge to the material LNCs and the Commissioner’s operation of the No Consent Regime.

3.  In the Judgment, I ruled that the No Consent Regime as operated by the Commissioner: (1) is ultra vires sections 25 and 25A of OSCO; (2) is not “prescribed by law”; and (3) disproportionately interferes with rights, and in particular the right to use of property under BL 6 and BL 105.

4.  As to what relief might be granted, I recognised that it would likely be non-prescriptive as to how the constitutional problems I have identified should be removed or resolved – where the subject-matter is one in which the relevant authorities should have a reasonable measure of discretion in terms of their precise policies and the administrative and operational arrangements for them. I also directed a further round of submissions to be exchanged between the parties and provided to the Court, once the parties had had the opportunity to consider the Judgment.

5.  I also reserved the question of costs – and any other consequential matters – to written submissions.

6.  Though I anticipated that there might be a further short oral hearing, by letter of 21 March 2022 the parties say they have agreed, as do I, that the matter can be dealt with on paper.

7.  This is, therefore, my Decision on Relief and Costs.

B.  Relief

8.  It turns out that there is relatively limited contest as to the appropriate relief to be granted.

9.  The Applicants propose that the Court should grant the following declaration (“Proposed Declaration”):

The LNCs were, and the No Consent Regime as operated by the Commissioner is:

(1)  ultra vires sections 25 and 25A of OSCO; and

(2)  incompatible with articles 6 and 105 of the Basic Law, because the No Consent Regime as operated by the Commissioner is not prescribed by law and is disproportionate.

10.  The Commissioner has no objections to the suggested declaratory relief in so far as the No Consent Regime as operated is concerned. However, the Commissioner objects to the granting of any declaratory relief for the LNCs (that is to the particular LNCs material to the argument in this case).

11.  There is also little between the parties as to the applicable principles. It is, of course, axiomatic that all relief in judicial review is discretionary. Further, in determining whether to grant relief, and if so what relief, the Court takes into account a wide range of factors including the need for good administration, delay, the effect on third parties, and the utility of granting the relevant remedy. In the current contest, the focus has been on that last point relating to utility – said by both sides to be the ‘touchstone’ consideration.

12.  Before turning to precisely what relief to grant, it may help to start from the settled propositions that (1) where a decision has been found to be flawed, it ordinarily follows that the proper exercise of discretion is to quash it; and (2) a wrong should not go without a remedy except in limited and exceptional circumstances.

13.  Further, it seems to me obvious that the appropriate relief to grant is that which properly reflects my findings that the No Consent Regime, as has been operated up to this point, is outside the scope of the provisions said to permit it, is not otherwise prescribed by law, and interferes with constitutional rights. The relief to be granted is intended to ensure that no further similar breaches occur.

14.  The original relief sought by the Applicants in the Form 86 was essentially an order quashing the LNCs and a declaration that the No Consent Regime is unconstitutional. In light of the evidence subsequently filed, and the change in the shape of the arguments (see the Judgment), the Applicants proposed to amend the Form 86 to substitute the relief sought (“Proposed Amendments”). Now, with the benefit of the Judgment and its reasoning, the Applicants put forward the Proposed Declaration as the appropriate relief.

15.  Mr Chan argues that the prejudicial effect of the LNCs should be undone in so far as possible. He says that (1) as a matter of practical reality, the issuing of the LNCs created the impression on the part of recipients that there were, as a matter of fact, grounds to freeze the Applicants’ money, and (2) the withdrawal of the LNCs and the making of the Restraint Order does not reverse that, not least where no detailed public reasons or clarifications have been provided to the banks to explain the shift.

16.  Mr Chan submits that the Proposed Declaration would have utility. First, the Restraint Orders now in force are time-limited, capable of being varied, set aside or challenged. Secondly, the prejudicial effect of the LNCs may continue to operate to the Applicants’ detriment as regards property they hold or acquire, present or future, beyond the scope of the Restraint Orders. Thirdly, a declaration that the LNCs were unlawful is appropriate to leave open the possibility of seeking compensation for unlawful freezing of assets.

17.  Mr Dong’s argument starts from the fact that the LNCs have been lifted or withdrawn, and the relevant banks were notified that was because of the issuing of the Restraint Orders. In essence, the Restraint Orders have superseded the LNCs. So, says Mr Dong, there is no longer any utility in granting any relief in relation to the LNCs. First, it is difficult to understand what “prejudice” the Applicants could suffer from an “impression” that there were grounds to issue the LNCs now that the Restraint Orders were obtained on the basis of police investigations on suspected money-laundering activities by the Applicants. No declaration based on the Judgment could dispel any “impression” that the Applicants are suspects of criminal investigations for money laundering. Secondly, what may happen to the Restraint Orders is irrelevant to the need for any declaration that the LNCs were ultra vires or otherwise unconstitutional, and vice versa. Thirdly, there is no prejudicial effect lingering from the LNCs now that the Restraint Orders have been granted. Fourthly, the declaration sought is immaterial to the question of compensation under section 29 of OSCO, but if there is any finding in the Judgment relevant to such a claim, then reliance can be placed upon it.

18.  I think there is considerable force in those points. In my Judgment, I recognised that the argument was to an extent academic vis-a-vis the LNCs themselves, though it appeared to me entirely proper to consider the opposing submissions as a matter of general principle on the lawfulness of the No Consent Regime. I also agree that there seems little point in declaring the LNCs unlawful for the purpose of removing any adverse “impression” of the Applicants, when they were removed upon the grant of the Restraint Orders. I am not even sure that there would be a significantly different “impression” between a person whose account has been made subject to an LNC and one whose account has been subject to a Restraint Order. I also agree that any finding in my Judgment relevant to any compensation claim in any forum can be deployed without there first being a declaration; the findings and conclusions are evident in the Judgment.

19.  But, ultimately I am persuaded to grant the declaration in the form sought by the Applicants. I have decided that the No Consent Regime as operated was unlawful for various reasons. Therefore, the LNCs were unlawfully issued. Even though they have been lifted, that was only because of the obtaining of the Restraint Orders – on a timetable which I accepted to be in effect unconnected to the legal challenge in these proceedings, and certainly not with the cynical aim of bringing that challenge to an early end. But for the availabilities of the Court and Counsel, I might well have been able to deal with the proceedings before any Restraint Orders were applied for or obtained.

20.  In other words, I think there is utility in the declaration simply to identify that the LNCs were unlawfully issued, outside the powers created by statute, not otherwise prescribed by law, and inappropriately interfering with constitutional rights. It seems to me to be appropriate to identify that LNCs issued in circumstances were, or are, or would be unlawfully issued. The other claimed matters relating to prejudice or impressions seem to me to be largely subjective, and of little weight to my consideration.

21.  Obviously, for the purposes of granting the declarations, I also permit the Proposed Amendments to the Form 86.

C.  Costs

22.  There is also limited contest on the question of costs.

23.  Mr Chan submits that costs should follow the event and be paid by the Commissioner to the Applicants, even though they did not succeed on all of their intended grounds of review. The fundamental issue in the case, which occupied the vast majority of time and costs, was the question of vires and the constitutionality of the No Consent Regime, under which the LNCs were issued.

24.  For costs to follow the event is not in dispute, and I agree they should. But, Mr Chan also submits that the case merits certification of three Counsel (after the Form 86 stage, as that form was settled by junior Counsel). Mr Chan says that a certificate for three Counsel is justified because: (1) as I said in the Judgment, the case raises issues of real public importance in respect of a frequently operated regime with potential application to any bank account held in Hong Kong by any person or corporation; (2) the issues were complex and difficult, including by reference to the close examination of the scope of the previous Interush decision, fully explaining why the authorities produced by both sides were justifiably voluminous; and (3) it would not be in the interests of parties or the judicial process if parties were to be deterred from instructing Counsel of sufficient number and experience in complex and important systemic constitutional cases, to ensure that all relevant matters are properly ventilated before the court.

25.  Mr Dong submits there is no justification for granting a certificate for three Counsel in the present case. He says such a certificate would require something exceptional, and that this case involved issues of considerable importance is clearly not sufficient. Indeed, he says that there was nothing exceptional involved in the present proceedings, and actually the legal and factual issues involved were not particularly complex.

26.  Those submissions are a little surprising, where the Commissioner himself thought it proper to instruct three Counsel, who produced extensive written submissions and made full oral submissions on his behalf, supported by reference to almost 60 authorities.

27.  Therefore, I agree with Mr Chan, that the complexity and importance of this case were, on any view, towards the high end of the scale. This was a systemic constitutional challenge to a frequently operated regime through which significant amounts of funds have been frozen. Further, I would specifically acknowledge that I was significantly assisted in my consideration of this case by the deployment of three Counsel on both sides.

28.  This is a case which, in the exercise of my discretion, I consider one of those rare cases fully justifying a certificate for three Counsel.

D.  Summary of Relief and Costs

29.  I grant leave to amend the Form 86 in accordance with the Proposed Amendments.

30.  I grant declaratory relief in accordance with the Proposed Declaration, namely in the following terms:

The LNCs were, and the No Consent Regime as operated by the Commissioner is:

(1)  ultra vires sections 25 and 25A of OSCO; and

(2)  incompatible with articles 6 and 105 of the Basic Law, because the No Consent Regime as operated by the Commissioner is not prescribed by law and is disproportionate.

31.  I order the Applicants’ costs of the proceedings to be paid by the Commissioner, to be taxed if not agreed, with certificate for three Counsel.

32.  As I have found in favour of the Applicants on the arguments relating to relief and costs, I also would include the costs of that argument in the above order, save that those costs will only attract a certificate for two Counsel.