RE ANSON GARMENT LTD AND OTHERS

HCAL 187/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST
NO. 187 OF 2002

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J U D G M E N T

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Introduction

1. This judgment is related to two applications for judicial review, namely, HCAL No. 187 of 2002 and HCAL No. 11 of 2003; leave to so apply were respectively given on 5 December 2002 and 30 January 2003. The complaints in both applications are in essence the same and accordingly, unless otherwise expressly stated below, they will be considered and determined together. Further, for convenience, whenever it is necessary to do so, HCAL No. 187 of 2002 will be referred to as HCAL 187 and HCAL No. 11 of 2003 as HCAL 11.

Parties to the Applications

2. There are 30 applicants named in the title of action to HCAL 187. However, at the beginning of the hearing, counsel for the applicants therein informed that only 25 out of those applicants had a live interest in the outcome of the applications.

3. The respondents' names originally appeared in the title to the application in the Form 86A of HCAL 187. Their names were crossed out in the Amended Form 86A. In HCAL 11, the respondents' names have not been spelt out in the title to the application. However, no issue arises out of these matters.

4. The 1st respondent (the Commissioner of Customs & Excise) is empowered by the provisions of the Mutual Legal Assistance in Criminal Matters Ordinance (Cap. 525) inter alia to keep "things" seized by an authorised officer pursuant to s. 12(8), Cap. 525. The 2nd respondent is a senior investigator of the Customs and Excise Department ("C & E") and the authorised officer appointed under s. 12.

5. The applicants in HCAL 187 and those in HCAL 11 are represented by different legal teams. However, counsel for the applicants in HCAL 187 clarified during the hearing that the applicants' interest is common and different counsel were engaged because it was intended Mr Egan of counsel was to take charge of the cross-examination of the respondents' deponent(s) if the applicants' summons for leave to cross-examine was granted.

Leave to Amend and Re-Amend the Form 86A

6. Leave to amend the Form 86A was given by Hartmann J on 5 December 2002. Four decisions were challenged in the Amended Form 86A:-

7. At the beginning of the hearing, counsel indicated the challenge regarding the photocopying charges had been agreed between the parties and so needs not be dealt with by court.

8. The grounds set out in the Amended Form 86A in support of the applications are summarised in the applicants' skeleton submissions in HCAL 187. They are:-

9. At the start of the hearing on 10 February 2003, counsel for the applicants asked for leave to re-amend the Amended Form 86A so as to raise another challenge relating to the validity of the US requests. It is also contended the US requests fall outside Mutual Legal Assistance in Criminal Matters (United States of America) Order ("the US Order") because they relate to foreign revenue matters. The respondents disagree with the applicants' contention but do not object to leave being given. The new ground now appears as para. 35A to 35D (and para. 8B of the Relief Sought) of the Re-Amended Form 86A.

Background

10. In October 2002 the US sought the assistance of Hong Kong under Parts III ("Assistance in Relation to Search and Seizure") and VI ("Assistance in Relation to Confiscation, Etc. of Proceeds of Crime"), Cap 525.

11. In relation to the request for Hong Kong's assistance under Part III, Cap. 525, the allegations made by the US are as follows. During the period from June 2000 to May 2002, by using a web of companies incorporated both in Hong Kong and overseas (including the US and elsewhere), individuals residing in Hong Kong and elsewhere (including the US (and possibly the Mainland)) perpetrated a textile smuggling fraud. The fraud involved the import of wearing apparels into the US based on false declarations that the goods were for re-export to Mexico when in fact they were for sale in the US. The smugglers thereby avoided payment of customs duties and by-passed quota controls. The respondents' affirmations also described the fraud as a conspiracy as well as the commission of offences against the US laws.

12. The Hong Kong companies (including the applicants) were alleged to have common places of operation (which later became the subject-matters of the search warrants).

Search and Seizure by the Respondents

13. On about 31 October 2002, a group of officers from the C & E, headed by the 2nd respondent, attended two of the premises to carry out a search respectively under two search warrants issued pursuant to the US request. Carton boxes of documents and things were seized as a result.

14. Solicitors attended the two above premises on instruction in the morning of 31 October 2002. It appears they were acting for all of the companies which were occupying the searched premises. Because of the protest of the solicitors and after discussion, C & E officers did not seize documents found in one of the rooms on the 12th floor of the building when it was pointed out none of them were covered by the search warrant.

15. On 5 November 2002, a group of officers from the C & E, again headed by the 2nd respondent, attended one of the two above premises to carry out a search under a search warrant. Similar to the earlier occasion, documents and things were seized.

16. According to the 2nd respondent's affirmations, many items were seized by him in the reasonable belief that they are relevant to the textile smuggling fraud under investigation in the US. After the items were seized, they were delivered into the custody of the 1st respondent, pending a direction from the Secretary for Justice. The 2nd respondent also disclosed that customs officers had reviewed the things seized together with offices of the US Customs Service:-

It was also disclosed that because of information made known during the said review, the US made a further request for Hong Kong's assistance by way of applying for restraint orders in Hong Kong.

17. In an affidavit of the applicants' solicitors in HCAL 187, the deponent stated that, on 7 November 2002, the applicants requested to inspect the seized items but he was told that C & E officers were still examining the items, the items could not be inspected by the applicants. Inspection by the applicants, however, was allowed on 8 November 2002 and continue until 10 November when it was stopped by the C & E. The applicants were later allowed to inspect the documents again.

18. It is common ground a large number of documents have been seized by the C & E as a result of the above search. Most of them were seized in the form of bundles or files of documents. The parties have at different stages prepared "inventory lists" of the seized items (which have been exhibited to their respective affirmations). There is no need to go into the details of the lists suffice it to say the respondents' lists treat a file or a bundle as an item whereas the applicants' lists describe the seized documents individually. The difference in approach very probably results from the parties' respective stance regarding how the authorised officer's search and seizure powers under s. 12(6) ought to be exercised.

19. The 2nd respondent, in his capacity as the authorised officer, stated in his affirmations that he briefed the team of C & E officers before the searches. Further, although the searches were carried out by him together with other C & E officers, he supervised the entire process at the scene. From time to time, C & E officers would discuss the search with the 2nd respondent. An arrangement was agreed between the parties as to the "seizure" of data in the computers. Computer data have not been treated separately in these applications and I will not go into details regarding them.

20. The 2nd respondent's account of the search process is substantially undisputed but in an affidavit of the applicants' solicitor, it was stated the 2nd respondent

The relevance of this observation will be dealt with later under the sub-headings "(b) Nature of the Search and Seizure Powers under S. 12(6)" and "(c) Legality of the Search and Seizure".

Summary of Cap. 525, Especially Part III Thereof

21. It is undisputed that the powers exercised (search and seizure; directing the disposal of the seized items), or to be exercised (sending documents overseas), by the respondents are founded on the provisions of Cap. 525, especially Part III thereof ("Assistance in Relation to Search and Seizure") which contains ss. 11 and 12.

22. References have also been made in the course of the hearing to ss. 2 ("Interpretation"), 4 ("Chief Executive in Council may apply Ordinance"), 5 ("Refusal of assistance"), 6 ("Assistance may be provided subject to conditions") and 15 ("Requests to Hong Kong for production, etc. of material"). The US Order has also been referred to.

23. An overview of some of the provisions in Part III, Cap. 525 will help one to understand the nature of the issues raised in these applications. It is as follows.

24. A request to Hong Kong for legal assistance in criminal matters by way of search and seizure should be made to the Secretary for Justice, who may nominate in writing an authorised officer: ss. 8(1) and 12(1). The request shall be accompanied by the matters set out in s. 8(2)(a) to (2)(i) including:-

The words "external offence" have been defined in s. 2 to mean:-

A "criminal matter" is defined by s. 2:-

And, again by s. 2, "ancillary criminal matter" means:-

The phrase "external confiscation order" has also been defined and will be referred to under the next heading.

25. The authorised officer's power is first to apply to a magistrate for a search warrant: s. 12(1). Hence, where the authorised officer has reason to believe one or more of the matters set out in s. 12(2)(a) to (2)(e) is/are present,

Upon such application being made, and subject to s. 12(4), the magistrate shall issue a warrant: s. 12(3). The warrant authorises the authorised officer,

to do the acts referred to in s. 12(3)(a) to (3)(d). The warrant issued shall state the matters set out in s. 12(5)(a) to (5)(d) which include:-

Presumably, and this is not disputed, the warrant should be shown to the individual(s) affected by it. Whether it should be done voluntarily by the authorised officer, or only if so requested by those affected, is immaterial for present purposes.

26. The authorised officer's power also includes the search and seizure of things relevant to a criminal matter in a place outside Hong Kong. His power of seizure is not limited by the warrant because s. 12(6) provides:-

27. Besides empowering the authorised officer to seize things "wholly or partly" which he believes on reasonable grounds to be relevant to the criminal matter in the place outside Hong Kong concerned, s. 12(7) also empowers him to deliver the things seized into the custody and control of the Commissioner [of Customs and Excise] (that is, the 1st respondent).

28. Where things are delivered into the custody and control of the 1st respondent, he shall:-

The restrictions on the Secretary for Justice's power to direct the original of a thing to be sent outside Hong Kong are set out in s. 12(11). She shall not give such a direction unless:-

29. Lastly, because it has been argued by the applicants that the assistance sought by the US relates to Hong Kong's assistance for the enforcement of US revenue laws, s. 12(13) may also be relevant:-

Was the Assistance by Hong Kong Ultra Vires Cap. 525?

30. As stated above, this argument was first raised by the applicants on 10 February 2003. It is along these lines. Although the requests from the US authorities have not been disclosed (and are thus unknown) to the applicants, they know from the affirmations filed by the respondents that the requests are related to both a criminal matter and civil proceedings in the US.

31. In relation to the criminal matter, the offences in question are, according to the respondents' description, offences against the state. More specifically, the applicants say that section 542, United States Code is about depriving the US of lawful duties on the import of goods by false documentation whereas section 545, United States Code is about smuggling. Hence, the avoidance of lawful duties is implicit. Section 371, United States Code is about a conspiracy to defraud which could only be committed against the US. In the present context, it was about defrauding the US of lawful duties. In relation to the civil proceedings, forfeiture proceedings have been commenced seeking the forfeiture of properties (adopting the words used in the respondents' affirmations) "constituting, derived from, or used in connection with" the above offences.

32. The above summary (taken mainly from the respondents' affirmations) is confirmed by a certificate produced by the US. The certificate refers to in rem forfeiture proceedings and according to s. 30(1)(a), Cap. 525 is evidence (among other things) that proceedings have been instituted in the US seeking an external confiscation order (regarding which the US has requested Hong Kong to assist under s. 27).

33. The requests led to the application for, and the making of, restraint orders in Hong Kong (HCMP No. 4395 of 2002). The applicants contend further that the restraint orders are civil proceedings within the civil jurisdiction of the Hong Kong Court of First Instance: s. 12(2), High Court Ordinance (Cap. 4).

34. The general rule at common law is revenue laws of a foreign country are not enforced by the local courts: Government of India v. Taylor [1955] AC 491; Nanus Asia Co. Inc. v. Standard Chartered Bank [1988] HKC 377, 393H-397I.

35. Although the above rule can be relaxed by a treaty (Government of India, above, at p. 511), the applicants say that the terms of the agreement made between Hong Kong and the US do not provide for such relaxation. In fact, so they argue, its terms are against such assistance being rendered. This is because, although the assistance rendered by Hong Kong falls within Articles 1(2)(f) and (2)(g) of the US Order which state:-

those articles must be subject to Article 1(3):-

36. The request from the US, according to the applicants, was at least partly concerned with Hong Kong's assistance relating to the enforcement of the US revenue laws by way of civil proceedings in Hong Kong, namely, the request for assistance to enforce the external confiscation order. Such a request is seeking "assistance for non-criminal proceedings relating to [taxation, customs duties ... or other revenue matters]" and is outside the agreement made between the US and Hong Kong. Consequently, it is outside the "arrangements for mutual legal assistance" as that phrase has been defined by s. 2, Cap. 525.

37. Insofar as the court may have power to "sever" the "criminal part" of the request from its "non-criminal part", the applicants submit that the court should not do so because the Secretary for Justice has chosen not to do so earlier even though there is in effect power under s. 6 for her to "hive off" the offending part.

38. The respondents, on the other hand, disagree with the applicants' above approach and ask this court to note the overall scheme of Cap. 525, especially s. 2 ("Interpretation", in particular the meanings of "criminal matter" and "ancillary criminal matter") and s. 27 ("Requests to Hong Kong for enforcement of external confiscation order").

39. As stated above, s. 2 defines "criminal matter" as:-

The phrase "ancillary criminal matter" is in turn defined as:-

Finally, an "external confiscation order" is:-

An "external serious offence" is an external offence the maximum penalty of which is death, or not less than 24 months' imprisonment.

40. The relevant parts of s. 27(1)(b), Cap. 525 provide:-

41. The respondents argue that, in view of the above provisions, the US request falls squarely within Cap. 525 and the assistance rendered by Hong Kong is therefore not ultra vires.

42. Further, the respondents submit that the applicants' approach fails to recognise the common law distinction between a mere enforcement of foreign revenue laws (by way of recovery proceedings) as opposed to offering assistance in relation to criminal offences, even though such assistance may be in a revenue context: R v. Chief Metropolitan Stipendiary Magistrate, ex parte Secretary of State for Home Department [1988] 1 WLR 1204, 1215G, 1216B-E. According to the respondents, Article 1(3) of the agreement between the US and Hong Kong does no more than reflect the above common law distinction.

43. S. 4(1), Cap. 525 stipulates that:-

S. 4(3), Cap. 525 further stipulates:-

In relation to the US Order, the modifications are to be found in Schedule 2. Para. 2 thereof provides:-

Schedule 2 does not contain any modification relating to the enforcement by Hong Kong of external confiscation orders made in the US. Hence, as between Hong Kong and the US, the provisions relied upon by the respondents (set out above under this heading) have not been excluded.

44. In view of the above, the respondents argue that Article 1(3) was not intended to limit or vary the assistance which s. 27, Cap. 525 empowers Hong Kong to provide insofar as the assistance is related to civil forfeiture proceedings related to or arising out of criminal matters. Whether the assistance is rendered in a revenue context is irrelevant.

45. I agree with the respondents and disagree with the applicants. The applicants have adopted an unjustifiably narrow view when analysing the meaning of Article 1(3) of the US Order. Because no modification has been made to the provisions relating to Hong Kong's assistance regarding external confiscation orders in Cap. 525 (especially those quoted above), such a narrow view could not have been the intention of the contracting governments. This part of the applicants' arguments is thus rejected.

46. Even if the terms of the agreement between Hong Kong and the US should somehow have a narrower scope than the above-mentioned provisions of Cap. 525, I do not consider that the applicants have the locus standi to rely on them in these applications. At common law, international treaties between governments cannot be enforced, or relied upon, as conferring any legal rights in the municipal courts: Winfat Enterprise (HK) Co Ltd v. A-G of Hong Kong [1985] AC 733; Tang Ping Hoi v. A-G [1987] HKLR 324. This is especially true if private individuals seek to enforce or rely upon such treaties. Further, the terms of the agreement confirm the common law position. Thus, Article 1(4) of the US Order states:-

Was the Search and Seizure Valid?

(a) The Legal Principles

47. Before dealing with the issues raised under this heading in detail, I propose to set out two general principles relied upon by the applicants regarding searches and/or seizures by law enforcement agencies. First, such searches are an intrusion into the citizens' property rights and/or privacy rights. This is recognised by both the Basic Law and the courts. Articles 6, 29, 39, 41 and 105 of the Basic Law protect property rights, including rights over premises, and provide for freedom from arbitrary and unlawful searches. The courts have decided that there is power to supervise the issuance and execution of search warrants: Apple Daily Ltd. v. Commissioner of ICAC [2000] 1 HKC 295. The second principle is that powers of seizure given by statutes are to be construed strictly: R v. Chesterfield Justices, exp Bramley [2000] QB 576, 586B-587F; 588H-589C; 590B-591C.

48. The applicants also rely on exp Bramley for the proposition that, because seizure powers should be construed strictly, there is no "off-premises" sifting power: pp. 586B-587F; 588H-589C; 590B-591C. In other words, any decision to seize relevant documents has to be made at the time of the search. Further, a failure to comply with the relevant statutory requirements will render the whole entry and search process to be unlawful: p. 586G. They further contend that this principle has not been doubted in subsequent cases in the UK: R v. Rotheram Magistrates Court, exp Todd (QBD) CO/2091/1999; R (on the application of H) v. Commissioners of Inland Revenue (AC) [2002] 2 All ER (D) 330. Both contentions are disputed by the respondents.

49. The following are some of the passages in the judgment of exp Bramley relied upon by the applicants:-

50. In answer to the above passages in ex Bramley, counsel for the respondents referred to a number of authorities in Hong Kong, Australia and England which held (in relation to different statutes) that search powers can include a certain amount of subsequent sifting, either by the court construing the statute as permitting it, or by treating the things seized as one single item. The Hong Kong case referred to is Apple Daily Ltd v. Commissioner of the Independent Commission against Corruption [2000] 1 HKC 295, 319I-320D; 330A-331B; 333I-334B. The Australian cases are:-

The English cases are:-

51. Counsel for the respondents also argue that, contrary to the applicants' contention, exp Todd and R (on behalf of H) did not decide that exp Bramley should be followed invariably. He says the former case was a decision concerning the admissibility of evidence obtained from an unlawful seizure whereas the latter case was about the difference between the seizure of "paper documents" and the "seizure" of data in a computer. In fact, R (on behalf of H) decided that:-

The reason for the above decision was:-

(b) Nature of the Search and Seizure Powers under S. 12(6)

52. The applicants' case regarding the nature of the search and seizure power under s. 12(6) can be summarised as follows. Depending on the manner in which s. 12(6) is to be construed, an authorised officer's search power (in relation to documents) should be performed in one of the following ways:-

53. It is the intention of s. 12(6) (so the applicants submit) that the authorised officer must undertake a detailed examination of the "things" at the time of seizure before he can properly hold a "belief on reasonable grounds" that the "things" are within s. 12(6) and thus liable to be seized. If there was only a "cursory" inspection of the "things" at the time of search, and the detailed (or more detailed) examination was undertaken by the authorised officer only after the seizure, he would be acting beyond s. 12(6) and hence the search and seizure would be unlawful.

54. The applicants contend their case is supported by the following. First, the powers conferred by Cap. 525 do not attract what can be called considerations of public policy relevant to the Hong Kong criminal justice system. This is because the "criminal matters" in Cap. 525 are matters which (if proven) took place (or may still be taking place) overseas. Secondly, there is no statutory requirement for the "things" seized (whether pursuant to the terms of the search warrant or under s. 12(6)) to be taken before a court and so there is no independent check on those powers. Thirdly, the seizure power given by s. 12(6) is not subject to any inherent independent supervision and is exercisable only by the authorised officer. Finally, in cases of search and seizure in a purely local context (for example, where law enforcement agencies are exercising their domestic powers), the affected party can ask for relief from the Hong Kong courts. Conversely, the "things" seized under Cap. 525 may be sent abroad (possibly without an undertaking from the foreign government to return them).

55. Apart from the above, the applicants submit that the wording of s. 12, Cap. 525 (especially those of s. 12(3)) supports their case. In this connection, emphasis is placed on the part of s. 12(3) which states that the warrant empowers the authorised officer inter alia to search and seize "things":-

The applicants say that the "assistance" referred to in the provision includes assistance which may be given to the authorised officer by overseas law enforcement officers concerned with the investigation abroad. In particular, they may assist the examination of the "things" during the search. Because the overseas investigating officers should have intimate knowledge of their investigation, the "belief on reasonable grounds" on the authorised officer's part cannot be intended by s. 12 to cover a seizure of "things" which may or may not be relevant to the criminal matter in question, to be followed by a detailed (or more detailed) "sorting and sifting" exercise later. In relation to the present applications, the applicants ask the court to note that the US customs has an office in Hong Kong.

56. On the other hand, the respondents contend that the authorised officer's seizure power under s. 12(6) is much wider. Depending on the circumstances, the authorised officer's power can include seizing "things" when the word "things" includes files, or bundles, of documents without the need to "sort and sift". In the context of the present applications, the respondents argue that the authorised officer was entitled to seize "things" even though they may contain documents which, by themselves, may arguably be "irrelevant" to the US criminal matter(s).

57. The respondents' submission is, in relation to assistance to be provided by Hong Kong under Cap. 525, this is made available by a statute concerned with assistance for criminal matters which took place (or may still be taking place) overseas. As has been recognised in the UK, international co-operation in the discovery of crime and the apprehension of criminals is a well established fact and constantly in use: R v. Southwark Crown Court, exp Customs Commissioners [1990] 1 QB 650, 662E.

58. As stated earlier, the term "criminal matter" is not limited to criminal prosecution, but has a much wider meaning: s. 2, Cap. 525. In relation to the present applications, it includes "an investigation" as well as, in effect, "the ... enforcement ... of ... an external confiscation order". Further, s. 27(1)(b) empowers Hong Kong to act when requested to do so "... where an external confiscation order may be made in a proceeding which has been or is to be instituted [overseas]".

59. A criminal investigation is a fluid process because, although the law enforcement agency may have a general knowledge of the suspected crime(s) from information provided by, for example, the complainant they may not be aware of the full extent of the suspected crime(s) until investigation work has completed. Sometimes, even then the full extent of the suspected crime(s) may still be unknown. The purpose of seizing "thing" in connection with a criminal investigation is usually three-fold:-

Hence, things which are relevant to a criminal investigation are not restricted to mere evidence.

60. The legislature, in defining the term "criminal matter" (as opposed to "criminal investigation" or "criminal prosecution") as it is defined by s. 2, Cap. 525 must therefore have the three-fold purpose in mind. One also has to bear in mind that the "criminal matters" in Cap. 525 are not local, and yet the assistance to be provided by Hong Kong are to be undertaken by authorised officers whose law enforcement powers are normally domestic. This makes the assistance which they are empowered (and obliged) to provide an even more difficult task because they are usually not privy to the overseas investigation. Hence, the context of Cap. 525 indicates that wide statutory powers are needed in order to give effect to its provisions. The use of the word "things" rather than merely "documents" must also be intended to widen the statutory power.

61. Secondly, after "things" have been seized, s. 12(8) obliges the Commissioner to "keep" the "things":-

a written direction from the Secretary for Justice. Similarly, under s. 12(11)(a):-

to decide whether to give to the Secretary for Justice a written notice to require the original of the thing seized to be sent abroad :-

It must have been the legislative intention (and this is undisputed by the respondents) that the decision of both the Secretary for Justice and the appropriate overseas authority (provided for by s. 12(8) and 12(11)(a) respectively) should be based on reasonable grounds. The one-month period referred to in those provisions must have been intended to give them sufficient time to make such decision. In order to properly exercise that power, the seized "things" would have to be examined and considered by the Secretary for Justice and the appropriate overseas authority (as the case may be).

62. In relation to the examination of "things" for the purpose of deciding whether they are liable to be seized, the respondents contend that it cannot be the legislative intention that that can only be undertaken at the time of the search. If it were so, there would have been no need to provide for a one-month period for both the Secretary for Justice and the appropriate overseas authority. This is because, if the search had to be undertaken in the way contended for by the applicants, by the time it is completed, it should have been known which of the "things" are relevant and which are not. There would have been no need for the one-month period referred to in ss. 12(8) and 12(11)(a).

63. The reasonableness (or absurdity) in the result of a statutory construction is a ground for one construction to be adopted as opposed to another (or other) construction(s): Jade City International Ltd. v. Director of Lands [2002] 3 HKLRD 33, 43-44. The consequences set out below may flow from the construction of the provisions of Cap. 525 advocated for by the applicants.

64. First, if the applicants' argument was correct in that a detailed examination of the "things" at the time of search is intended by s. 12(6), depending on the complexity of the criminal matter under investigation and/or the quantity of "things" which require examination, the search process may take days, or even weeks. A search, quite apart from being an intrusion into a citizen's right of property in the "things" which may be liable to seizure and/or his privacy right, more often than not also involves an intrusion into his property right in relation to the premises searched. A lengthy search process can be even more intrusive than the result of the search; for example, in an extreme case, a search which lasts for days, or even weeks, may result in the seizure of only a few documents: see similar observations in Reynolds and Another v. Commissioner of Police of the Metropolis [1985] 1 QB 881, 889A-C. In HCAL 187, applicants' counsel informed the court it took the solicitors about 300 man-hours to complete a proper examination and categorisation of the seized items, even with the assistance of the "inventory lists" provided by the C & E.

65. Secondly, it is true that the applicants argue (among other things) that the seized documents cannot be examined by the overseas law enforcement officers involved in the investigation. However, (at least at one stage of the hearing) they accept that, in order to enable an appropriate decision to be made under ss. 12(8) and/or 12(11)(a), it is proper for the authorised officer to prepare what can be called an "inventory of the seized 'things'" and for that inventory to be shown to the Secretary for Justice and/or the overseas authorities. When asked what the inventory may contain, initially the respondents agreed that it can in effect be a summary of the seized "things".

66. However, this would render the applicants' argument about not allowing the overseas officers to examine the seized "things" (while allowing them to examine a summary of the same) to amount in effect to an extremely "technical" one. This is because an "inventory" may need to contain a substantial part of a document's contents in order to be meaningful to a reader. Perhaps as a result of having realised the problem, the applicants then argue that the inventory should be something like a list of documents (similar to that required by RHC Ord. 24). Hence, for instance, a "thing" may be described simply as "letter dated [date] from [X] to [Y]". The difficulty with that argument is immediately apparent. Ord. 24 contemplates an inspection of documents to follow discovery (that is, the service of respective lists of documents). An examination of the "inventory" where inspection is not permitted is very probably insufficient to enable a proper decision to be made under s. 12(8) and/or s. 12(11)(a).

67. Thirdly, if one adopts the applicants' arguments, the following would be the net result of what will happen. The overseas authorities may examine the "things" in detail during the search because this will fall within the "assistance" to which the authorised officer is entitled under s. 12(3). Assuming that the Secretary for Justice has made a proper direction pursuant to s. 12(8) and the "things" seized (whether copies or originals) are sent abroad as a result, the overseas authorities can again examine them for the purpose of investigation. However, the only time when the overseas authorities (or, indeed, the authorised officer) cannot examine the "things" for any purpose at all is the period after their seizure and before they are sent off; in other words, the period when they were kept by the Commissioner pursuant to s. 12(8).

68. I consider that purely as a result of construction, I should accept the respondents' arguments and reject those of the applicants. It is unnecessary to differentiate whether the above consequences should be described as absurdities, abnormalities or an unsatisfactory state of affairs. The unreasonableness in result of the applicants' arguments only reinforces my conclusion. There is strictly no need to consider the applicants' contention whether the powers conferred by Cap. 525 should attract considerations of public policy relating to the Hong Kong criminal justice system. Insofar as it may be necessary to say anything about this, I only observe that at common law, the domestic courts presume that Hong Kong will carry out international obligations which it has undertaken by way of treaties with foreign states, especially when the treaty has been incorporated into the local law by way of a statute: 44(1) Halsbury's Laws of England (1995 Reissue) 4th Ed., para. 1222. The provisions of Cap. 525 are presumed to be consistent with the treaty agreements entered into between Hong Kong and other contracting foreign states.

69. In relation to the applicants' arguments about the lack of independent supervision (whether by the courts or otherwise), in the absence of recognised exceptions, such as ultra vires, unlawfulness or bad faith, powers connected with criminal investigations (including powers of search) are usually unsuitable for judicial supervision: see, for example-

Having said so, in appropriate cases, judicial intervention (including judicial review) is as much available to persons affected by domestic searches as those affected by purported exercise of powers conferred by Cap. 525.

70. The applicants have referred to the UK position, especially that under the Criminal Justice (International Co-operation) Act 1990. While the position there is no doubt different because the provisions of the 1990 Act are different from those of Cap. 525 regarding several important aspects, I do not find that a comparison of the two statutes, or a detailed examination of the 1990 Act, is of any real value to the present applications.

71. Further, the applicants have referred to authorities which decided on the nature of search powers under other statutes; for example, R v. Chesterfield Justices and Another, exp Bramley [2000] QB 576; Apple Daily Ltd. v. Commissioner of ICAC [2000] 1 HKC 295. The nature of statutory search powers depends ultimately on the construction of the statute(s) in question. Without disrespect to the industry of counsel, little assistance can therefore be gained from a detailed examination of the above authorities other than to bear in mind the general principles stated therein (set out under the sub-heading "(a) The Legal Principles").

72. By reason of the above matters, I conclude that, in appropriate circumstances, an authorised officer is empowered by s. 12(6) to seize "things" which he believes on reasonable grounds (among other things) that they are relevant to a criminal matter. "Things" here can include files and bundles of documents, rather than just individual documents.

(c) Legality of the Search and Seizure

73. No challenge has been made against the issue of the search warrants, or their execution relating to the things specifically authorised to be searched and seized thereunder. Subject to the jurisdiction arguments (referred to under the previous heading), there is also no challenge to the initial request from the US or the decision of the Secretary for Justice under s. 12(1). The issue is accordingly whether the authorised officer's seizure power under s. 12(6) has been properly exercised. In this connection, it should be noted the 25 applicants in HCAL 187 (except the 14th applicant, which was the owner of the premises searched), and the 4 applicants in HCAL 11, have not been named in the search warrants.

74. The applicants say that a large quantity of "things" have been seized. It is surprising how such could be properly achieved when only a relatively short time period to do so had been given to the authorised officer by the search warrant. Because of the stringent requirement of s. 12(6) regarding the authorised officer's belief on reasonable grounds that the "things" must fall within that provision, it is doubtful if he in fact has had that belief at the time of seizure. The applicants further criticised the authorised officer's statement to the effect that he had that belief to be self-serving and unspecific. They also question if the inventory lists setting out the grounds for seizing the "things" were in fact prepared at the time of seizure and submit that they probably were prepared afterwards.

75. At the early stage of the hearing, the applicants contended that there is a factual dispute as to the manner in which the 2nd respondent (as the authorised officer) carried out the searches. The applicants' case is that the 2nd respondent has not properly examined and/or considered one by one the documents seized during the searches and therefore could not have held a "belief on reasonable grounds" that the documents were liable to be seized under s. 12(6). The applicants also submit that the 2nd respondent appears to have disputed this in his affirmations.

76. The respondents clarify that their case is not that the 2nd respondent has in fact examined or considered the individual documents in detail during the searches before deciding whether to seize them. Their case, in short, is that, in light of the allegations set out in the US requests for assistance, the 2nd respondent was entitled under s. 12(6) to seize files or bundles of documents (rather than just individual documents).

77. The discussion regarding the ambit of s. 12(6) has been set out under the sub-heading "(b) Nature of the Search and Seizure Powers under S. 12(6)" and will not be repeated. In the factual context of this case, I agree with the respondents that the 2nd respondent has properly exercised his search and seizure powers.

78. As has been stated above (under the heading "Background"), the US allege in their requests in essence that sham transactions have been used to deceive the US customs. The alleged crime was carried out by way of forged documents and/or false statements. Further, it involved bogus transactions among a number of limited companies. Many companies share the same address(es), including the searched premises.

79. Forged documents which have been used in the alleged crimes are of course by themselves relevant to the investigation of those crimes. However, the way in which documents have been arranged, or the location of the documents (whether inside a file or bundle, or inside the premises), can sometimes also enable one to infer whether those documents have been used in, or they are related to, sham transactions. For example, documents which belong to one company are ordinarily expected to be filed together with other documents of that company. But if instead they were put into the file(s) or bundle(s) of apparently unrelated companies for no valid reason, this may entitle one to believe that this evidences unreal transactions. Similarly, documents which are filed randomly and/or completely out of context without any valid justification may also enable one to draw the same conclusion.

80. With the above in mind, I find that it is well within the seizure power conferred on the 2nd respondent by s. 12(6) to regard files and bundles in question as "things" and to decide whether they are liable to seizure on that basis.

Was the Examination by Third Party After Seizure Valid?

81. As stated above, ss. 12(8) and 12(11)(a) prescribe a one-month period respectively for the Secretary for Justice and the overseas appropriate authority. The purpose of the prescribed period has been discussed above (at para. 61) and will not be repeated.

82. It is common ground that, after the documents were seized from the applicants' premises, they were reviewed by C & E officers. Further, at some stage, they were reviewed by them together with officers of the US customs. One part of the affidavit evidence relating to this has been set out above (under the heading "Search and Seizure by the respondents"). The respondents further clarified the purposes of the review exercise in the affirmation of Linda LS Lam, Senior Government Counsel:-

The review was supervised by the C & E. Thus, her affirmation stated:-

83. The applicants allege that the respondents' affirmations show that the examination of documents was an investigation process, or at least was partly for investigation purposes. Reliance is placed on the 2nd respondent's affirmations filed in the applications for restraint orders in Hong Kong, as well as the passages in Ms Lam's affirmation (set out above).

84. On the other hand, the respondents claim that the review of documents was undertaken for the purpose of making a decision under (as they are permitted to do so by) s. 12(8) and/or 12(11)(a). However, counsel for the respondents admitted during the hearing that information which justified an application for restraint orders in Hong Kong happened to be discovered in the course of the review. He further contends that the respondents were entitled to make use of the information for such purpose. The said restraint order was related to three of the applicants companies in HCAL 187.

85. In R v. Southwark Crown Court, exp Customs Commissioners [1990] 1 QB 650, US customs officers obtained court order for the production of documents pursuant to the Drugs Trafficking Offences Act 1986. Documents thereby produced were retained by them under the Police and Criminal Evidence Act 1984. In relation to the word "retained" in s. 22 of the 1984 Act, the Divisional Court held that the word does not prohibit the UK law enforcement agencies from sending the documents to their overseas counterparts, having regard to the purpose of the legislature, namely, international assistance in criminal investigations.

86. I do not agree with the applicants. Ms Lam's affirmation rather shows that the review of the documents was merely for the purpose of enabling a proper decision to be made under s. 12(8) and/or 12(11)(a). In relation to the 2nd respondent's affirmations, I accept that although the review was for the above purpose, information may be discovered showing that there was a proper basis to apply for restraint orders in Hong Kong. This does not render the review of documents unlawful or ultra vires. Furthermore, there is no valid reason (whether under Cap. 525 or at common law) why the information cannot be used for applying for restraint orders in Hong Kong.

87. As stated above (under sub-heading "(b) Nature of the Search and Seizure Powers under S. 12(6)"), in order for a proper decision to be made under ss. 12(8) and 12(11)(a), a review of the documents must be undertaken by the Secretary for Justice and the overseas appropriate authority before hand (see para. 61 to 62 above).

88. By reason of the matters set out above, there is no evidence that the examination of the documents by the C & E officers (whether done alone or together with the US customs) is unlawful or ultra vires.

89. The Law Officer (International Law) has permitted the US to inspect the seized items. The respondents also argue this amounted to a direction given under s. 12(8). Although that was not given by the Secretary for Justice herself, it is inconceivable she would have directed otherwise. This is because the Law Officer (International Law) is one of the officers vested with some of her powers by delegation. Since I already decided in the respondents' favour on other grounds, it is unnecessary to deal with this argument. However, I doubt if the permission to inspect seized documents purely for investigation purposes falls within s. 12(8).

Must Reasons for Sending Things Overseas be Disclosed, Etc?

90. The Secretary for Justice has power to direct the originals of seized "things" to be sent overseas: s. 12(8). However, she should not do so unless the requirements in s. 12(11) have been met. In relation to both applications, on 29 November 2002 the Secretary for Justice (through the Law Officer (International Law)) directed the seized documents to be sent to the US. Counsel for the respondents says that only five original documents were required by the US and accordingly the direction covered those five documents and other copy documents.

91. This part of the applicants' case is in essence that they should be afforded an opportunity to be heard before this statutory power can properly be exercised. Moreover, because the right to be heard can only be meaningfully exercised if they know the case they have to meet, the respondents should be informed of the case put forth against them; for instance, a copy of the written notice sent by the US to the Secretary for Justice pursuant to s. 12(11) should be supplied. The applicants complain that not only was the direction of the Secretary for Justice given without affording them an opportunity to be heard, they were not informed of the basis on which the decision was made.

92. Several reasons were given by the applicants in support. Article 29 of the Basic Law protects the applicants' property rights. Those rights cannot be interfered with arbitrarily or unlawfully. The power invoked by the Secretary for Justice under Cap. 525 does not concern the investigation of domestic crimes and confidentiality cannot be justified on that ground. There is no "foreign state privilege" at common law: Buttes Gas and Oil Co. v. Hammer (No. 3) [1981] QB 223, 247F-G. Even in relation to information obtained during a police investigation, public policy does not automatically require the same to be protected from disclosure: Conway v. Rimmer and Another [1968] AC 910, 972D-G.

93. In addition, it is presumed all statutory powers affecting a person's interest are to be used fairly: R v. Home Secretary exp Doody [1994] 1 AC 531. S. 15, Cap. 525 provides (among other things) that third parties, such as professional advisers, are entitled to be heard. The rights of an owner of things seized, so the applicants argue, should not be any less under ss. 12(8) and 12(11).

94. Further, the only way in which the applicants can challenge the statutory power conferred by s. 12(8) is by way of judicial review. If they are not furnished with information as to why the originals of the things seized are required to be sent overseas, no meaningful judicial review application can be brought.

95. Regarding "fairness", the relevant parts of the judgment in exp Doody (relied upon by the applicants) said:-

It is apparent this part of the applicants' case is at least partly based on propositions (1), (5) and (6) of the judgment in exp Doody.

96. However, whether a person affected in fact enjoys a right to be heard depends ultimately on the nature of the statutory powers in question (propositions (3) and (4) in exp Doody). This in turn depends on the proper construction of the statute which confers the powers.

97. As stated above, Cap. 525 is a statute concerned with Hong Kong's provision of assistance for overseas criminal matters (which include criminal investigations). There is often a need for secrecy in criminal investigations; criminals may abscond if they learn of the investigation in advance, and evidence and/or other materials may be destroyed or concealed. The course of justice may be impeded or obstructed. It is true that the criminal matters referred to in Cap. 525 are not domestic, but it must have been the intention of the legislation that the integrity of the overseas criminal matters covered by its provisions should not be jeopardised either.

98. An analysis of some of the provisions of Cap. 525 shows that the legislature intends that there should be secrecy in relation to the powers conferred on the Secretary for Justice by ss. 12(8) and 12(11). The request to Hong Kong for assistance, which has to be given by the foreign state to the Secretary for Justice, needs to contain matters including:-

Conversely, the search warrant, which may have to be shown to a person affected by it, needs only contain:-

Hence, the matters which need to be set out in the search warrant are less than those set out in the request.

99. Further, s. 12, which provides for search and seizure powers of the authorised officer, only requires him to obtain a search warrant from a magistrate. To recap, the powers conferred by s. 12 include:-

There is no express provision in s. 12 regarding the need to hear from the person affected with regard to these powers. On the other hand, s. 15, which concerns Hong Kong's assistance by way of production of materials relevant to overseas criminal matters, provides for a different scheme. In short, s. 15 stipulates that an authorised officer can apply to court for an order for the production of such materials from a

Ss. 15(2)(a)(i)(A) and 15(1)(b)(i)(A) permit an order to be made for materials to be taken away by the authorised officer and transmitted overseas. Because of the wording of ss. 15(2), (3), (6) and (7) and RHC Ord. 115A r. 12, Cap. 525 intends the application to be made ex parte. The references to "legal privilege" (see, for example, s. 15(5)(a)(ii)), "a tax adviser or relevant auditor" (see, for example, s. 15(9)(b)(i)) and "a public body" (see, for example, s. 15(10)) show that the persons against whom an order made under s. 15 is directed is generally the professional advisers. Even so, s. 15 permits ex parte applications to be made.

100. I disagree with the applicants' argument that if the persons referred to in s. 15 and Ord. 115A r. 12 are entitled to be heard (albeit only after an ex parte order has already been made), it necessarily means that the rights of the owner of documents under ss. 12(8) and 12(11) should not be any less. It is exactly because different treatments have been given to the two types of persons respectively by s. 12 and s. 15 that it can be concluded the legislature does not intend to confer any right to be heard on persons who are affected by the powers conferred by s. 12. The respondents' argument, conned in daily language, is that there is no requirement to hear from suspects as to how criminal investigations or prosecutions are to be conducted. In view of the above matters set out above, I agree.

101. This part of the applicants' case is therefore also rejected.

The Application to Cross Examine

102. It was originally contended by the applicants that there was a factual dispute regarding the manner in which the search and seizure of was carried out by the 2nd respondent. The respondents maintained throughout there was no factual dispute which warrants leave to be given for the 2nd respondent to be cross-examined.

103. In any event, after the respondents have clarified their stance regarding the ambit of s. 12(6) (the respondents' case about this aspect has been discussed under the sub-heading "(c) The Legality of the Search and Seizure"), counsel for the applicants accept that there is no need for cross-examination. No order is therefore necessary in respect of this application.

104. Both sides accept that costs of the application to cross-examination should be in the cause of the judicial review applications.

The Application for Discovery of Documents

105. Between the hearings respectively on 18 February and 4 April 2003, the respondents have supplied the documents sought by the applicants in the application for discovery of documents on "without prejudice" basis. Because of this superseding event, the parties did not address the court about the merits of the application during the hearing.

106. From their respective skeleton submissions, whether the documents sought to be discovered fall within public interest immunity appears to be the issue. Since no full argument has been advanced during the hearing, it is inappropriate to determine the merits of this application.

107. The applicants seek an order that costs of this application be paid by the respondents whereas the respondents ask for no order as to costs. However, there is no proper basis for the court to make any finding on this application. Further, the costs of this application must be far less than those of the judicial review applications. In these circumstances, I agree with the respondents that it is more appropriate to make no order as to these costs.

Other Matters

108. In the course of the submissions for counsel for the applicants, he mentioned from time to time that certain provisions of Cap. 525 may be unconstitutional under the Basic Law and/or the Hong Kong Bill of Rights Ordinance (Cap. 383). However, it has never been suggested that these observations should form an independent ground in support of the judicial review applications. Moreover, the applicants have not sought leave to include in the Re-Amended Form 86A any argument regarding the constitutionality of the provisions in Cap. 525.

Conclusion

109. To conclude, the applications are refused.

Costs

110. There is no apparent reason to depart from the usual rule that costs should follow the event. The costs of these applications (including any reserved costs) are to be paid by the respective applicants to the respondents, to be taxed if not agreed. Since the applicants' case in both applications are in essence common, there is no need to differentiate the costs of the hearing.