XCHRX SECRETARY FOR JUSTICE v. CHOW SUI KWONG

HCMP3109/98

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO.3109 OF 1998

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J U D G M E N T

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1. This is an application under s.5 of the Drug Trafficking (Recovery of Proceeds) Ordinance, Cap.405, for a confiscation order under s.3 of the Ordinance, against the Respondent, Chow Sui-kwong ("Chow"). Chow absconded from criminal proceedings brought against him in Hong Kong and the prosecution does not know his whereabouts.

2. In this judgment, unless otherwise stated, all section references are to sections in the Ordinance.

3. Pursuant to O.115, r.2 of the Rules of the High Court, the hearing was held in chambers, I however directed that the public may have full and free access to the hearing.

4. In applications against an absconding person, such as Chow is said to be, I must be satisfied of the following conditions :

1. That the application is made by the Secretary for Justice [s.3(1)(b)].

2. Proceedings for one or more drug trafficking offences have been instituted against the Respondent [s.3(1)(a)(ii)].

3. Those proceedings have not been concluded [s.3(1)(a)(ii)].

4. The Respondent has absconded [s.3(1)(a)(ii)(B)].

5. Six months have elapsed from the date on which the Respondent absconded [s.3(2)(c)(i)].

6. The Respondent's exact whereabouts are not known and reasonable steps have been taken to give him notice of the proceedings [s.3(2)(c)(ii)(B)].

7. The Respondent could have been convicted of a drug trafficking offence or offences [s.3(2)(c)(iii)].

8. The Respondent has benefited from drug trafficking [s.3(3)].

5. If items (1) to (8) are satisfied, then I have to determine :

1. The value of the Respondent's benefit [ss.3(5), 5, & 6(1)].

2. The amounts of the confiscation orders [s.3(6)].

3. The amounts that might be realised for the purposes of the making of the certificates [s.6(2)].

6. In support of this application, the Secretary for Justice has filed and relies on a written statement of 1 December 1998 made by Inspector Lui Lok-sang of the Customs & Excise Department. This statement deals with the matters provided for in s.5(1) of the Ordinance. I have also heard oral evidence from Inspector Lui and Customs Officer 8729, Chan Sui-ping.

First condition - that the application is made by the Secretary for Justice

7. Order 115, r.2A of the Rules of the High Court provides for the Secretary for Justice to make an application by way of originating summons for a confiscation order under s.3 where the person has died or absconded. The Secretary for Justice filed the ex parte originating summons in this application in the High Court on 6 July 1998. I am satisfied that the application is made by the Secretary for Justice.

Second condition - that proceedings for a drug trafficking offence have been commenced against the Respondent

8. As to the second condition, s.2(1) of the Ordinance defines a "drug trafficking offence" to mean :

"(a) any of the offences specified in Schedule 1;

(b) conspiracy to commit any of those offences; ...

(e) aiding, abetting, counselling or procuring the commission of any of those offences."

9. Section 2(11) defines when proceedings for a drug trafficking offence have been instituted in Hong Kong. It includes under s.2(11)(a), when a person is charged with the offence after being taken into custody without a warrant. Chow was arrested on 2 May 1994. On 3 May 1994 he was charged with an offence of manufacturing dangerous drugs, contrary to s.6(1) of the Dangerous Drugs Ordinance, Cap 134. This is a drug trafficking offence included in Schedule 1 of the Ordinance. I am satisfied that the second condition has been proved.

Third condition - that the proceedings against the Respondent have not concluded

10. Section 2(12A), which was added to the Ordinance in 1995 by the Drug Trafficking (Recovery of Proceeds) (Amendment) Ordinance 1995 (Ord. No.89 of 1995), defines when proceedings have concluded in respect of persons who have absconded :

"An application for a confiscation order made in respect of a defendant where section 3(1)(a) (ii) or (7) [respondent dies or absconds after conviction] is applicable is concluded -

(a) if the High Court (now the Court of First Instance of the High Court) or the District Court decides not to make such an order, when it makes that decision; or

(b) if such an order is made as a result of that application, when the order is satisfied.”

11. Section 3(15) permits the 1995 amendments to the Ordinance to operate against persons who absconded before 1 September 1995. It reads :

"(15) Where -

(a) before the commencement of the Drug Trafficking (Recovery of Proceeds) (Amendment) Ordinance 1995, proceedings for one or more drug trafficking offences have been instituted against a person but have not been concluded because that person has absconded; and

(b) immediately before that commencement, any realizable property of that person is the subject of a charging order or restraint order,

- then the provisions of this Ordinance as amended by that Ordinance shall apply in relation to that person ..."

12. I am satisfied that these conditions are proved. Proceedings against Chow were instituted when he was charged on 3 May 1994. They have not concluded, because he absconded. No confiscation order has been made by the Court of First Instance, neither has the Court declined to make one.

Fourth condition - that the Respondent has absconded

13. Section 2(1) defines "absconded" as follows :

"'absconded', in relation to a person, includes absconded for any reason whatsoever, and whether or not, before absconding, the person had been -

(a) taken into custody; or

(b) released on bail."

14. The following facts are relevant : on 15 July 1994, Chow informed Customs officers that the drug seized inside Flat 47 at 2/F, Fook Wah Mansions, Lyttleton Road, belonged to his friend Choy Chi-tak ("Choy"), who was then detained in Lai Chi Kok Detention Centre in respect of another case.

15. On 18 July 1994, Choy was interviewed under caution in Lai Chi Kok Detention Centre and admitted that the drugs found in the Lyttleton Road flat were his. He claimed that Chow had been no more than a visitor to the Flat. On legal advice, Choy was jointly charged with manufacturing a dangerous drug along with Chow.

16. On 31 August 1994, in the High Court (Case No.HCC346 of 1994) Chow was granted bail pending trial, he produced a copy of Choy's statement in support of his application.

17. On 1 May 1995, the first day of their joint trial, Choy unexpectedly pleaded not guilty to all the charges he faced. The judge re-fixed trial for 3 May 1995 and extended Chow's bail, despite objection from prosecuting counsel. Chow failed to appear on 3 May 1995 and the judge issued a warrant for his arrest. The trial proceeded against Choy alone, who was acquitted by the jury on 29 June 1995.

18. Upon the Custom & Excise Department's request, Chow's name, as a wanted person, was included in the EPOICS and VALID III by the Police. His name was also put onto the Immigration Department Watch List and notified to all immigration control points.

19. I am satisfied that Chow has absconded.

Fifth condition - that the Respondent has absconded for not less than six months

20. Under s.3(2)(c)(i), I must be satisfied that the Respondent absconded and that not less than six months have elapsed, beginning with the date, which in my opinion, is the date on which he did so. I am satisfied that more than six months have elapsed since Chow absconded on 3 May 1995.

Sixth condition - that the exact whereabouts of the Respondent are not known and reasonable steps have been taken to give him notice of the proceedings

21. Section 3(2)(c)(ii)(B) provides that, if a person's exact whereabouts are not known, then reasonable steps must have been taken to give him notice of "those proceedings". In its context, the phrase "those proceedings" refers to the criminal proceedings prosecuting Chow for manufacturing a dangerous drug, not these proceedings applying for a confiscation order.

22. Inspector Liu and Customs Officer 8729 gave evidence of the steps taken to locate Chow and notify him of the criminal proceedings. It includes the fact that :

1. He was arrested on 2 May 1994, charged with manufacturing a dangerous drug on 3 May and was present throughout the proceedings up to his arraignment before the High Court on 1 May 1995.

2. A warrant for his arrest was issued by the High Court on 3 May 1995.

3. His name is on the Criminal Record Bureau's wanted list.

4. His name is on the Immigration Department's stop list.

5. The Immigration Department's movement records do not show that he has entered Hong Kong in recent years.

6. Repeated unsuccessful enquiries as to his whereabouts have been made of his family members in Hong Kong.

23. I am satisfied that Chow's exact whereabouts are not known and that reasonable steps have been taken to notify him of the criminal proceedings instituted against him.

Seventh condition - that the Respondent could have been convicted of drug trafficking offences

24. Last year in Secretary for Justice v. Lee Chau-ping & Tam Wai-hung, HCMP4412 of 1996 (unreported), I ruled that the applicable standard of proof in relation to this issue is the civil standard of a balance of probabilities.

25. The following is a summary of the evidence put before me on this issue :

Summary

26. At 4:55 p.m. on 2 May 1994, a surveillance officer, Customs Officer 8812 Yiu Yuen-man ("CO8812") saw Chow enter a flat at 2/F, Fook Wah Mansions, 47-49 Lyttelton Road, Mid-Levels, Hong Kong. He used keys he carried with him to do so. Around 6:55 p.m., CO8812 saw Chow leave the flat. He was seen by another Customs Officer 83213 Ko Wing-cheong ("CO83213"), to go to a metered parking space where a car, Plate No.FY3540, was parked, he paid for 2 hours' parking. He returned to Fook Wah Mansions, where CO83213 saw him unlock the metal grille to Fook Wah Mansions and go inside the building.

27. About 9:10 p.m. C083213 saw Chow leave Fook Wah Mansions and approach the car, FY3540. He unlocked the car's door and got into it. CO83213 and Customs Officer 90162 Tam Kwok-hung ("CO90162") then intercepted Chow and revealed their identity as Customs & Excise officers.

28. Customs Officer 8709 Lee Chi-keung ("CO8709") searched the car in Chow's presence, nothing suspicious was found. However, CO8709 found a pile of Hong Kong dollar notes, totalling $8,960 in the car's front glove compartment. Chow was asked to explain the source of this money, but did not reply. Chow was then searched by C083213, four keys on a key ring were found in the right pocket of his jeans, another key ring with nine keys on it was found in the left waistband of his jeans, together with $4,900 in cash. When asked which places could be opened by the keys, Chow made no reply.

29. About 9:25 p.m., CO83213, CO90162 and CO8709 took Chow back to Fook Wah Mansions. In Chow's presence, CO8709 used the four keys on the key ring to unlock the metal grille to Fook Wah Mansions, the wooden door to Flat 47 on the second floor and the door of Room C of the Flat. CO8709 searched Room C and found about 9.43 kg of suspected No.4 heroin and equipment believed to be suitable for manufacturing and packing dangerous drugs.

30. A Government Chemist, Dr Anna Chan, was summoned to the Flat and assisted CO8709 in collecting exhibits. She carried out on-site preliminary chemical tests for opiate substances, including heroin. Traces of white powder were found on a table, on the floor tiles and curtains. Dr Chan was of the view that the equipment and chemicals found inside Room C were suitable for manufacturing dangerous drug. She asked that certain items be sent to her office for further examination.

31. A search of Chow's claimed address, Flat A, 4/F, Hon Way Mansion, 11 Hoi Kwong Street, Quarry Bay, found no suspicious items, however, a total of $56,270 in cash was found there.

32. At 3:55 a.m. on 3 May 1994, Chow was taken to the Customs Drug Investigation Bureau Office for investigation. After caution, he refused to say anything, or sign on any document. Later on 3 May 1994, Chow was charged with one count of manufacturing dangerous drugs. He was later remanded in custody at Lai Chi Kok Detention Centre pending committal proceedings.

33. Dr Anna Chan, the Government Chemist, found that in the exhibits sent to her for examination there were 9,271.21 grammes of a mixture containing 3,455.64 grammes of heroin.

34. A number of exhibits found in the Flat at Lyttleton Road were sent to the Fingerprint Identification Bureau of the Hong Kong Police for examination. Chow's fingerprints were found on a shopping bag and a mattress found in Room C of that flat.

35. Enquiries showed that Chow had rented Room C at the Lyttleton Road Flat in July 1992. The Landlady had seen him entering and leaving that room when she went there from time to time to clean the Flat. She said that she would be able to recognize him if she saw him again.

Determination

36. From the above, I am satisfied that the evidence is sufficient to prove on a balance of probabilities that Chow could have been convicted of the offence of manufacturing a dangerous drug charged against him on 3 May 1995.

Eighth condition - that the Respondent benefited from drug trafficking

37. Section 3(3) refers to "drug trafficking", not to "drug trafficking offence of which he was convicted". "Drug trafficking" is defined in s.2 to mean :

"...doing or being concerned in, whether in Hong Kong or elsewhere, any act constituting a 'drug trafficking offence', or an offence punishable under a corresponding law, committed in Hong Kong, as well as an offence committed elsewhere."

38. It follows from that definition, that my determination of whether Chow benefited from drug trafficking is not confined to the proceeds arising from the particular offence of which he could have been convicted. This is the view taken by the English Courts of similar wording in their legislation. See : Dickens [1990] 2 WLR 1385 (CA) and Tredwen [1994] 99 CAR 154 (CA) at 157. In these applications the distinction is academic since Chow's benefits relate to the offence charged against him.

39. Section 4(1) defines the phrase "a person's proceeds of drug trafficking" :

"4(1). For the purposes of this Ordinance -

(a) a person's proceeds of drug trafficking are -

(i) any payments or other rewards received by him at any time...in connection with drug trafficking carried on by him or another; and

(ii) any property derived or realised, directly or indirectly, by him from any of the payments or other rewards; and

(b) the value of the person's proceeds of drug trafficking is the aggregate of the values of -

(i) the payments or other rewards; and

(ii) that property.”

40. Under s.3(4), a person who has at anytime received any payment or other reward in connection with drug trafficking carried on by him or another has benefited from drug trafficking.

41. For the purpose of determining whether Chow benefited from drug trafficking and assessing the value of his proceeds from that activity, I may make the assumptions contained in s.4(3), namely :

"(a) that any property appearing to the court -

(i) to have been held by him at any time

(A) since his conviction;

(B) where section 3(1)(a)(ii) [person absconded or died] is applicable, since the application was made for a confiscation order in his case; or

(ii) to have been transferred to him at any time since the beginning of the period of 6 years ending when the proceedings were instituted against him -

was received by him, at the earliest time at which he appears to the court to have held it, as his proceeds of drug trafficking.

(b) that any expenditure of his since the beginning of that period was met out of his proceeds of drug trafficking; and

(c) that, for the purpose of valuing any property received or assumed to have been received by him at any time as his proceeds of drug trafficking, he received the property free of any other interests in it."

42. The burden is upon the Respondent to prove, on a balance of probabilities, that the assumptions are incorrect. As Chow is not present in this application to rebut the assumptions, they must stand.

43. Section 3(12) provides that the standard of proof required to determine whether the Respondent benefited from drug trafficking is a balance of probabilities. See : Dickens (above) at p.1388.

44. After Chow's arrest, he refused to give any information about his source of income or his financial position. The Customs & Excise Department therefore carried out a Concealed Income Analysis for the year 4 May 1993 to 3 May 1994 in order to estimate the income he received from unknown sources. The analysis takes account of "Net worth" (i.e. Assets less Liabilities), "Expenditure" and "Income from Known Sources". The formula for calculating the concealed income is :

Concealed income = Change in net worth + Expenditure - Income

45. The Accountant's report giving full details of the calculations is at Annex 35 of the s.5(1) statement.

46. In summary, the calculations are :

Assets

47. As at 3 May 1993, Chow had the following assets :

Cash in hand	$2,500.00
Cash in banks	$142.60
Balance in Telebat A/C	$657.80
Rental deposits	$2,200.00
Other valuables	$40,000.00
Total :	$45,500.40

As at 3 May 1994, he had the following assets :

Cash in hand	$70,130.00
Cash in banks	$22,611.60
Balance in Telebet A/C	$298.00
Rental deposits	$12,000.00
Other valuables	$40,000.00
Total :	$145,039.60

Liabilities

48. At both 3 May 1993 and 3 May 1994, Chow had no known liabilities.

Net worth

49. At 3 May 1993, Chow's net worth amounted to $45,500.40 and at 3 May 1994, it amounted to $145,039.60.

Change in net worth

50. For the period between 4 May 1993 and 3 May 1994, Chow's net worth increased by $99,539.20.

Expenditure

51. During the period from 4 May 1993 to 3 May 1994, Chow had the following expenditure :

Daily living expenses and entertainment	$30,000.00
Commission to a property agent	$3000.00
Rental	$85,900.00
Management fees, water & electricity	$5,920.00
Rates	$1,746.00
Loss on horse racing gambling	$191,859.80
Contributions to his co-habitee	$24,000.00
Expenses on trips to Macau	$7,128.00
Bank charges	$215.00
Total :	$349,768.80

Income

52. During the period from 4 May 1993 to 3 May 1994, Chow had no known legitimate source of income. He filed no tax returns.

53. Based on the above figures, it is calculated that between 4 May 1993 and 3 May 1994, Chow had a concealed income of $449,308.00. The calculation is :

Change in net worth	+ Expenditure	- Income
$99,539.20	+ $349,768.80	- $0	= $449,308.00

54. As he appears to have had no legitimate source of income, I am satisfied that Chow benefited from drug trafficking. I make the assumptions provided by s.4(3) and find that the whole of this concealed income of $449,308.00 represents Chow's proceeds of drug trafficking.

The amounts of the confiscation orders

55. Having made these findings, s.3(5) provides that I now have to determine, in accordance with s.6, the amount to be recovered by means of a confiscation order.

56. Section 6(1) provides that the amount to be recovered under the confiscation order is the value of the Respondent's proceeds of drug trafficking. Or, under s.6(3), if the amount that might be realised at the time of the confiscation order is made is less than the amount the Court assesses the value of his proceeds of drug trafficking to be, then the amount to be recovered is :

"(a) the amount appearing to the court to be so realised, or

(b) a nominal amount, where it appears to the court (on the information available to it at the time) that the amount that might be so realised is nil."

57. The onus is upon the Respondent to prove on a balance of probabilities that the amount that might be realised is less than the value of his proceeds of drug trafficking. See : Ko Yuen [1993] 2 HKCLR 101, at p.111. In this applications Chow is not present to take advantage of s.6(3) and to seek to prove that the amounts that might be realised are less than his proceeds of drug trafficking.

The amounts that might be realised

58. For purposes of a certificate under s.6(2), the amount that might be realised at the time a confiscation order is made against the person is defined in s.7(3) to mean :

"(a) the total of the values at that time of all the realisable property held by the person, less

(b) where there are obligations having priority at that time, the total amounts payable in pursuance of such obligations,

together with the total of the values at that time of all gifts caught by this Ordinance."

59. The definition of "realisable property" is given in s.7(1), as :

"(a) any property held by the defendant;

(b) any property held by a person to whom the defendant has directly or indirectly made a gift caught by this Ordinance; and

(c) any property that is subject to the effective control of the defendant."

60. "Property" is defined in s.2 to include both movable and immovable property within the meaning of s.3 of the Interpretation and General Clauses Ordinance.

61. Section 6(2) provides that if I am satisfied as to any matter relevant for determining the amount that might be realised at the time the confiscation order is made, I may issue a certificate giving my opinion as to the matters concerned. I am satisfied that I should issue such a certificate and make the confiscation orders requested by the Secretary for Justice.

62. Based on the information put before me, Chow's property that is to be realised and included in the certificate is :

Cash (in Customs' custody)	$70,130.00*
Cash in banks	$25,661.00
Balance in Telebet Account	$298.00
Rental deposit	$6,000.00
A gold necklace with jade pendant	$11,000.00*
A "Chopard" watch	$8,000.00
A "Rolex" watch	$18,000.00*
Total :	$139,089.00

63. The items marked with an asterisk are prisoner's property taken from Chow by the Customs & Excise Department after his arrest.