CHAN MEI YIU, PADDY AND ANOTHER v. SECRETARY FOR JUSTICE AND OTHERS

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AND

HCAL 17/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

  CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST

  NO. 17 OF 2007

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AND

HCAL 18/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

  CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST

  NO. 18 OF 2007

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AND

HCAL 19/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

  CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST

  NO. 19 OF 2007

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(Heard Together)

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J U D G M E N T

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The decisions challenged:

1.  These are judicial review proceedings in which the applicants challenge a number of decisions arising from the issue of certain search warrants pursuant to the provisions of the Mutual Legal Assistance in Criminal Matters Ordinance, Cap 525, (MLAO).

2.  The specific decisions or actions which are subject to challenge are as follows:

(i)  A decision made by or on behalf of the Secretary for Justice on 15 January 2007, to accept a request for mutual legal assistance made on behalf of the Italian Republic by Mr Fabio De Pasquale, an Italian prosecutor, as contained in a letter of request dated 10 July 2006; 

(ii) A decision by the Secretary for Justice to nominate an authorised officer pursuant to s 12(1) MLAO, to apply to a magistrate for a search warrant, as requested by the Italian Republic;

(iii)    A decision made by that authorised officer to apply, under s 12(2) MLAO, to a magistrate for four search warrants, on 16 January 2007;

(iv)    A decision made by a magistrate at Eastern Magistracy, on 16 January 2007, to issue four search warrants pursuant to s 12(3) MLAO;

(v) The searches purportedly conducted under the authority of those search warrants by the Hong Kong Police at the various premises occupied by the applicants, on 18 January 2007.

3.  Leave to apply to judicial review was given by Hartmann J (as he then was) on 22 March 2007.

4.  The application for judicial review involves the determination of the following main issues:

(i)  Whether the letter of request from the Republic of Italy to the government of Hong Kong contains misrepresentations or omissions that may have operated in the mind of either the Secretary for Justice or the magistrate when they respectively made the decisions they made in relation to the ultimate issue of the search warrants;

(ii)    In particular, whether the failure to draw to the attention of the magistrate the fact that Italian law enforcement agents would be present and may take part in the search constituted a material nondisclosure in an ex parte application, such as to justify the quashing of the search warrants and their execution;

(iii)  Whether the failure to include temporal limits in the warrants, upon the material that may be seized, invalidates the warrants;

(iv)  Whether the MLAO, properly construed, permits foreign law enforcement agents to take part in the execution of search warrants issued thereunder;

(v)    The correct procedure to be followed, once things have been seized in consequence of a search pursuant to MLAO.

5.  An issue also arose as to whether or not any of the materials seized in the searchers pursuant to the search warrants were “items subject to legal privilege”, as that expression is defined in s 13(1) MLAO.  In the event, it was not necessary to give any consideration to this issue, as ultimately, all claims for legal professional privilege in respect of the items seized were abandoned by the applicants.

The applicants:

6.  There are four sets of proceedings, one in respect of each of the four search warrants that were issued.  The first, HCAL 16/2007, relates to the residential premises of Ms Paddy Chan, who is an officer of Harmony Gold Ltd and Wiltshire Trading Ltd. 

7.  The second, HCAL 17/2007, relates to office premises of Wiltshire Trading Limited.  Loong Po is a management company, that acts as a company director for Wiltshire Trading.  CS Secretaries act as secretary for Wiltshire Trading.

8.  The third, HCAL 18/2007, relates to the residential premises of Ms Katherine Hsu, also an officer of Harmony Gold Ltd and Wiltshire Trading Ltd.

9.  The fourth, HCAL 19/2007, relates to the office premises of Harmony Gold Ltd, Loong Po, and CS Secretaries, which are all companies which operate from Room 1253, Prince’s Building Hong Kong.  Both Ms Chan and Ms Hsu have offices in those premises from where the companies are operated.

The procedural background:

10.  It is appropriate that the procedural background should be briefly set out having regard to the unfortunately very long period of time between the issue of the search warrants and the substantive hearing.  It will be noted that the search warrants were issued as long ago as 16 January 2007, and were executed at the various premises on 18 January 2007.  Leave to apply for judicial review was given on 22 March 2007.  However, the substantive hearing of the application for judicial review did not commence until 22 March 2010.

11.  Unusually in judicial review proceedings, there was a factual dispute.  That dispute was as to the events that occurred during the course of the searches, in particular, the extent of the involvement of two Italian prosecutors and two Italian forensic accountants assisting the prosecutors, (collectively called “the Italian officers”),  in the searches.  To resolve that dispute, it was necessary to hear evidence from those involved or present at the searches.  That evidence will be dealt with later in this judgment.

12.  The applicants were to give evidence, as were the Hong Kong police officers involved in the execution of the warrants.  The factual issue centred upon the conduct of the Italian officers in the course of the searches.  Notwithstanding their central involvement in the factual dispute Department of Justice indicated to those advising the applicants that they did not propose to call the Italian officers to give evidence.

13.  Counsel for the applicant, Ms Chan, then indicated that he would call the four Italian investigators as witnesses for Ms Chan.  He was reminded that as they were his witnesses he would not be entitled to cross-examine them.  I was informed that that procedural rule could be overcome, as counsel for the remaining applicants, other than Ms Chan, who did not call the four witnesses, would be entitled to cross-examine them.

14.  A request was made to the Department of Justice as to whether or not the Italian officers would be willing to come to Hong Kong to give evidence and be cross-examined.  The four witnesses declined to come to Hong Kong for that purpose.

15.  Consequently, an application was made by Ms Chan for the issue of a letter of request to have the evidence of the Italian officers taken in Italy.  The respondents challenged the jurisdiction of this Court to issue that letter of request.  On 23 July 2007, I held that the Court had the necessary jurisdiction[1].

16.  The respondents appealed, and the Court of Appeal dismissed the appeal on 18 March 2008, affirming my decision[2].

17.  The respondents then argued, relying on alleged prosecutorial immunity in Italy on the part of the Italian officers, that the Court should exercise its discretion against the issue of the proposed letter of request.  Having considered competing evidence on relevant Italian law I ordered that the letter of request be issued to the Italian authorities[3].  The letter of request was issued by this Court on 13 June 2008.

18.  The execution of a letter of request was authorised by the Court of Appeal of Milan on 13 January 2010.  Unfortunately, the notification of that authorisation, and the fixing of the date for taking the evidence in Milan on 4 March 2009, was dispatched to the Court of Appeal in Hong Kong with the address, in Hong Kong, written in Italian. 

19.  Remarkably, the Hong Kong Post Office was apparently unable to decipher the address[4], and returned the notification to the Court of Appeal in Milan.

20.  Consequently, on 4 March 2009, when the evidence was due to be taken in Italy, the applicants had not received notice of the hearing.  I have not been told whether the Italian prosecutors had informed the Department of Justice of the date upon which the evidence was to be taken.

21.  On that day, the four Italian officers duly appeared before the judge in Milan, and their evidence was taken.  Because they had not been notified of the date, counsel for the applicants were absent, and so there was no cross-examination.

22.  The first the applicants learned of the matter was when they received the transcript of the evidence taken in Milan.  Having determined what had happened, a new letter of request was issued to the Italian authorities on 18 May 2009.  On 7 July 2009, the Court of Appeal of Milan again authorised taking of the evidence.  Procedural directions for the taking of the evidence were made by Bichi J in Milan on 17 July 2009.

23.  On 29 September 2009, the principal proposed witness, Mr de Pasquale, wrote to the Deputy Public Prosecutor of Milan, complaining that the letter of request, dated 18 May 2009, and authorised by the Court of Appeal of Milan, was ‘an abnormal action’, and urged the Deputy Public Prosecutor to have the matter reconsidered by the Court of Appeal in Milan.  He did not notify the applicants of this step.  There is no evidence as to whether or not he informed the Department of Justice of his action.

24.  On 12 October 2009, approximately 10 days before the date fixed for the taking of the evidence, without hearing from the applicants in any way, the Court of Appeal of Milan revoked the order it had made on 7 July 2009.  There is no evidence as to whether or not the Deputy Public Prosecutor for Milan informed the Court of Appeal of Milan that the application made by the Deputy Public Prosecutor was being made without the knowledge of the applicants.

25.  In the result, the order authorising the letter of request having been revoked, the evidence of the four witnesses was not taken.  Those advising Ms Chan elected not to take further steps to take evidence from the four Italian officers, and the way was cleared for the trial proper to proceed.

26.  The evidence that had been taken, in the absence of the applicants, and without cross-examination, on 4 March 2009, was put into evidence by Mr McCoy SC for Ms Chan.  Mr Grossman SC, for the Department of Justice said that he did not rely upon that evidence.  Mr McCoy, however, did rely upon that evidence.

The factual background:

27.  Other than the factual issue relating to the conduct of the various persons present during the searches, there was no dispute between the parties as to the facts which gave rise to the judicial review proceedings.

28.  On 16 May 2005, Italian prosecutors requested the Milan court to commit Mr Frank Agrama and others for trial for alleged offences of misappropriation, tax fraud and false accounting in relation to a company called Mediaset SpA.  On 13 October 2005, parallel proceedings began against Mr Agrama and others in relation to another company, Mediatrade SpA.

29.  A preliminary hearing of the Mediaset proceedings commenced before Paprella J in Milan on 28 October 2005.  On 6 April 2006, Mr de Pasquale requested the Milan court to extend the preliminary investigations in the Mediatrade proceedings, citing ‘foreign pending rogatory activities’ as the ground for extension.

30.  On 7 July 2006, Paprella J dismissed the majority of charges in the Mediaset proceedings, ruling that they were alleged to have been committed between 1998-1999, and were accordingly time barred by a statute of limitations.  Mr McCoy contends that the result of that dismissal was to reduce the amount involved in the alleged offences from US$170 million to about US$19 million.  On the same day, the Judge committed Mr Agrama and others for trial on the remainder of the charges, the trial apparently to commence on 21 November 2006.

31.  As a result of further procedural steps in Milan, and a further application of the limitation period, the amount involved in the alleged offences was further reduced to US$741,024, as a result of a judgment given on 15 January 2007.

32.  On 10 July 2006, Mr de Pasquale issued a letter of request to the Department of Justice seeking assistance in the following ways:

1.  That the applicants, Ms Chan and Ms Hsu be examined on oath before a magistrate and that the examination be recorded on a video camera;

2.  That there be a production order against the Hong Kong branch of UBS AG Bank, a bank holding accounts for Harmony Gold and Wiltshire Trading;

3.  That the residential premises of Ms Chan and Ms Hsu, and the office premises of Loong Po, be searched;

4.  That a sum of US$40 million believed to be held by UBS AG in Hong Kong in a particular account, in the name of Harmony Gold, be seized.

33.  In the letter of request, addressed to the Secretary for Justice, Mr de Pasquale specifically stated:

“I ask to take part in the execution of the present request, in particular of the witness interviews and the searches.

I also ask that the authorisation to take part in the execution of the request be extended to Police officers and/or experts (auditors) collaborating on the investigation.”

34.  The letter of request was dispatched from Milan, through appropriate diplomatic channels, to Hong Kong.

Steps taken by the Italian authorities overseas:

35.  On 20 July 2006, Mr de Pasquale had issued a letter of request to the Attorney General of the United States, requesting searches of Mr Agrama’s offices and residence in Los Angeles, and that documentation from several banks be obtained.  That letter of request was in similar terms to that issued to Hong Kong.

36.  The letter of request concluded with the following statement by Mr de Pasquale:

“I ask to take part in the search.”

37.  By 15 November 2006, acting upon the letter of request, an Assistant United States Attorney for the Central District of California had obtained search warrants permitting the search of the office and residential premises of Mr Agrama in Los Angeles.  The searches were undertaken on that day.  Documents and computers were seized.  Mr de Pasquale and two KPMG auditors, instructed as part of Mr de Pasquale’s prosecution team, were present in the offices and residential premises that were searched.

38.  Mr Agrama challenged the search and seizure.  He instructed Mr Alejandro N Mayorkas, a partner in the respected US law firm of O’Melveny & Myers LLP.  An unchallenged affidavit from Mr Mayorkas said that amongst the grounds on which the challenge was made the following assertions were made:

“(b)   the Italian prosecution team, which I understand was comprised solely of members of the trial prosecution team in Italy, participated in the searches;

(c) adequate procedures were not in place to protect attorney-client communications and work-product from disclosure to the Italian prosecution team;

(d) the Italian prosecution team have access to attorney-client communications and work product;

(e) attorney-client communications at work product were seized; and

(f)  the Italian prosecutor provided misleading information in connection with securing the search warrants.”

39.  As part of its opposition to Mr Agrama’s challenge, the United States Government filed, as an exhibit to an affidavit by Linda English, a special agent with the FBI, a statement, unsworn, by Mr de Pasquale.  In the course of that statement Mr de Pasquale said:

“(7)   I participated in the search, together with consultants from my office, in order to assist the FBI in selecting the documents that were really relevant and excluding routine or excessively old correspondence and business documents.

(8) In the course of the briefing at the FBI offices on November 14^th 2006 I was warned that during the search the documents would be brought to our attention by the FBI agents, and that, in any case, we would not have access to documents that might at first sight appear privileged.

(9) During the search of Mr Agrama’s home, the documents (including several photographs of persons under investigation or persons relevant to the case whose appearance was not known to the FBI) were brought to my attention by Linda English and another agent, Andrew Forristel.  The latter accompanied my every move inside the home.

(10)   During the search of Harmony Gold, the documents were brought to my attention by Marie Kondzielski, Christopher Phillips and the other team leaders.  When moving around inside the rooms I was accompanied mostly by Christopher Phillips.

(11)   I examined the papers in some rooms where business and financial documents were kept in filing cabinets.

….

(14)   No document concerning communications between Mr Agrama and his attorneys, regarding legal questions directly or indirectly connected to the trial in Italy or the ongoing investigations, was ever shown to me by the FBI agents.

(15)   Indeed, no privileged document concerning the trial in Italy or the ongoing investigations against Mr Agrama, regardless of who they might have been written by or address to, was seen by me during my movements inside the premises.

(16)   I did not see any attorney client or work product material of any kind, relating to any matter whatsoever, during the search.”

40.  The United States Government was not, however able to maintain the position asserted by Mr de Pasquale in the proceedings.  The affidavit of Mr Mayorkas exhibited a letter from Jason P Gonzalez, the Assistant United States Attorney for the Central District of California, who was dealing with the challenge to the search and seizure.  That letter, dated 21 January 2007, contained the following:

“….  the government wishes to disclose to you the following: An FBI Agent (Paul Bertrand) saw the KPMG auditors reviewing in a first-floor room boxes, some of which may have been marked “legal chron.”  He does not know which, or how many, boxes the auditors reviewed, but estimates it was at least five.  This review lasted, in the agent’s estimation, approximately 10 to 15 minutes.  The KPMG auditors only were allowed access to boxes that contain material the agents already had determined was responsive to the warrant.  In the boxes that were reviewed by the KPMG auditors, the agents had not noted anything that they considered privileged.  The agent does not know whether each page in the boxes had been reviewed by agents.

My subsequent review of the boxes (on Friday and today) that I understand were seized from this room (based on the markings on the boxes) indicates that at least some of them contained privileged attorney-client correspondence.  Based on my understanding there are over 25 of these boxes, and I have not yet completed my review.  I therefore cannot say at this time whether all the boxes contain attorney-client information.  Most of these boxes were labeled “legal chron”, “chron”, “chron legal file”, or something similar.”

41.  On the next day, 22 January 2007, the light of that advice, the United States Government filed a further document in the United States District Court, entitled “Government’s Notice Regarding its Response to Motion for Return of Property”.  That Notice contained the following statements:

“In its Response, the government indicated that the searching agents followed “taint” procedures to protect movant’s attorney-client and work product materials, and did not allow the Italian Prosecutor or his staff to review such materials.

The government has since learned that agents, while apparently endeavouring to follow the taint procedures, did not correctly implement those procedures.  These mistakes included: (1) agents did not set aside as “tainted” correspondence that, in fact, appears to be attorney-client material; (2) agents allowed the Italian Prosecutor’s staff access to materials that, although pre-screened by agents and determined by agents to be “non-tainted”, in fact contained attorney-client material.

….. the government also has withdrawn the Declaration of Fabio de Pasquale (the Italian Prosecutor), as indicated in the government’s January 19, 2007, filing, and therefore no longer relies upon the assertions therein to support its Response.”

42.  It is clear from the evidence from California that there is a striking conflict between the assertions of Mr de Pasquale in his declaration, and the results of the investigation by Mr Gonzalez as to what had happened.  Mr de Pasquale had said that the Italian officers had seen only documents shown to them by the FBI investigators.  The investigation by Mr Gonzalez showed that assertion to be palpably false. 

43.  Further, it is clear that the fact that Mr de Pasquale’s statement was not sworn, and that he was not willing to go to California to be cross-examined on that statement, was a factor in the decision of the United States Government to withdraw the declaration, and to cease to rely upon the assertions made by him.

44.  The challenge by Mr Agrama to the search and seizure was entirely successful and the documents and computers were returned to him.  The circumstances which I have outlined above are relevant to the assessment of the evidence on the factual issue to be resolved.

The application for the search warrants:

45.  Mr de Pasquale’s letter of request to Hong Kong proceeded through diplomatic channels, and was received by the Mutual Legal Assistance Unit of the Department of Justice in Hong Kong on about 11 September 2006.  There it was assigned by the Law Officer (International Law) to Senior Government Counsel, Ms Susana Sit.

46.  It is apparent from the correspondence exhibited to the affidavits that Ms Sit and Mr de Pasquale had been in communication about the matter well prior to September 2006.  Upon receipt of the letter of request, Ms Sit proceeded to clarify a number of matters with Mr de Pasquale prior to preparing a note for the Law Officer, requesting the formal appointment of an authorised officer pursuant to s 12(1)(c) MLAO, to make application for a search warrant.  That authorised officer was DSI Leung, King Hung, a police officer attached to the Narcotics Bureau.

47.  The factual background justifying the application for the search warrants by the DSI Leung, as authorised person pursuant to the MLAO, is conveniently set out in an affidavit of DSI Leung, in the following terms:

“The Request from Italy

5.  The request was made by the Public Prosecutor at the Milan Court of Italy in connection with a prosecution and continuing investigation that had commenced in Italy involving external serious offences relating to fraud, false-accounting, misappropriation and money laundering, against Farouk Agrama (also known as Frank Agrama) (“Agrama”) and Silvio  Berlusconi (“Berlusconi’) and their associates.

6.  It was alleged that for over two decades, Agrama had been purchasing broadcasting rights from Paramount for the Berlusconi Group which included three national television networks. He conducted his business through his company Harmony Gold USA. Between 1988 and 1999, Agrama conspired with Berlusconi and arranged fictitious sales of the broadcasting rights to a number of dummy companies under the control of the Berlusconi Group at an inflated price. These dummy companies had been reselling the broadcasting rights at an over-price to Italian companies and to Mediaset spa (“Mediaset”) a listed company in Italy since 1995. The initial estimate of the amount involved in the criminal matter is USD200 million.

7.  The management of Mediaset had been under the control of Berlusconi.  Prior to 2000, Berlusconi owned 50% of Mediaset.  After 2000, his share had decreased to 35% since he increasingly involved in politics.  He had become the prime minister in 2001.  Even so, he still exercised influence over the management of Mediaset and manipulated its affairs through his associates who were top executives in the company.

8.   Investigations had also revealed that a number of directors of Mediaset were involved.  They had received bribes from Agrama to facilitate the inflated sales agreements.

9.  Certain funds generated from the criminal activities were found to have channelled into the accounts of the companies under the control of Berlusconi, including the Fininvest Group, Principal Network Ltd and International Media Services Ltd.

10.    Other funds had gone into the bank accounts of Agrama’s companies, including Wiltshire Trading Ltd (domiciled in Hong  Kong) and Melchers Limited N.V. (domiciled in the Netherlands), maintained at Sanwa Bank in Los Angeles and UBS New York.  It was alleged that Agrama had also set up other companies to facilitate the laundering of the criminal proceeds.  They included Harmony Gold Ltd (domiciled in Hong  Kong), Meadowview Overseas Ltd and Olympus Trading Ltd (domiciled in Ireland).  It was further discovered that the above companies had common shareholders and company directors.  Paddy Chan Mei Yu (“Paddy Chan”) and Katherine  Hsu  May  Chun (“Katherine Hsu”), who are Hong  Kong residents, are the shareholders and directors of these companies.

11.    Italian authorities had also discovered that an approximate amount of 150 million Swiss Francs had been credited to the accounts opened at UBS Lugano under the names of Harmony  Gold Ltd, Wiltshire Trading Ltd and other companies traceable to Agrama.  Substantial deposits came from the account of Melchers Ltd held at Banca del Gottardo in Lugano.  Paddy  Chan and Katherine Hsu are the authorised signatories of Melchers Ltd’s account.

12.    Italian investigations had also revealed that Paddy Chan is the authorised signatory of the accounts of Wiltshire Trading Ltd and Melchers Ltd opened at UBS’s New York Branch.

13. Assistance sought by the request included, inter alia, searching the premises: (i) Flat C, 16/F Hung Fook Court, 169 Tin Hau Temple Road, Bedford Gardens, Hong Kong (residence of Paddy Chan); (ii) Flat C, 16/F Yuan Kung Mansion, Kam Din Terrace, 20 Taikoo Shing Road, Taikoo Shing, Hong Kong (residence of Katherine Hsu); (iii) 12/F Inchape Insurance Tower, 3 Lockhart Road, Wanchai, Hong Kong (registered address of Wiltshire Trading Ltd); and (iv) Room 1523, Prince’s Building, 10 Chater Road, Hong Kong (registered address of Harmony Gold Ltd, CS Secretaries Ltd and Loong Po Management Ltd) and seizing the things as itemized at A below relating to the persons and entities as identified at B below:

A: Things to be seized

(i)  company incorporation documents, articles of association, shareholding and capital (including the transfer, sale or purchase of shares) details, beneficial ownership, written resolutions, change of name, directors and secretaries or addresses information;

(ii) correspondence, notes agreements, contracts, letter of engagement, instructions;

(iii) invoices, receipts and payments;

(iv)    financial records, including company accounts, cash books, ledgers, profit and loss accounts, balance sheets and statements;

(v) banking records including mandates, cheque books, cheques journals, statements of account for all accounts held, cheque stubs and paid cheques, money transfer instructions and any correspondence with banks;

(vi)    powers of attorney;

(vii)    bank drafts, loan certificates of deposits, and guarantees;

(viii)   documents relating to Trusts (including trust deeds and appointment of trustees) set up for the benefit of the company or associated persons;

(ix)    investment certificates, share certificates, certificate of title and ownership;

(x) minutes of meetings, file notes, working papers, reports, diary notes, telephone attendance notes, internal memoranda;

(xi)    documents relating to service provided, including valuation services, acquisition, sale or possession of film rights;

(xii)    contact addresses and telephone numbers;

(xiii)   documents relating to any external storage facility; and

(xiv)   documents relating to any management agency, fiduciary or formation agent used by the individual or company.

B: Persons and entities identified

Persons

Farouk Agrama (also known as Frank Agrama)

Colleen Morris

Vilma Thomas

Silvio Berlusconi

Pier Silvio Berlusconi

Marina Berlusconi

Daniele Lorenzano

Carlo Bernasconi

Roberto Pace

Gabriella Ballabio

Giovanni Stabilini

Aldo Spagnoli

Guido Babieri

Luca Dermitzel

Oscar Garzotto

Bruce Gordon

Peter Mustaky Cary

Gary Marenzi

Joe Lucas

Companies connected with Farouk Agrama

Harmony Gold HK Ltd

Harmony Gold Usa

Wiltshire Trading Ltd

Melchers N.V. Ltd

Meadowview Overseas Ltd

Olympus Trading Ltd

The Agrama Trust

Companies connected with Silvio Berlusconi

Fininvest

Silvio Berlusconi Finanziaria

Societé Financiére d’Investissement

Principal Network Ltd

International Media Services Ltd

Waotu Investment Ltd

Other companies

Mediaset

Mediatrade

RTI

Paramount

Banks

Sanwa Bank

Bank of The West

UBS Lugano

UBS New York

UBS Hong Kong

Banca del Gottardo

Cedars Bank

National Irish Banks

14.    It was also requested that the Italian authorities that were involved in the prosecution and investigation of the criminal matter in Italy be allowed to assist the Hong Kong authorities in the execution of the search warrants.”

48.  The evidence of DSI Leung was that, on 16 January 2007, he laid an information before the magistrate at Eastern Magistracy which sought:

“….the issuance of the search warrants authorising myself, with such other assistance and by such force as is necessary and reasonable, to enter the above premises and to search for and seize any such things (specified)”.

The things to be searched and seized were specified in the information in the terms contained in paragraph 13A, of DSI Leung’s affidavit as set out in paragraph 49 above.

49.  Mr McCoy takes the point that in the letter of request there was no formal request for the search of the office premises of Harmony Gold, Wiltshire Trading, or CS Secretaries. 

50.  It is clear however that warrants were issued by a magistrate in respect of those premises in response to information by affidavit.  Although the information itself is normally a confidential matter and is usually not disclosed, in the present case, albeit with some reluctance, the information was ultimately disclosed.  It is essentially in the terms set out in DSI Leung’s affidavit, and I am satisfied that that affidavit accurately reflected the terms of the information.  The involvement of the three companies, and their particular association with the investigation, was set out in the information.

51.  There is no dispute that the three companies could not have been properly involved in the warrants.  I see no reason at all why, following the issue of the formal letter of request, and in the discussions which undoubtedly followed, between Mr de Pasquale and the Department of Justice, the matter was clarified, resulting in those three companies being included in the warrants.

52.  The omission of those three companies from the letter of request, is not a basis upon which the warrants may be set aside.  The point, to be fair, was not pursued other than in written submission.

53.  DSI Leung said that he did not specifically inform the magistrate that “such other assistance” would include the Italian investigation team who would be present and assist the police during the execution of search warrants. 

54.  In cross-examination DSI Leung said that although there had been no mention in the information that the representatives of the Italian prosecutors wanted to be present research, he felt comfortable to proceed with the application for the warrant in terms without those facts being stated.  He gave his reasons for that in the following terms:

“So I regarded the presence of the Italian officers as some kind of assistance.  They only assist me in identifying documents relevant to their investigation.  That’s what I always keep -- I kept on reminding my boys during my subsequent briefings, that they should not allow the Italian offices to do the search, they are only present -- they were only present to assist us to identify relevant documents.”

55.  The four warrants were issued by the magistrate, addressed to DSI Leung in the following terms:

“NOW THEREFORE I, under section 12 of the Ordinance, hereby authorise you, for the purpose of assisting in that prosecution and continuing investigation in relation to those external offences, with such assistance, and by such force, as is necessary and reasonable:

At any time of the daily between 7:00 a.m. and 10:00 p.m., to enter into the said premises to search for the things kept in paper or computerized form, described in Schedule A being things connected with the individuals and/or institutions listed in Schedule B;

and to seize those things found in the course of the search that you believe, on reasonable grounds, to be relevant to the prosecution and continuing investigation in relation to those external serious offences.” (original emphasis)

The warrant thereafter set out, in Schedule A, the documents, and in Schedule B, the persons and companies and banks, described in paragraph 14 of DSI Leung’s affidavit.  It will be noted that the expression that appears in s 12(3) MLAO; “with such assistance, and by such force, as is necessary and reasonable”, was included in the warrants.

56.  Four search warrants were issued, one in respect of each of the four sets of premises at Taikoo Shing, (Ms Chan’s home), Tin Hau Temple Rd, (Ms Hsu’s home), Wanchai, (the office of Wiltshire Trading and Prince’s Building, (the office of Ms Chan and Ms Hsu and the companies Harmony Gold, CS Secretaries and Loong Po.

The execution of search warrants:

57.  The Italian officers came to Hong Kong in order to take part in the searchers, as Mr de Pasquale had indicated in the letter of request.  They were Mr de Pasquale, a prosecutor, (as I understand it, the equivalent of a Hong Kong Government Counsel), Mr Sergio Spadaro, also a prosecutor, and two KPMG forensic accountants who were described as “consultants” to the prosecutors, Ms Gabriella Chersicla, and Mr Stefano Martinazzo.  Of those four, at least Mr de Pasquale, Ms Chersicla, and Mr Martinazzo had been involved in the searches undertaken in California.

58.  Prior to the execution of search warrants DSI Leung briefed his team members, comprising himself, a sergeant, two detective constables, and two constables.  The team was divided into two, with DSI Leung, a woman detective constable, and a constable to be responsible for searching the residence of Ms Hsu, and the office premises of Wiltshire Trading in Wanchai.  The other team, led by Sgt 20868, Ho Chi Pui, with a detective constable and constable, was assigned to search the residence of Ms Chan.  After those searches, the two teams would join together in order to search the office premises of Harmony Gold and other companies, at Prince’s Building in Central.

59.  Each team was assisted by two of the Italian officers.  With DSI Leung’s team were Mr Spadaro and Ms Chersicla.  With Sgt Ho’s team were Mr de Pasquale and Mr Martinazzo.

60.  DSI Leung said that in the course of the briefing he instructed the teams that the Italian officers were to be present to help them to identify materials relevant to the criminal matter in Italy.  He said that they were told that if the searching police officers found anything apparently covered by the search warrants during the search, they would confirm with the Italian officers the relevancy of the documents, which would then be seized.  Each team had a copy of the search warrants.

61.  DSI Leung agreed that he would have been able to conduct the searches without the presence of the Italian officers.  He said however, and I accept, that in those circumstances the search would have been more difficult.  His evidence was that with the Italian officers present the search was more “conveniently” undertaken because of their ability to identify relevant documents.

62.  At each search scene, the Hong Kong police officers, announced their presence to the person answering the door, and informed that person that the police were present to execute a search warrant.  On each occasion, in response to that information, the police were granted admission to the premises.  The Italian officers were immediately introduced, the reason for their presence explained.

Ms Chan’s home:

63.  Upon the police entering Ms Chan’s home, Ms Chan requested the opportunity to telephone a lawyer friend.  She did so, and as a result of advice received from that lawyer, raised no objection to the search taking place.  Ms Chan said that during the search, whilst she was watching, the two Italian officers remained in her sitting room.  She was informed that the search was concluded, and went to a shrine room in her home, for approximately one hour.

64.  She was unaware of what happened during the time that she was in the shrine room, but believed, because documents had apparently been found next to her fax machine, that further searching had taken place in her absence.  Because she had been absent she was not able to identify the nature of that search.  She said that when she came out of the shrine room she was asked to turn on her laptop computer which uses a Chinese operating system.  She said that one of the Hong Kong police officers went through the documents saved on the computer, describing those to an Italian officers, in English.

65.  Ms Chan did not see the Italian officers undertaking any search at all at her home.  She “believes” that they may have engaged in searching during the period that she was in her shrine room but there is no substantive evidence to substantiate that belief.  It is right that she had earlier been told the search was concluded, and that when she came out of the shrine room, after about an hour, further documents had been located.  However, there is nothing to suggest that it was the Italian officers who had located those documents.

66.  The evidence of the solicitor, Ms Grace Fong was that by the time she arrived at Ms Chan’s home, and inspected the search warrant, she was informed that the search of the premises had been concluded.  She did not suggest that the Italian officers were involved in the search in Ms Chan’s home.  After giving advice Ms Fong left the premises and went to the home of Ms Hsu.  Before she left it was agreed with the police officers that they would remain in contact with her, as Ms Fong wished to be present at the search of the office at Prince’s Building.

67.  The evidence of the police officers was that it was they who conducted the search, only consulting the Italian officers when they wished to clarify the relevance of documents found.  They said that the Italian officers did not take part in the search.

68.  Two exhibits were seized from Ms Chan’s home.  Those two documents came from the documents that had been adjacent to the fax machine. 

69.  Ms Chan was subsequently taken to Prince’s Building for the office search.

Ms Hsu’s home:

70.  The evidence of Ms Hsu was that the police arrived at her home at approximately 7:30 a.m. when she was asleep.  Her husband answered the door, and realising that the matter concerned his wife, called Ms Hsu to the door.  Upon being told that the police had a search warrant, Ms Hsu admitted the police party to her flat.  Ms Hsu then telephoned Ms Chan, as a result of which she too contacted the solicitor, Ms Fong.

71.  Ms Hsu’s evidence was that a female Italian officer, (Ms Chersicla), searched the sitting room, and the male Italian officer, (Mr Spadaro), searched a workroom.  She said that two male Hong Kong police officers remained in the sitting room with her, observing what was happening as the search was undertaken by the two Italian officers.  In the course of the search, she said that Mr Spadaro asked to switch on her laptop computer, which she did, after which Mr Spadaro went through all of the computer files, including checking the contents of floppy disks.  No documents were seized.

72.  Again it was the evidence of the police officers engaged in the search that it was they who had undertaken the search, consulting the Italian officers to determine the relevance of documents found.

73.  WDPC Lai was part of the police party who searched Ms Hsu’s home.  In her affidavit she said:

“During the search in the living room, Ms Chersicla was to help me identify whether the documents were relevant.  When I found documents that may be relevant, I passed them to Ms Chersicla and she would read the documents and advise me on their relevance.  She did not pick up any documents herself or rummage through the items in the premises, although she had opened one or two drawers of the shoes locker and briefly look into the drawers for about 10 seconds or so, in which they contained medicines, photos, and other miscellaneous items but not any document.” (sic)

74.  She said that she did not pay attention to the details of the search of the computer, although she noticed that it was DSI Leung who was controlling the computer, but not Mr Spadaro, who was there beside DSI Leung.  The evidence of DSI Leung was that it was he who requested Ms Hsu to turn on her computer and that he, together with Mr Spadaro went through the contents.

75.  However, the evidence of WDPC Lai was inconsistent with a notebook entry made by her at the time of the search, and countersigned at her request by Ms Hsu.  The entry stated:

“During the period of search conducted by police, a prosecutor from Italy and the forensics accountant from Italy also conducted a search of the scene.”  (my emphasis)

76.  WDPC Lai was cross-examined on this entry.  In cross-examination WDPC Lai, when asked if the notebook entry was true, said:

“A:    Well, but, well, what I meant by writing these few lines here actually, what I meant is - please refer to page 49 in Chinese original - the search was conducted by us, the Narcotics Bureau’s people, we were responsible for.  And on page 50 in the Chinese original, here, the sentence I wrote on page 50, I meant, during the search that we police were conducting, the Italian prosecutor and the forensic accountant - Italian forensic accountant were also present during the search.  So what I meant was the search was being conducted with the presence of that.

Q  But you – sorry.

A   That’s that I thought and these were the words I put down, and that was what I actually meant but it did not mean that they actually do it.” (sic)

77.  WDPC Lai was pressed by counsel on the notebook entry, it being suggested that the words used were used because the two Italian officers had in fact conducted a search.  That was denied.

78.  Ms Fong said that when she arrived at Ms Hsu’s home, a Caucasian male and female:

“…were searching through Ms Hsu’s papers, so the house was messy when I first arrived.  They continued their search and whilst going through all documents and they did not pay any attention to me.  The search continued for over an hour.” (sic)

79.  She said further:

“A man I later learned to be one Italian prosecutor sat himself at Ms Hsu’s computer workstation and started reading the contents of Ms Hsu’s computer.  He also opened and examine the content of her floppy disks.  The search took just over two hours in total during which I believe the Italian and the Hong Kong Police officers went through almost each and every document and paper in Ms Hsu’s home.”

80.  No documents or computer files were seized from Ms Hsu’s home.

Wiltshire Trading’s premises:

81.  Following the search of the home premises of Ms Hsu, DSI Leung’s went, with Ms Hsu, to Inchape Insurance Tower, 3 Lockhart Road in Wanchai, the office address of Wiltshire Trading.

82.  The search warrant was produced to Ms Anita Leung, the assistant manager of a firm of certified public accountants who occupied the premises.  At the request of DSI Leung, Ms Leung, after obtaining approval from a partner in the firm, located two files relating to Wiltshire Trading and produced them to the police.  She said that the police officers showed the file to the Italian officers who checked the documents.  She said that upon seeing letters marked “sent client”, the Italian officers made an enquiry as to who the client was, and were informed by her that it was Ms Chan.

83.  Other than acknowledging that the Italian officers looked at the documents that were produced to them, Ms Leung did not suggest that the Italian officers engaged in a physical search.

84.  A Wiltshire file marked “Part 2” was seized and removed by the police.

Prince’s Building:

85.  Ms Chan, Ms Hsu and Ms Fong were present at the office in Prince’s Building during the course of the search.  When they arrived in the company of the police they found that other police officers were already there, perfectly sensibly, to secure the premises pending the search.

86.  The evidence of Ms Chan was that after the police officers took photographs of the office, and drew a diagram, the Italian officers asked Ms Chan’s assistant, Daisy To, (who did not give evidence), where files concerning the specific companies mentioned in the search warrant were located.  She said that Ms To showed them where the files were, and that the Italian officers then went through those files, reading the materials in the files.

87.  Ms Fong described the activities in this way:

“Immediately after arrival, Ms Chan told his staff to get out the files concerning the companies listed in the search warrant.  The Italian prosecutors, apart from going through the documents in files concerning the companies listed on the search warrant, they were examining other papers, documents, and files, including shelves and papers in Ms Chan’s office.  They were directing the Hong Kong police officers as to which documents to seize and which to make copies of.  Detective Senior Inspector Eddie Leung did not examined the documents.” (sic)

88.  She said further that all of the Italian officers, but particularly Mr de Pasquale, were: “going through each and every drawer and cupboard”.  The essence of her evidence was that the Hong Kong police took a passive role, being mainly responsible for compiling the list of materials they took away in preparing the boxes and making copies.

89.  Again, it was the evidence of the police officers that it was they who conducted the search, again, taking documents to the Italian officers to confirm relevance prior to seizure.

90.  The notebook of Sgt Ho contained the following entries:

“0615   DSI Leung K H briefed us regarding search warrant execution….  My team would go with Italian prosecutor Mr de Pasquale Fabio and Italian KPMG Mr Stefano Martinazzo assisting our search.

0735 I then explained to Ms Chan that the purpose of search and introduced to Italian officials to Ms Chan.  They would assist us in seizing relevant documents.

0815 Solicitor (Ms Fong) arrived.  I then showed her the search warrant  - introduced the two Italian officials to her.  They would assist us in seizing relevant documents.

1113 Italian prosecutor Sergio Spadaro and Italian accountant Gabriela turned up to the office and joined us for searching.” (sic)

91.  As well as the notebook entry, WDPC Lai made a formal Investigation Report, in which she described being briefed:

“….for a joint operation would be with the Italian Prosecutor and Italian accountant for the execution of E Mag Search warrant.”

92.  The notebook entry of PC Li Wai Chun, in relation to the search of the Prince’s Building search, contained the following entry:

“1100 Party started to search the office in the presence of F/Chan and solicitor F/Fong.”

93.  A total of 58 documents were seized from the office at Prince’s Building.

Analysis of the evidence as to the searches:

94.  First, the evidence does not substantiate an assertion that the Italian officers were physically engaged in the search at Ms Chan’s home.  There can be no complaint in this respect as to that search.

95.  Second, the evidence does not substantiate an assertion that the Italian officers were physically engaged in the search at the office premises of Wiltshire.  Following the production of the search warrant the documents were produced and only then examined for relevance.  Again, there can be no complaint in this respect as to that search.

96.  But there is evidence to substantiate the assertion that the Italian officers were physically engaged in the search at Ms Hsu’s home and in the office premises at Prince’s Building. 

97.  There was however a direct contradiction in the evidence.  The entire police party asserted that the only involvement on the part of the Italians was to observe the search and give advice on the relevance of documents.  The subjects of the search were equally insistent that the Italian officers had taken an active role in the search, in the sense that they had physically engaged in going through desks, drawers, boxes and the like, searching for documents.

98.  I have come to the conclusion, on the balance of probabilities, bearing in mind the seriousness of the allegation, that the Italian officers were, as asserted by the subjects of the search, actively engaged in the search of Ms Hsu’s home, and the office premises at Prince’s Building.  I have reached that conclusion for the following reasons.

99.  First, it is quite plain from Mr de Pasquale’s original application for assistance that he wished to personally take part in the search.  He said so in terms.  There is nothing in the evidence to suggest that he changed his mind, or that he was persuaded by the Department of Justice or the police officers that the role of the Italian officers would be limited to merely giving advice is to relevance of documents.  He came to Hong Kong to “take part in the search” and he has not said otherwise.

100.  It is right that the police notebooks show that “the role of the Italians” was a matter that was discussed at the briefing.  But although Sgt Ho’s notebook records the Italians officers were to be consulted as to relevance, he says also that the Italian officers: “would assist us in seizing relevant documents”.  The contemporary documentary evidence does not suggest that the role of the Italian officers was to be limited in the manner asserted at trial.

101.  To the contrary, the whole tenor of the notebook entries set out above indicates no distinction whatsoever between the role of the Hong Kong police officers and the Italian officers.  The plain message conveyed by those notebook entries is that the whole party intended to, and in fact, acted together in undertaking the physical search.

102.  There is nothing to suggest that Mr de Pasquale, having expressed an intention to come to Hong Kong to take part in the search, and having come to Hong Kong for that purpose, decided not to have his team engaged in the active searching, but to restrict them to a passive role, that of examining seized documents for relevance at the scene.

103.  Second, that the Italian officers took an active part in the search in Hong Kong is entirely consistent with their activities in California. 

104.  The great weight of the evidence, notwithstanding Mr de Pasquale’s untested attempts to say otherwise, points to the active involvement by the Italian officers in the California searches.  That was precisely why the United States Attorney for the Central District of California capitulated in the proceedings there, and returned all the documents. 

105.  It is not without significance that the searches in Hong Kong took place prior to the decision by the United States Attorney to return the documents seized in the search in California.  Although an argument was going on in California, and Mr de Pasquale was asserting his position, he had no reason to believe at that time, that his team’s active involvement in the search would have the result that ultimately occurred.  That being the case, there was no reason why he would not “take part” in the searches in Hong Kong, as he had asked.

106.  Having actively and physically engaged in the search in California, it is entirely logical that the Italian officers should also actively and physically engage in the searches in Hong Kong.

107.  Third, the entry in the notebook by WDPC Lai is particularly significant.

108.  It is plain in its terms.  The plain meaning of the words is that the Italian officers were physically and actively engaged in the search in Ms Hsu’s home.  The terms of WDPC Lai’s affidavit are quite inconsistent with the notebook entry and are an attempt to minimise the involvement of Ms Chersicla in the search.  I am satisfied that the affidavit has been drawn with hindsight of the issue, and the knowledge of the notebook entry, resulting in a clumsy attempt to escape the plain meaning of the words in the notebook.

109.  The answers given by WDPC Lai in cross-examination were evasive, and again sought to deny the plain meaning of plain words in the notebook.  I have no doubt at all, that if the Italian officers had simply observed the search, giving advice as to relevance of documents, and not actively taken part in the search, the entry would not have been made in the terms that were made.

110.  I am accordingly satisfied that both Mr Spadaro and Ms Chersicla were actively and physically engaged in the search in Ms Hsu’s home. 

111.  Having so found, for the same reasons, I prefer the evidence of Ms Chan, Ms Hsu and Ms Fong as to the activities of the Italian officers in the Prince’s Building office.  I am satisfied that all four Italian officers were actively and physically engaged in the search of those office premises.

112.  It is clear however, that the active physical engagement of the Italian officers in the search process was collateral to their primary role in determining the relevance of documents.  I am satisfied, on the whole of the evidence, that their primary role was to inspect documents or files brought to them by the Hong Kong police officers for the purpose of ascertaining the relevance of those documents or files to their investigation.  But addition to that, in both Ms Hsu’s home, and the office at Prince’s Building, I am satisfied that the Italian officers from time to time physically examined shelves drawers or cupboards, and removed for inspection documents there located.

113.  In reaching my conclusion I have not placed no weight upon the submissions made by Mr McCoy as to the circumstances in which the letters of request from Hong Kong for the examination of the Italian officers in Milan came to be revoked.

114.  In the context of common law proceedings the only relevant factor that arises from the failure of the Italian officers to come to Hong Kong to give evidence and be cross-examined, or to submit to cross examination pursuant to letters of request, is that I do not have the benefit of hearing directly from them as to any answers they may have the assertions made against them.  That must impact, adversely, on the assertions of the respondents in the evidence.  In simple terms, the best evidence that could have been put before the court, that a person is personally involved, was not before me.

115.  For the foregoing reasons, I am satisfied that, as alleged by the applicants, the Italian officers took an active role in the search of Ms Hsu’s home, and the office at Prince’s Building.

Steps taken with the documents after seizure:

116.  The procedure to be followed, after seizure of anything in the search under MLAO is set out in s 12 (7-11), see para.128 below. 

117.  First, anything seized must be delivered into the custody and control of the Commissioner of Police: s 12(7).  The Commissioner keeps those things for a period not exceeding one month from the date of seizure, pending a direction from the Secretary for Justice as to the manner in which the thing is to be dealt with: s 12(8).  That direction may include a direction that the thing be sent to an appropriate authority of a place outside Hong Kong.

118.  The authorised officer who executes a search warrant is required, as soon as practicable after the execution of the warrant, to give to the occupier of premises a notice setting out his name and rank, the name of the magistrate who issued the warrant and the day on which it was issued, a description of anything seized, and, if that occupier requests, a copy of any documents seized: s 12(9).

119.  The Secretary for Justice cannot give a direction to send the original thing outside Hong Kong unless the appropriate authority of the place to where it is to go again is notice in writing setting up the grounds on which the original of the thing is required for the purposes of the criminal matter concerned in that place: s 12(11).  There is apparently no restriction upon copies being given to the overseas authorities who have requested the search.

120.  The two documents seized at Ms Chan’s home, one documents seized at the Lockhart Road premises of Wiltshire Trading, and 58 documents seized at the office at Prince’s Building were collected together by WDPC Lai, who had been designated as the exhibits officer.  Following the search, she took those documents to Police Headquarters in Arsenal Street Wanchai, where they were kept for safe custody.

121.  That afternoon, on the instructions of DSI Leung, WDPC Lai assisted the Italian officers to study the seized documents at Police Headquarters.

122.  At 16:53 hours on the afternoon of the search DSI Leung received a faxed letter from the solicitors for the applicants asserting legal professional privilege, (LPP), in relation to the seized documents.  In her first affidavit, dated 23 May 2007,  WDPC Lai said that following the receipt of letter:

“…DSI Leung therefore asked me to stop studying these documents and I locked all the seized documents.  At 1730 hours, the Italian officers left our office.”

123.  The affidavit proved to be significant in the matters that it did not disclose.  The affidavit did not disclose that the Italian officers had not only been inspecting documents, but that they had been making notes and photocopies of documents.  In a subsequent affidavit, not filed until 13 September 2007, DSI Leung revealed this:

“In view of the LPP claim, I asked the Italian officers to stop inspecting the seized documents and hand all the notes and photocopies of the seized documents to the Police as I believed they were not empowered to keep the documents until the matter was resolved in court.  The Italian officers understood and agreed, and the notes and photocopies of the seized documents were handed to (WDPC Lai).  I also asked WDPC Lai to check the bags of the Italian officers and confirm that they did not take away any notes or photocopies of the seized documents and WDPC Lai did so.

At the material time, it was my concern and I wished to confirm that the Italian officers would not take away the notes and photocopies of the seized documents and that nobody could read them again.  As all the seized documents would be sealed later, I considered that the best way to deal with the notes and photocopies of the seized documents was to destroy them so that nobody could read them again before the matter was resolved.  Therefore, I instructed WDPC Lai to shred the notes and photocopies of the seized documents and she did so with the shredding machine placed near the Conference Room.  Only WDPC Lai and I were involved in getting back the notes and photocopies of the seized documents and the shredding of them.  No log or copy of the shredded notes and photocopies of the seized documents was kept.”

124.  This information, plainly, should have been disclosed to the applicants immediately, when the events occurred in January 2007.  The concealment of the information, for that is what it was, serve no purpose other than to heighten the suspicion of the applicants as to the conduct of the police officers and Italian officers in this matter.

125.  Equally plainly, the notes and photocopies should not have been shredded, but should have been retained and sealed as they potentially constituted relevant evidence in the proceedings.

126.  At the end of the day, there being no LPP issue, and the documents and notes having been shredded, and accordingly not taken to Italy, there has been no harm.  That is merely fortuitous.

The provisions of the MLAO:

127.  It is appropriate at this point to review the statutory regime.  The long title of the MLAO sets out its purpose:

“An Ordinance to regulate the provision of obtaining of assistance in criminal matters between Hong Kong and places outside Hong Kong; and for matters incidental thereto or connected therewith.”

Although formal regulations applying in the Ordinance between Hong Kong and the Italian Republic have been gazetted[5], those regulations are not yet in force and are not applicable to the present issues.  Notwithstanding that, there was no dispute that it was open to the Italian Republic to approach Hong Kong and seek assistance under the provisions of the MLAO.

128.  The starting point for a consideration of the regime is s 8.  By that provision a request by a place outside Hong Kong, to Hong Kong for assistance in criminal matter may be made to the Secretary for Justice.  The specific information that is required to accompany a request is set out in s 8(2).  Section 10 sets out the procedure where the request is made for the taking of evidence in Hong Kong. 

129.  Part III of the MLAO, in s 12, deals with assistance sought to be given by Hong Kong in relation to search and seizure.  The relevant provisions of the section, so far as this litigation is concerned are as follows:

“12    (1) Where-

(a) a criminal matter involving an external serious offence has commenced in a place outside Hong Kong;

(b) there are reasonable grounds to believe that a thing (including a thing belonging to a class of things) relevant to the criminal matter is located in Hong Kong; and

(c) an appropriate authority of that place requests the Secretary for Justice to arrange for the issue of a search warrant under this section in relation to that thing,

the Secretary for Justice may nominate in writing an authorized officer to apply to a magistrate for the search warrant so requested. (Amended L.N. 362 of 1997)

(2) Where an authorized officer nominated under subsection (1) has reason to believe that the thing to which the request relates is, or will, at a specified time, be-

(a)- (d) (omitted)

(e) upon or in any premises,

the relevant officer may-

(i) lay before a magistrate an information on oath setting out the grounds for that belief; and

(ii) apply for the issue of a warrant under this section.

(3) Where an application is made under subsection (2), the magistrate shall, subject to subsection (4), issue a warrant authorizing an authorized officer (whether or not named in the warrant), with such assistance, and by such force, as is necessary and reasonable to do such of the following as are specified in the warrant-

(a)  (omitted)

(b) to enter upon land, or upon or into premises, specified in the warrant;

(c) to search any such land or premises for the thing; and

(d) to seize any thing found in the course of any such search that the relevant officer believes, on reasonable grounds, to be relevant to the criminal matter in the place outside Hong Kong concerned.

(4) A magistrate shall not issue a warrant under this section unless-

(a) the informant or some other person has given to the magistrate either orally on oath or by affidavit, such further information, if any, as the magistrate requires concerning the grounds on which the issue of the warrant is sought; and

(b) the magistrate is satisfied that there are reasonable grounds for issuing the warrant.

(5) There shall be stated in a warrant issued under this section-

(a) the purpose for which the warrant is issued, including a reference to the nature of the criminal matter in relation to which the search is authorized;

(b) whether the search is authorized at any time of the day or night or during specified hours of the day or night;

(c) a description of the kind of things authorized to be seized; and

(d) a day, not being later than one month after the issue of the warrant, on which the warrant ceases to have effect.

(6) If, in the course of searching, under a warrant issued under this section, for a thing of a kind specified in the warrant, the authorized officer finds another thing that the authorized officer believes on reasonable grounds-

(a) to be relevant to the criminal matter in the place outside Hong Kong concerned or to afford evidence as to the commission of a Hong Kong offence; and

(b) is likely to be concealed, lost, destroyed or altered if it is not seized,

the warrant shall be deemed to authorize the authorized officer to seize the other thing.

(7) Where an authorized officer finds, as a result of a search in accordance with a warrant issued under this section, a thing which the authorized officer seizes wholly or partly because he believes the thing on reasonable grounds to be relevant to the criminal matter in the place outside Hong Kong concerned, the authorized officer shall deliver the thing into the custody and control of the Commissioner.

(8) Where a thing is delivered into the custody and control of the Commissioner under subsection (7), the Commissioner shall arrange for the thing to be kept for a period not exceeding one month from the day on which the thing was seized pending a direction in writing from the Secretary for Justice as to the manner in which the thing is to be dealt with (which may include, subject to subsection (11), a direction that the thing be sent to an appropriate authority of a place outside Hong Kong). (Amended L.N. 362 of 1997)

(9) An authorized officer who executes a search warrant issued under this section shall, as soon as practicable after the execution of the warrant, give to the person, or give to the owner or occupier of the land or premises or leave in a prominent position on the land or at the premises, as the case requires-

(a) a notice setting out-

(i) the name and rank of the authorized officer;

(ii) the name of the magistrate who issued the warrant and the day on which it was issued; and

(iii) a description of any thing seized and removed in accordance with the warrant; and

(b) in the case of any such thing which is a document, a copy of the document if that person, owner or occupier, as the case may be, so requests.

(10) (Omitted)

(11) The Secretary for Justice shall not give a direction under subsection (8) that the original of a thing be sent to the appropriate authority of a place outside Hong Kong unless-

(a) the appropriate authority of the place has, not more than 1 month after the thing was seized, given the Secretary for Justice a notice in writing setting out the grounds on which the original of the thing is required for the purposes of the criminal matter concerned in that place; and

(b) in any case where the Secretary for Justice is of the opinion, after considering all the circumstances, that the original of the thing should be returned to Hong Kong upon the conclusion of the proceedings relating to that criminal matter, the appropriate authority has given an unqualified undertaking to the Secretary for Justice that the original of the thing will be so returned. (Amended L.N. 362 of 1997)

(12) In this section, "Commissioner" (部門首長) means, where the authorized officer concerned is an authorized officer by virtue of-

(a) paragraph (a) or (d) of the definition of "authorized officer", Commissioner within the meaning of the Police Force Ordinance (Cap 232);

(b) paragraph (b) of the definition of "authorized officer", Commissioner within the meaning of the Customs and Excise Service Ordinance (Cap 342);

(c) paragraph (c) of the definition of "authorized officer", Commissioner within the meaning of the Independent Commission Against Corruption Ordinance (Cap 204).

(13)  (Omitted)

130.  The MLAO contains a specific definition of a “thing”.  There was no dispute that the items sought and seized in the searches fell within that definition.  There was no dispute that the matters being investigated by the Italian authorities constituted an “external serious offence”, as that expression is defined by the MLAO.

131.  The provision that was central to the argument for the applicants was that contained in s 12(3), permitting an authorised officer in possession of a warrant to have “such assistance as is necessary and reasonable”.

The context in which the issues are to be examined:

132.  Mr McCoy said, and Mr Grossman did not dispute the point, that the context in which the examination of the issues must take place, must begin with Article 29 of the Basic Law:

“The homes and other premises of Hong Kong residents shall be inviolable.  Arbitrary or under for search off or intrusion into a resident’s home or other premises shall be prohibited.”

133.  The MLAO is legislation which authorises an invasion of the homes and premises of Hong Kong residents, which would otherwise be impermissible, both by Article 29, and at common law.  In George v Rockett (1990) 170 CLR 104 at 110 the High Court of Australia said this:

“A search warrant thus authorises an invasion of premises without the consent of persons in lawful possession or occupation thereof.  The validity of such a warrant is necessarily dependent upon the fulfilment of the conditions governing its issue.  In prescribing conditions governing the issue of search warrants, the legislature has sought to balance the need for an effective criminal justice system against the need to protect the individual from arbitrary invasions of his privacy and property.  Search warrants facilitate the gathering of evidence against, and the apprehension and conviction of, those who have broken the criminal law.

…..

Nevertheless, in construing and applying such statutes, it needs to be kept in mind that they authorise the invasion of interests which the common law has always valued highly and which, through the writ of trespass, it went to great lengths to protect.  Against that background, the enactment of conditions which must be fulfilled before a search warrant can be lawfully issued and executed is to be seen as a reflection of the legislature’s concern to give a measure of protection to these interests.  To insist on strict compliance with the statutory conditions governing the issue of search warrants is simply to give effect to the purpose of the legislation.”

134.  I approach the task of considering the challenges made to the steps taken with that context firmly in mind.

135.  Mr Grossman accepted, I am satisfied correctly, that although the word “shall” is used in s 12(3) MLAO, it is clear, when that subsection is read with s 12(4), that the magistrate has a discretion to refuse to issue a search warrant where, in the circumstances, a search and seizure would be unreasonable. 

136.  The manner in which a magistrate must approach the exercise of that discretion is best set out in Philip KH Wong, Kennedy YH Wong & Co v ICAC [2009] 5 HKLRD 379, at paragraph 48, per Stock VP.

Consent to entry and search by occupiers:

137.  Much was made by Mr Grossman as to the fact that consent was given by the occupier of each of the premises searched for the searches to take place.  As I understood his position, that consent was a complete answer to any complaint that might be made in respect of the search warrants.

138.  The argument simply cannot stand.  It was not in dispute that at each of the premises searched, the warrant was produced and the search was conducted pursuant to the warrant. 

139.  In reality, no issue of consent on the part of the occupiers of the premises arose.  Permission was not sought from the occupier of the premises.  Instead the occupier was notified of the existence of the warrant, by which the police officers were lawfully entitled to enter the premises and search.  They could do so with or without agreement of the occupier.  It is right that when requested, Ms Chan was allowed to contact a lawyer before the search proceeded.  But that was merely a matter of courtesy, and the police would have been perfectly entitled to proceed with the search before that legal advice was obtained.

140.  It would only be in circumstances where a warrant was not produced, and the occupier of premises was quite unaware of the existence of the warrant, that a question of consent would be relevant.  That was plainly not the case in the present circumstances.

Was the Secretary for Justice or the magistrate misled:

141.  The argument that the Secretary for Justice was misled depends upon submissions that the letter of request, and the information, would effect of the following ways:

(i)  that Mr de Pasquale asserted in the letter of request that Mr Agrama was accused of misappropriating US$170 million, when in fact at the time the letter of request was received the amount had been reduced to US$19 million, and on the day prior to the issue of the search warrants, was reduced to US$741,024;

(ii) that the information, failed to inform the magistrate that the Italian officers had participated in the execution of search warrants at Mr Agrama’s home and office premises in Los Angeles;

(iii)    that the information, failed to inform the magistrate that proceedings had been taken by Mr Agrama in Los Angeles for the return of seized documents, and Mr de Pasquale refused to make himself available for cross-examination in those proceedings;

(iv)    that documents which might be subject to legal professional privilege, (LPP), might be encountered during the searches.

142.  Some of this information was made available to Ms Sit, in the e-mail correspondence that took place between herself and Mr de Pasquale in the lead up to the application for the search warrants.

143.  The argument that the magistrate was misled a further involves a submission that that DSI Leung admittedly failed to inform the magistrate, either orally or in the information, it was proposed that the Italian officers would be present during the search, in order to advise upon relevance of documents.  Instead, the information contained the following paragraph:

“9.1   I believe that search warrants, in terms of the attached for warrant should be issued pursuant to section 12(2) of the Ordinance.  I hereby apply for the issuance of the search warrants in a authorising myself, with such other assistance and by such force as is necessary and reasonable, to enter the above premises and to search for and seize any such thing is specified in paragraph 7 above.”

144.  The search  warrants when issued were addressed to DSI Leung, with the authority to search described as set out in paragraph 55 above.

The amount involved in the proceedings:

145.  While it is right that the amount alleged to be involved in the offence is being investigated had reduced substantially during the course of the investigation, that reduction, I am satisfied, did not result in the offences ceasing to constitute external serious offences, as that expression is defined in the MLAO.  Even if the amount involved was only US$700,000, it is not suggested that the definition could not be met.

146.  While it would have been better for Mr de Pasquale to have continued to update the Secretary for Justice on the state of the Italian proceedings, it is not suggested that the Italian proceedings were not brought in good faith, or that the investigation was not bona fide. 

147.  The obligation on someone seeking assistance is to satisfy the Secretary for Justice that a criminal matter involving an external serious offences commenced in a place outside Hong Kong, and that there are reasonable grounds to believe that a thing relevant to that criminal matter is located in Hong Kong.  So long as the matter remained an external serious offence, there was no obligation on Mr de Pasquale to inform the Department of Justice of the developments in Italy, although that would have been preferable.

148.  I reject the argument that the reduction in the amount involved in the proceedings as a basis upon which the warrants may be set aside.

The Los Angeles circumstances:

149.  While these matters are relevant to the assessment of the evidence as to the steps taken by the Italian officers in Hong Kong, I am satisfied that they are not relevant to the decision to be made by the Secretary for Justice, or the magistrate, in relation to the issuance of the search warrants.

150.  The Italian officers were perfectly entitled to take steps in other jurisdictions, and there is nothing in the provisions of the MLAO requiring information of those steps to be disclosed in a Hong Kong application.  That steps were being taken in other jurisdictions in order to recover seized documents, or prevent searches, are matters which arise from the laws of those particular jurisdictions and do not impact upon the discretion to be exercised in Hong Kong.

151.  In so far as it is a fact in relation to the Los Angeles proceedings, that Mr de Pasquale was not willing to give evidence in the subsequent challenge, by itself, is not a matter that required disclosure.  I will consider his refusal to give evidence further when considering whether the Italian officers were entitled to be present at the searches.

The presence of the Italians at the searches:

152.  This issue arises only in respect of the magistrate’s decision to issue the search warrants.  It is clear from the papers that the Department of Justice were fully aware of the fact that the Italian officers intended to be present at the searches.  The Secretary for Justice was not misled in this respect.

153.  The case for the respondents is that it was intended that the Italian officers would be present during the search in order to advise the Hong Kong police officers as to the relevance of things found, in order that decisions could be made as to seizure.  I propose to consider the submission on the basis that the role of the Italian officers would be so limited.

154.  The critical expression in the MLAO is that there may be such “assistance as is necessary and reasonable”.  There will be certain circumstances in which it will be obvious that assistance given to police officers in the course of the search will have been necessary and reasonable.  The most obvious one is if police officers are physically unable to gain entry to premises for search pursuant to a warrant.  Plainly, they must in those circumstances be able to seek the assistance of, say, a locksmith to open a lock. 

155.  Just as necessary and reasonable assistance may be given, so may necessary and reasonable force used.  In appropriate circumstances necessary and reasonable force may involve a forced entry to premises.

156.  In so far as the role of the Italian officers was intended to be limited advising on relevance of documents, I accept that their presence during the search for that purpose was both reasonable and necessary. 

157.  In R v Secretary for State for the Home Department, ex parte Fininvest SpA & Ors [1997] 1 All ER 942, the Republic of Italy had sent a request to the United Kingdom for search warrants in relation to fraud and false accounting investigations into Fininvest SpA.  Apparently as a result of specific provisions in the Police and Criminal Evidence Act (UK) six named Italians were permitted to accompany the police constable executing the round.  The presence of the Italian officers was not challenged in the proceedings, and Simon Brown LJ made the following comment at p 950:

“Six named Italians were permitted to accompany any police constable executing the warrant.  This had been specifically requested for obvious good reason: the documents related to highly complex matters and many were in Italian.  The Italians were there to advise where necessary as to which documents fell within the terms of the warrant.”

158.  Mr McCoy relied upon a decision of the Northwest Territories Supreme Court, (Canada); Federal Republic of Germany v Ebke (2001) 158 CCC (3d), where the warrant permitted a police officer from the requesting state to be in attendance during the search as an observer or resource person.  That observer took a more active role and examine things brought to his attention by the Canadian officers and gave advice on whether or not things should be seized.  The court held that in extending his role, that officer had gone beyond the role of observer.

159.  First, the decision needs to be seen in terms of the particular legislation.  The legislation concerned contained a provision which prevented the requesting state from examining any seized material before an order was made sending it to the requesting state.  By examining documents and giving advice on whether or not things should be seized, the court held that the officer had undermined that provision in the legislation.  As will be seen from the discussion below, (see paragraphs 206-211) there is no similar provision in the Hong Kong legislation.

160.  Second, the decision was criticised in R v Budd, a decision of the  Ontario Superior Court of Justice, reported in Westlaw, as 2004 CarswellOnt 3483.  There are, McKinnon J said, at 21-22:

“I am unable to agree with the decision in Ebke.  If giving directions as to what may be searched for and examining certain items during the course of the search “defeats the entire purpose of these statutory provisions” then Officer Trede should probably not have been permitted to attend as an observer.  As I pointed out earlier in these reasons, Article VIII of the Treaty between Canada and the United States specifically contemplates the presence of foreign agents during the course of the search.  It must be remembered that the search is in furtherance of crimes alleged to have been committed in a foreign jurisdiction.  The foreign agents know the case they are attempting to mount.  The fact that they may be permitted to make suggestions to their Canadian counterparts as to what should be seized and what should not be seized to me makes eminent good sense.  Obviously, materials should not be retained by foreign agents, nor copied, nor notes taken as to what has been seized, until a hearing has been held pursuant to s 15.  But I have no objection to foreign officers actively participating in the search and providing direction to their Canadian counterparts as to what may be relevant or irrelevant.  Obviously, the foreign agents must be subject to the supervision of Canadian peace officers and at all times act in accordance with Canadian law and within the four corners of the specific warrants.  However, it seems to me that searches conducted under MLACMA[6] should not be a game of “blind man’s buff”.  Foreign agents on occasion may be necessary and integral to an orderly search.  They should be able to observe the material of interest and advise as to its materiality to the foreign case.  Permitting foreign estate agents to be present during the execution of warrants under the Act should not be viewed as an affront to Canadian sovereignty.  On the contrary, the practice might be regarded as an enhancement of Canadian sovereignty, signifying a commitment to Canada’s place in the world is a cooperative partner to our Treaties with foreign nations who are resolved to combat international crime, whose perpetrators have no regard for borders and a demonstrated contempt for the sovereignty and laws of individual nations.”

161.  In Dunesky v Commonwealth of Australia (1996) 89 A Crim R 372, domestic search warrants were issued to police to assist enquiries made by the Australian Taxation Office, (ATO), into alleged tax offences against the Commonwealth. 

162.  The search was undertaken in the presence of ATO officers.  The relevant provision conferring authority for the search stated that the constables named in the warrant “with such assistance….as is necessary and reasonable” might enter the premises and conduct the search.  The applicant challenged the presence of the ATO officers during the search.  Lockhart J in the Federal Court of Australia rejected the challenge, saying, 384:

“But the presence of persons other than those authorised to execute the warrant is not fatal to the validity of the execution.  I do not accept the argument of counsel for the applicants that on its proper construction s 10 does not authorise persons, other than the police officers named in the warrant, to give assistance beyond assistance in the nature of “locksmith’s assistance”.  The authority conferred by s 10 upon constables named in the warrant to enter premises and seize things found therein is to pursue these activities with such assistance….as is necessary and reasonable”.  The obtaining of the assistance with entry, search (by implication), and seizure is not limited merely to assistance with entry of the premises.  This follows both from the literal construction of s 10 and its obvious intent.  The assistance includes assistance in relation to seizure of things, which in turn must carry with it, by implication, inspection of the articles, including documents, to see if they come within the terms of the warrant.

The facts and circumstances that surround this matter are complex and have involved years of investigation by the Australian Taxation Office into the activities of the applicants.  In my view it is not only permissible under  s 10 of the Crimes Act for ATO officers to accompany the police officers on the search; but it is probably in the interests of both the prosecuting authorities and the applicants that they do so.  Who better to assist in the identification of relevant documents (i.e. relevant according to the terms of the warrant) than the ATO officers who are intimately conversant with the subject matter of their audits?  It is true that the ATO officers cannot take over the role of the police officers in the conduct of the search and seizure of documents; but plainly they were retained for the purpose of distinguishing between relevant and irrelevant material, that is material which would or would not answer the description of the documents in the warrants themselves.  ”

163.  In R v Middlesex Guild Hall Crown Court, ex parte Tamosious & Partners (a firm) [2000] 1 WLR 453, the Inland Revenue Department obtained search warrants of the offices of an international legal practice.  It was consequently obvious that LPP issues may arise.  As a matter of caution, the officers executing the warrant took with them legal counsel to determine legal privilege, if asserted over material seized. 

164.  The applicants challenged the presence of legal counsel during the search.  The relevant provisions in the legislation allowed an officer searching premises to “take with him such other persons as appeared to him to be necessary”.

165.  The court held that the limiting words “as may appear necessary” only prohibited the presence of persons who could not be reasonably expect to assist in any of the tasks authorised under the warrant.  As to the presence of counsel the court said at 464D:

“Indeed, I would have thought that his presence, in cases such as these, was to be encouraged, so long as it is understood that his presence should not inhibit a solicitor who wishes to assert a genuine claim to a legal professional privilege from making his assertion as speedily as he came before the courts.”

166.  The common theme through these decisions is to take a sensible approach to the involvement of persons other than police officers in searches. 

167.  It is entirely sensible that the Hong Kong police officers should have the assistance in the search of officers who are familiar with the nature of the offence alleged and the factual parameters of the offence.  Fraud or misappropriation offences, particularly when committed on an international scale, can involve a wide range of documents.  Until a search is undertaken, it is unlikely that investigators will know precisely what documents may be available to assist in establishing the offence.  Without the presence of investigators familiar with the offence and circumstances it may be necessary for large numbers of documents to be seized, only subsequently to be returned as irrelevant.

168.  Mr McCoy also relied upon Hartnett & Ors v New South Wales, (unreported, 19380/93, New South Wales Supreme Court, 31 March 1999).  There however, the legislation required the warrant to name the officer or member of the police force who was to conduct the search.  There is no similar requirement in the Hong Kong legislation: see s 12(3) and (4).  In fact, s 12(3) specifically does not require the authorised officer to be named in the warrant.

169.  In R v Southwark Crown Court & Ors, ex parte Gross [1998] COD 445, a US investigating agent was present at the execution of a search warrant in England.  The Divisional Court held that the execution of the warrant was unlawful because the US investigating agent was not named in the warrant, his involvement in the search went beyond that authorised by the relevant Home Office Circular, and he entered the premises before his identity and status was revealed, and the occupier’s permission obtained.  Although superficially appearing to support Mr McCoy’s submissions, an examination of the decision demonstrates it is primarily a decision on the specific provisions of the Police and Criminal Evidence Act (UK).  The decision turns on the particular terms of that legislation which are not replicated in the Hong Kong legislation.

170.  It is right that the Italian officers had requested to be present during the searches.  By involving the Italian officers to review the documents found and to advise as to relevance DSI Leung took a sensible precaution which would ensure that only relevant documents were seized.  Nothing turns upon the fact that the Italian officers requested to be present. It was open to DSI Leung to refuse that request. 

171.  I am accordingly satisfied that the presence of the Italian officers at the search, for the purpose of advising on the relevance of the material found in the course of the search that might be seized, was sensible, and desirable, and consequently “necessary and reasonable assistance”. 

172.  For reasons given in paragraphs 206-211 below, I am satisfied that the regime in Hong Kong is not such that officers of the requesting state are prevented from seeming the material before it is seized.  Consequently their presence in the course of the search to advise on relevance is not a matter which can be the subject of complaint.

173.  Mr McCoy contended that as the definition of “assistance” in s 2 MLAO included giving evidence, the contention that the Italian officers were prevented by Italian law from giving evidence in Hong Kong proceedings meant that they were disqualified from ever being able to give assistance within the meaning of s 12(3).  With respect to Mr McCoy I simply do not understand the argument.

174.  Mr. McCoy said that it was a “precondition” to be able to assist the authorised officer, that the person giving assistance should also be able to assist the Hong Kong courts if matters became contentious.  Consequently he said that if an “assistant” cannot, by law, testify, then an assistant could not by law qualify to give assistance under s 12(3).  The submission did not sit comfortably with Mr. McCoy’s submission but as a matter of law, there was nothing to prevent the Italian officers giving evidence in Hong Kong.

175.  I accept that it is desirable that a person giving assistance should be able to give evidence.  But there is nothing in the ordinance which disqualifies a person who cannot give evidence from giving assistance or other appropriate criteria are met.

Exposure to LLP documents:

176.  The proposed searches were of private homes and office premises and not law offices.  In that respect they were no different at all from any other document search that might be undertaken by police officers.  There is nothing in the evidence to suggest that there was any special reason to believe that there might be LPP material in the search.

177.  It is tolerably clear from the factual circumstances that the allegation made by the Italian prosecutors was that the Hong Kong companies involved in the alleged fraud were merely alter egos of Mr Agrama, and were being used to give an apparent, but arguably unjustified, commercial separation between the transactions in California and the transactions in Italy.  In those circumstances, rather than it being likely that there would be LPP material on the premises, it becomes unlikely that such material would exist in those premises.

178.  If there was no reasonable cause to believe that the premises were likely to contain privileged material there is no requirement to make disclosure to the magistrate: see Philip KH Wong, Kennedy YH Wong & Co v ICAC at §§ 49 and 94.

179.  That there was no reasonable cause to believe that there may be LPP material in the premises to be searched has been subsequently confirmed by the fact the claim for LPP was ultimately entirely withdrawn.

180.  The failure to draw to the attention of the magistrate the possibility of the presence of LPP material is not a basis upon which the warrants may be declared unlawful.

The involvement of the Italian officers in the search:

181.  For the reasons given above I am satisfied that the role of the Italian officers extended beyond merely inspecting documents found in the course of the search and shown to them by the Hong Kong police officers, and advising the Hong Kong police officers whether or not the document ought to be seized.

182.  But I am satisfied also that the Italian officers were lawfully present at the scene of the search in order to give assistance in the course of the search.

183.  The decision in Fininvest, while recording that the purpose of the Italian officers being present was to advise on relevance of documents, does not indicate whether in the course of so advising the Italian officers physically located documents.

184.  However, in Dunesky, the ATO officers were physically involved in the search as well as advising on relevance: see p 379, (the discussion of the evidence of Mr Fitton), and p 380, (the discussion of the evidence of Mrs Dunesky).  It was not disputed that certain of the ATO officers found documents and brought them to the exhibit officer for inclusion: see p 382.  In this respect, the involvement of the non-police officers present, appears to be similar to that in the present case.

185.  I am satisfied, that in the circumstances of this case, where the Italian officers were lawfully present at the search, and were fully entitled to examine documents and things found for the purpose of relevance, it cannot be said at that the act of physically locating a document or thing in the course of the search, is an act that would justify the setting aside of the warrants.  However, just as in Dunesky, it is plain that the Hong Kong police officers did not abdicate their searching responsibility to the Italian officers.  The reality of the situation is that they were assisted in their searching responsibility by the Italian officers.

186.  It might have been better if the Italian officers had simply sat at a table and made decisions on relevance of any documents or brought to them.  They would have been entitled to leaf through a file looking at documents to determine whether or not they were relevant.  But it would be an unwarranted act of hair splitting to find that they could look through a file, but not open a drawer and take out a file.

187.  I am satisfied that the acts of the Italian officers in assisting the Hong Kong police officers in searching the various premises were not acts which justify declaring the warrants unlawfully executed.

The scope of the warrants:

188.  This argument is mounted relying upon analogy with the decision of the Court of Final Appeal in P v ICAC (2007)10 HKCFAR 293.  There the court was dealing with the provisions of s 14 Prevention of Bribery Ordinance, Cap 201, which permits the Commissioner, for the purposes of investigation into, or proceedings relating to, an offence under that Ordinance, to obtain from the Court of First Instance an order requiring a person to furnish a statutory declaration in relation to certain matters.

189.  In the course of the judgment of Li CJ, at § 31 the following was said:

“Where the court decides to make the order sought authorising 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 authorising 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 authorisation in such general terms.  Functioning as a safeguard, the court has to decide whether to make an order authorising the Commissioner to issue a notice to compel a non-suspect to supply the information sought.  The order must define the scope of the authorisation granted.”

190.  Mr McCoy argues that by the time of the execution of search warrants, January 2007, the Milan court had already ruled that events before 14 July 1999, could not be proceeded with because of the statute of limitations.  Consequently, he says that the warrants could not authorise a general search for documents without imposing a time limit on the period of the documents that might be sought.

191.  To further substantiate the submission he relies first upon Williams & Ors v Summerfield [1972] 2 QB 512.  There, a warrant under s 7 Bankers’ Books Evidence Act, (UK), had been obtained and banking information obtained in relation to certain defendants to criminal proceedings.  The warrant was challenged on various grounds including self incrimination.  In the course of the judgment Lord Widgery CJ referred to the need to limit the period of disclosure of the bank account to a period which was strictly relevant to the charge.  The judge said that the power to obtain information from a bank was one to be exercised with caution and should not be allowed to be used for the purpose of fishing in order to find out whether there is a case.

192.  In R v Nottingham Justices ex parte Lynn (1984) 79 Cr App R 238 at 242-243, orders made under the same Act were quashed as being too wide in time.

193.  Both of those decisions are decisions which turn on the particular circumstances of the legislation in question.  They are decisions in relation to legislation requiring banks to disclose documents.  The circumstances and the legislation in question are sufficiently distinct from the present proceedings that these decisions do not assist me.  I note that in Fininvest, at p 925, the court noted that the position in that case, a case having a very close factual parallel to the present case, “could hardly be more different from that under consideration in Williams v Summerfield.”

194.  It is right that the Italian courts had found that certain prosecutions could not proceed because of the statute of limitations in Italy.  But it does not follow from that, that documents generated during that period would not be relevant to a prosecution or investigation of offences after that period.  While it might be appropriate to limit a warrant designed to obtain information from a bank to information covering a particular period of time, it would rarely be appropriate to limit a warrant in respect of general premises where offences of the nature being investigated and prosecuted in this case are involved.

195.  Other than the two banking cases, no authorities were submitted in which it was demonstrated that in a search warrant in relation to premises individuals or companies related to an offender, the right to search and seize ought to be limited to a particular period of time.  Of course, if documents are seized which are irrelevant because of a time issue, appropriate steps can be taken by the subject of the search.  There was no suggestion that such an issue arose in this case.

196.  The next decision relied upon by Mr McCoy was R v Central Criminal Court & British Railways Board ex parte A J D Holdings Ltd [1992] Crim LR 669.  There was a discrepancy between the information as sworn by the officer in the warrant issued by the judge.  The information referred to “all records of business details relating to the finances of [the company], namely letters, notes…” whereas the warrant referred simply to “letters and notes” but omitted to identify them as records of financial business details of the company.

197.  The court held that was a crucial omission because the warrant purported to give the holder a free hand to seek and seize all documents of the kind described in respect of whether they fell within the scope of the investigation to which the information related.

198.  It is not objectionable per se for a request for a search warrant to extend beyond the precise dates of alleged offence.  In Fininvest, Simon Brown LJ said, at 952:

“As for the period encompassed by the request, extending as it does beyond the periods of false accounting under investigation, that seems to me plainly justifiable in the present circumstances: self-evidently documents post will dating the closing of accounts are likely to refer back to the accounting period and in any event they may reveal the subsequent movement of assets or shares allegedly employed in the fraud.”

199.  That is not the situation in the present case.  The authorisation is to search for and seize things found that are believed to be relevant to the prosecution and continuing investigation in relation to the serious external offences.  The warrants specifies those serious external offences as fraud, false-accounting, misappropriation and money laundering.

200.  There is an important distinction between the right to search, and the power to seize.  It would not be sensible to impose limits on the right to search, other than specifying the particular premises, or identifying files on particular premises might be searched.  By the use of the names of the companies and individuals the warrants sufficiently identifies files on particular premises that might be examined.  Files relating to persons or companies not named in the warrant in, for example, the Prince’s Building office, could not be searched.

201.  The power to seize must be limited only to those things which are relevant to the prosecution examination that has given rise to the search warrant.  There can be no limitation, other than as set out in the preceding paragraph on the things that might be inspected by a searching police officer in the course of research.  By restricting the power to seize things related to the specified serious external offences, the warrant adequately imposes an appropriate restriction.

202.  I am satisfied that these warrants are not warrants which can be described as giving carte blanche to the investigators to seize whatever they like.  The police officers have been properly empowered to examine all things on the premises which relate to the named parties, to determine whether or not those things are relevant to the investigation of the specified serious external offences.

203.  The fact that the warrants covered 19 individuals, 17 companies and 8 banks is simply beside the point.  There is no reason why so many individuals companies or banks should not be involved in a complex international fraud.  The fact that an alleged criminal offence is complex and involves numerous companies individuals and banks on an international scale does not make a search warrant aimed at pivotal points in that alleged criminal offence over wide.

204.  For those reasons I am satisfied that the warrants were not over wide, and were, in the circumstances, appropriately confined in scope.

The steps following the seizure of the documents:

205.  The steps taken in respect of the documents after seizure have been set out in paragraphs 116-123 above.  Mr Grossman concedes that the police were wrong to permit the Italian offices to make copies of documents during the period they were in the custody of the Commissioner pursuant to s 12(7).  Mr McCoy submits that the Italian offices were not entitled to inspect any of the documents/things seized at all until such time as the Secretary for Justice had made a decision under s 12(8), as to whether or not the document/things may be sent to an appropriate authority of a place outside Hong Kong.

206.  The provisions of s 12(8), and the steps to be taken after things are seized under the MLAO were considered by Chung J in Re Anson Garments Ltd [2006] 2 HKC 246. 

207.  The decision involved a request by the United States for assistance in respect of an alleged textile smuggling fraud into the United States.  After documents and things were seized they were delivered into the custody of the Commissioner of Customs and Excise, pending a direction from the Secretary for Justice.  Whilst in that custody the things seized were reviewed by Hong Kong Customs officers, together with officers of the United States Customs Service to enable United States offices to identify the documents required in their investigation, and whether or not original documents were required.  Subsequently, the Secretary for Justice made a direction that certain documents, including some original documents be sent to the United States.  The applicants sought judicial review of the decisions.

208.  The judge held that the review of the documents by the Hong Kong Customs officers and the United States investigators was merely for the purpose of enabling a proper decision to be made under s 12(8), and that a review of the documents must be undertaken beforehand in order for a proper decision under those provisions to be made.

209.  The decision is entirely sensible, and in my view correct.  It is right that in some other jurisdictions that the regime is such that officers of the requesting state are not able to see the documents prior to orders permitting the documents to be sent out of the jurisdiction: see e.g. Ebke.  But there is nothing in the Hong Kong legislation to lead me to conclude that that ought to be the position in Hong Kong.

210.  By taking the documents into the custody of the Commissioner, making arrangements for an appropriate examination of the documents by officers of the requesting state, under the control of the Commissioner, the Secretary for Justice may be properly advised as to which documents will be required, in whether or not copies will suffice or originals will be necessary.

211.  It will be inevitable that in the course of a search, even with the assistance of officers of the requesting state to advise as to relevance more documents or things that may ultimately be required, might be seized.  That seizure would not be unlawful, but may later be found to have been superfluous to requirements, thereby enabling some documents or seems to be returned to the owner.

212.  I am accordingly satisfied that although copies and notes of the seized documents were wrongly made by the Italian offices, nothing that transpired following the seizure of the documents justifies the search being declared unlawful.

Conclusion:

213.  For the foregoing reasons, the application for judicial review must be dismissed.

Costs:

214.  Nothing was said on the question of costs, which are accordingly reserved.

[1] See [2008] 2 HKLRD 137.

[2] See [2008] 5 HKLRD 507

[3] See [2008] 3 HKC 182.

[4] “Corte d’appello, Hong Kong.”

[5] See Mutual Legal Assistance in Criminal Matters (Italy) Order, Cap 525, Sub Leg  G.

[6] Mutual Legal Assistance in Criminal Matters Act (Canada)