SECRETARY FOR JUSTICE v. XU AIMIN AND ANOTHER

HCMP 1072/2016

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO 1072 OF 2016

(ON INTENDED APPEAL FROM HCMP 3237 OF 2013)

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REASONS FOR JUDGMENT

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Hon Andrew Chan J (giving the Reasons for Judgment of the court):

1.  On 29 November 2013, a warrant of arrest was issued by a Magistrate against the first Respondent for 5 counts of “Money Laundering” contrary to s.25 of OSCO. It was alleged that the first Respondent was the ringleader of an illegal gambling network in the Mainland. The amount of suspected gambling money was over RMB 300 million.

2.  Investigation by the Hong Kong authorities was sparked off by one Interpol Red Notice which the Hong Kong Police received in June 2013.  In the Interpol Red Notice, it was stated that the first Respondent, being the Chairman of one gambling group, was wanted in China after a 10-year imprisonment sentence had been imposed on him by a Chinese court. The first Respondent held a Hong Kong Identity Card, Chinese Passport and Cambodian Passport, and was the sole director of the second Respondent, a BVI company. 

3.  On 20 December 2013, a Restraint Order was made pursuant to s.15 of OSCO.  The Restraint Order was made on the basis that criminal proceedings for a specified offence had been instituted and that the proceedings had not been concluded (as a result of the first Respondent absconding).   

4.  The property under restraint was the credit balance in various HSBC accounts held by the Respondents: four in the name of the first Respondent and the other in the name of the second Respondent.  As of 31 July 2013, the total balance of these accounts was approximately HK$654 million.

5.  Records of the Inland Revenue Department confirmed that both Respondents had not filed any tax returns in Hong Kong during the period of 2006 to 2013.  The first Respondent left Hong Kong on 5 May 2013 and has not returned.

6.  On 14 November 2014, the Respondents took out a summons to apply for discharge of the Restraint Order.  In the alternative, the Respondents submitted that if the Restraint Order was not discharged, it should be varied so that the sum restrained should be lowered (“the 1^st Application”). On 27 May 2015, the application was dismissed (“the 1^st Decision”), by A Wong J (“the Judge”). 

7.  Before the determination of the 1^st Decision, the Respondents, on 7 October 2014, took out another similar summons to apply for the discharge and variation of the Restraint Order (“the 2^nd Application”). On 29 March 2016, the 2^nd Application was refused by the same Judge (“the 2^nd Decision”).

8.  The Respondents now applies for leave to appeal against the 2^nd Decision of the Judge.  

9.  The Applicant opposes the present application on the ground that: (i) the Respondents failed to obtain leave from the Judge within 14 days of the 2^nd Decision; (ii) the Respondents failed to put forward any exceptional circumstances or extreme urgency which call for the exercise of discretion by this Court; and (iii) the appeal has no reasonable prospect of success.   

10.  Having perused all materials placed before us, we are of the view that the present application could well be dismissed on the first two grounds alone.  The explanation put forward by the Respondents for the delay (ie the necessity of a face-to-face meeting with their legal representative in Cambodia and hence instruction given) is simply unconvincing.  In the absence of good explanation for any delay, this Court would not allow a late application to sidestep such a requirement. (Ortmann v Secretary for Justice [2015] 1 HKLRD 240) 

11.  Further in view of the inexcusable delay, even if we were to entertain the application, leave also would not be granted unless this Court is satisfied that the appeal has a real prospect of success.  (Secretary for Justice v Hong Kong & Yaumati Ferry Co Ltd [2001] 1 HKC 125)

12.  The Respondents put forward five grounds.  In essence, the Respondents submit that the Judge erred in his application of his discretion to maintain the Restraint Order on the grounds that there was insufficient evidence to show that the monies were of an illegitimate nature and therefore there were no reasonable grounds to believe that the Respondents had committed or benefited from the offence.  The Respondents rely on HKSAR v Yan Suiling (2012) 15 HKCFAR 146.

13.  In determining whether or not there is reasonable grounds to believe that the monies they dealt with represent the proceeds of an indictable offence, the recent Court of Final Appeal (“CFA”) judgment of HKSAR v Yeung Ka Sing, Carson FACC 5/2016 (unreported) 11 July 2016 held that it was not necessary for the prosecution to prove, as an element of OSCO section 25, that the property dealt with by the defendant in fact represented the proceeds of an indictable offence.

14.  Additionally, the CFA provided clarification as to what constituted “having reasonable grounds to believe” that property being dealt with represented any person’s proceeds of an indictable offence as prescribed by OSCO section 25.  It also explained its earlier decision in HKSAR v Pang Hung Fai (2014) 17 HKCFAR 778 and endorsed the approach to the “reasonable grounds to believe” mental element adopted by the Appeal Committee in Seng Yuet Fong v HKSAR [1999] 2 HKC 833, namely “To convict, the jury had to find that the accused had grounds for believing; and there was the additional requirement that the grounds must be reasonable: That is, that anyone looking at those grounds objectively would so believe”.  The “reasonable grounds” also included the “personal beliefs, perceptions or prejudices of the defendant”, whilst still taking into account of the facts and circumstances known to him. 

15.  The CFA also emphasized that the conclusion a court reached on the issue of whether a defendant had the relevant reasonable grounds to believe depended on the state of evidence. 

16.  The Judge, having adopted the Wu Lihui test, went on to consider the evidence.  The Judge noted the following matters which he should bear in mind when coming to his decision:

(i)   The material which the Court is entitled to take into account is not required to be in the form of evidence admissible in a criminal trial;

(ii)   This applies to both the material provided by the Applicant as well as by the Respondents;

(iii)   The weight of the material will need to be assessed;

(iv)   The Applicant bears the burden of proof; and

(v)   The standard of proof is one of balance of probabilities.

17.  The Judge then went on to determine whether there was reasonable ground to believe that the Respondents had committed the specified offence.  The Judge’s approach whilst not put in the same terms as that in Pang Hung Fai and Carson Yeung, was in effect the same.  The Judge’s approach could not be faulted, and he was clearly in the best position to decide on the matter, having clearly been made aware of all the information and having been aware of the appropriate test.

18.  This particular case is distinguishable from Yan Suiling.  In Yan Suiling, the CFA went on to hold that in a situation where a defendant received monies, as she ran an underground bank operation, and made no enquiries when receiving the monies, this supported or tended to support their claim that there was no grounds to believe that the proceeds were of an illicit nature.  In this particular case, there is affirmation evidence from Inspector Cheung stating that there was the Interpol Red Notice that had been issued against the first Respondent.  Further, the explanations given regarding the legitimacy of the monies were highly questionable.  For reasons best known to the first Respondent, he chooses to remain in Cambodia, a country that he is not wanted for any judicial proceedings.

19.  In light of the above, it cannot be said that the Judge wrongly considered the evidence or attached incorrect weight in coming to the view that the Respondents had benefited from the alleged money laundering, and that the Restraint Order should not be discharged.  Leave for appeal is accordingly refused.  After hearing submission, we fix the costs of the applicant at $48,000.