HKSAR v. Ha But Yee

CACC 104/2023 [2024] HKCA 315

On appeal from [2023] HKCFI 1208

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO 104 OF 2023

(ON APPEAL FROM HCCC NOS 290 and 319 OF 2016)

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D E C I S I O N

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1.On 22 January 2018, the applicant (D2 at trial)  pleaded guilty before Campbell-Moffat J (the Judge)  to one count of offering an advantage to an agent, and Ma Sin Chi (D1 at trial)  pleaded guilty to one count of, being an agent, accepting an advantage, contrary to ss.9(2)(a)  and 9(1)(a)  of the Prevention of Bribery Ordinance (Cap 201)  respectively. This was a retrial of D1 and D2, and the guilty pleas related to the payment of bribes by D2 to D1 between 16 January 2007 and 7 May 2008, which originally totalled $24,800,000 but as part of a plea bargain, was reduced to $6,391,758.[1] At the relevant time, D1 was the Chief Trader of the Deutsche Bank in derivative warrants, and D2 paid bribes to D1 for information and advice concerning derivative warrant transactions.

2.On 26 February 2018, after a review of the case and its history together with an overview of the mitigation presented on behalf of D1 and D2 and the relevant sentencing principles, the Judge, having adopted a starting point of 5 years’ imprisonment, which she discounted by 25% for the pleas of guilty, sentenced D1 and D2 to 3 years and 9 months’ imprisonment.  The Judge ordered that D1 pay $6,391,758 to Deutsche Bank by way of restitution (the advantages paid by D2 to D1).

3.Upon the conviction of D2 on 22 January 2018, the Secretary for Justice made an oral application before the Judge for a confiscation order under s.8 of the Organized and Serious Crimes Ordinance (Cap 455)  (OSCO)  in the sum of $63,000,000.  By s.2(8)  of OSCO, a person who has at any time received any payment or other reward in connection with the commission of an offence or organized crime has benefited from the offence or organized crime.  In similar terms, s.2(6)(i)  defines that a person’s proceeds of an offence include “any payments or other rewards received by him at any time in connection with the commission of that offence.”  See HKSAR v Li Kwok Cheung George[2] and HKSAR v Lin Kei Tat[3].  See also the similar procedure in determining the amount and terms of a confiscation order under the Drug Trafficking (Recovery of Proceeds)  Ordinance (Cap 405)  in HKSAR v Musah Hakeem Tahiru[4].

4.The Secretary for Justice filed a s.10 statement dated 9 April 2018[5], and D2 filed a reply dated 27 August 2018[6]. The Secretary for Justice filed a second s.10 statement dated 22 October 2018[7], and D2 filed a reply dated 3 December 2018[8]. The Judge held a series of hearings in respect of the s.8 application on 7 February 2023, 24 February 2023[9] and 27 April 2023[10].  The Judge handed down her decision on 11 May 2023 in HCCC 290 and 319/2016, in which she ordered D2 to pay the sum of $63,000,000 on or before 11 November 2023, failing which he was to serve a term of imprisonment of 10 years in default, which was to be served consecutively to the sentence imposed by the court on 26 February 2018 (the Decision).  

5.The Secretary for Justice’s submission for the confiscation order was succinctly stated by the Judge in the Decision as follows:

“7. At this time, D2 was trading, inter alia, in Deutsche Bank derivative warrants (‘DBWs’)  through D1. It is the prosecution case that D2 spoke with D1 on an almost daily basis and they discussed both the market generally and specifically. In particular, the prosecution alleged, and the defence accepted, that D1, on a continuous basis, provided information by means of 356 telephone conversations by way inter alia of specific recommendations to D2 as to which Deutsche Bank warrants to trade[11]; responding to enquiries from D2 about pricing of particular DBWs and responding to enquiries from D2 as to whether particular warrants were being priced manually or automatically[12]. In addition to that general and specific information, D1 rendered continuous assistance to D2 and his associates in their trading of DBWs. By way of specimen examples of such assistance, such assistance was given by providing D2 with a bid which allowed D2 to exit DW 03539 on 4 June 2007; by helping D2 get out of trade in DW02454 on 9 August 2007, which D2 had purchased at too high a price; by selling DW06899 to D2 on 5 October 2007 at a lower price and by selling back 2 million of DW04479 to D2’s son when his son had oversold 2 million of that warrant.

8.  It was the prosecution case, and accepted by D1 & D2, that the Ha family made a total net profit of $203, 689,156.68 through the trading of DBWs during the relevant period[13] and that D1 received a total of $6,391,758[14] from D2 during the same period as a reward for information and assisting them to do so. …”

6.The Judge accepted that D2’s benefit was $125,664,254.30[15] and that his realisable assets (as agreed)  was $63,000,000[16].

7.By notice dated 2 June 2023, which was filed on 6 June 2023, D2 applied for leave to appeal against his sentence in respect of the confiscation order only.

8.The confiscation order has been the subject of variation orders and payments (or failure to make payments)  as follows:

(i)  On 30 November 2023, Deputy High Court Judge A Kwok (A Kwok J)  in HCCC 290 and 319/2016, by consent of the parties, varied the confiscation order to extend the time for payment of $9,000,000 to 15 December 2023 and $54,000,000 to 11 May 2024.  

(ii)  On 4 December 2023, A Kwok J in HCMP 373/2012, by consent of the parties, varied the restraint order against D2 and others to allow the sale of assets to satisfy the confiscation order. 

(iii)  On 15 December 2023, D2 defaulted in making the first payment of $9,000,000.  

(iv)  On 3 January 2024, A Kwok J in HCMP 373/2012, by consent of the parties, further varied the restraint order against D2 and others to allow the sale of the assets to satisfy the confiscation order. 

(v)  On 16 January 2024, D2 attempted to pay $1,550,990.39 out of time, but the payment was refused by the High Court Account Office. 

(vi)  On 28 February 2024, A Kwok J in HCMP 373/2012, by consent of the parties, granted leave to D2 to pay out of time, and from time to time, any sums he may receive from the disposal of his assets to the HKSAR Government in satisfaction of his confiscation order. 

(vii)  On 15 March 2024, D2 paid $3,250,030.82 to the High Court Account Office.

9.On 23 August 2023, Mr Robert S K Lee, SC, with Mr Brian Chau, for the applicant, filed perfected grounds of appeal.  It is submitted that the confiscation order is both wrong in principle and manifestly excessive and ought to be quashed.  There are seven grounds of appeal all except Ground 6, complain about the Judge’s evaluation of the agreed facts and findings regarding the proceeds of the crime.  It is contended that the Judge erred in her understanding of the nature and ambit of the confiscation order which only applies to gains caused by proven or admitted criminality.  Ground 6 complains that the Judge improperly imposed her own “expert opinion” and relied on extraneous materials in her determination of the amount of the confiscation order without notification to the parties.

10.Mr Lee argues that a majority of the transactions and their gains that were taken into account by the Judge in her calculation of the amount of the confiscation order were outside the specific charge and should not have been treated as proceeds of the crime.  He argues that of the 356 recorded telephone calls between D1 and D2, only 75 calls involved D1 providing information to D2, of which 38 calls and an additional 4 calls (referred to as “smoking gun”)  concerned illicit or tainted transactions, which resulted in gains of $9.72 million.[17] He argues that the rest of the transactions were general trading in market making between D1 and D2 that was allowed by Deutsche Bank, therefore should not have been taken into account in determining the amount of the confiscation order.  He submits that the Judge was wrong to find that the proceeds of the crime amounted to $203 million, which was reduced to $125 million, excluding the proceeds of D2’s family members.

11.Ms Betty Fu, for the respondent, in response, points out that the bribe payments by D2 to D1 in the amount of $6,391,758 over 17 months in respect of 231 derivative warrants were for D1 giving information to D2 and his associates in respect of derivative warrants issued by the Deutsche Bank that “may assist” D2 and his associates in their trading of those derivative warrants.

12.In a letter dated 2 April 2024, D2’s solicitors requested that he not attend the leave hearing because he was receiving medical treatment in Shenzhen.  A medical report was attached to the letter from Luohu District Traditional Chinese Medicine Hospital dated 25 March 2024, setting out a number of ailments for which D2 was receiving treatment.  Under s.83U of the Criminal Procedure Ordinance (Cap 221), the applicant/appellant has a right to be present at the hearing of a leave application or appeal “unless the Court of Appeal [or a Single Judge under s.83Y], where it considers it necessary in the interests of justice or public order or security to do so, orders otherwise.” Whilst D2 has an undeniable right of appeal, the question arises whether he can exercise that right when outside the jurisdiction, particularly in the circumstances of the present application where he is challenging a confiscation order for which he will be subject to a term of imprisonment of 10 years if he defaults under the terms of the payment.  According to the respondent, D2 is already defaulting on the payments under the confiscation order, but D2 is seeking to challenge the terms and amount of the order by these proceedings.

13.I have decided to refer the leave application to the full court of the Court of Appeal in order to address the issue of whether D2 can proceed with his leave application without being present in court or in the jurisdiction, if in the event he does not attend the hearing of the leave application.  I should note that in addition to the grounds of appeal advanced on D2’s behalf, there is the issue of the parallel proceedings in HCCC 290 and 319/2016 (the confiscation order)  and HCMP 373/2012 (the restraint order)  and how they impact on each other, particularly the basis on which the orders were made in HCMP 373/2012 varying the confiscation order which was made by the Judge in HCCC 290 and 319/2016 and is subject of appeal proceedings before this Court.

Ms Betty Fu, ADPP (Ag)  and Mr Matthew Hui, SPP (Ag), of Department of Justice for the respondent

Mr Robert S K Lee, SC and Mr Brian Chau, instructed by KB Chau & Co, for the applicant