HKSAR v. Chan Wai Kwan

DCCC 308/2025

[2026] HKDC 1987

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO 308 OF 2025

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RULING ON COSTS

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1.The four defendants (D1-D4) each faced one count of Dealing with property known or believed to represent proceeds of an indictable offence, contrary to section 25(1) and (3) of the Organized and Serious Crimes Ordinance, Cap 455 (respectively Charges 1-4). They were found not guilty and only D4 applied for costs pursuant to section 5 of the Costs in Criminal Cases Ordinance, Cap. 492. The prosecution objects to the application.

2.I shall not repeat my findings in acquitting D4 which have already been set out in the Reasons for Verdict dated 11 September 2026.

3.It is agreed by the parties that an acquitted defendant should normally be compensated out of public revenue for the costs incurred in defending those charges; that in exercising its discretion to deprive a defendant of her costs, the judge must look to her conduct generally so long as such conduct is relevant to the charge; and that relevant considerations include how she first responded to the investigators, the answers she gave when confronted, the consistency of those answers with the subsequent defence, along with the strength of the case against the defendant and the circumstances under which she came to be acquitted.[1]

4.The prosecution objects to the costs application on the grounds that (1) D4 brought suspicion upon herself and (2) D4 misled the prosecution into thinking that its case against her was stronger than it actually was. The prosecution also submits the documents are voluminous but the facts and evidence against D4 were not complex and does not warrant a certificate for two counsel to be granted.

5.The prosecution says the transactions in D4’s account called for explanations given the transaction amounts and patterns in her account were incommensurate with her financial background. Although D4 along with the other defendants served the defence bundles on the prosecution on 13 May 2026 disclosing the defence of legitimate business, the prosecution submits that the disclosure of such a defence together with the bundles without further explanation did not explain the relevant business dealings and transactions or relationship between Waldie Enterprise Ltd (“Waldie”) and D4. It is further submitted that the situation of D4 is similar to the case of the respondent in HKSAR v Rahman Md Sheikh Mojibur (CACC 333/2018) – by stating her occupation and giving information about her business and properties under caution, D4 brought suspicion upon herself, as her occupation, business and properties in Hong Kong could not explain the large amounts of money deposited into her account by Waldie. It is further submitted that D4’s situation is different from that in 律政司司長 訴 張鎮泰 [2025] 5 HKC 234 as the respondents in that case had provided, inter alia, two accountant reports before trial to support their defence that the money was derived from a legitimate business.

6.I bear in mind the relevant principles set out in the case authorities, including Tong Cun Lin v HKSAR (1992) 2 HKCFAR 531, HKSAR v Chan Kam Ching (No. 2) (2002) 25 HKCFAR 181, Ting James Henry v HKSAR (No 2) (2007) 10 HKCFAR 730, HKSAR v Rahman Md Sheikh Mojibur CACC 333/2018 and 律政司司長 訴 張鎮泰及另一人 [2025] 5 HKC 234.

7.D4’s conduct during the investigation (including the answers given by her under caution) is relevant to the court’s exercise of discretion in respect of an application for costs upon an acquittal. However, this is subject to the caveat that “the discretion is not exercised so as to undermine the presumption of innocence, and in particular, provided that its exercise does not involve the court in adopting a position at variance with the defendant’s acquittal by the tribunal of fact.”[2] Moreover, the court must not take “a view of the facts palpably different from that taken by the jury and reflected in the not-guilty verdict.”[3]

8.In the present case, D4 chose to answer some questions (pertaining to her own occupation and businesses) during the VRI but exercised her right to silence on other questions (pertaining to the relevant accounts) when reminded of that right by her lawyer during the interview. More than three months before trial commenced, the defendants (including D4) disclosed to the prosecution that D1-D3 and others had been carrying out a legitimate business during the relevant period and served on the prosecution the defence bundles totaling over 800 pages supporting this defence.

9.I agree with D4 that her situation is different from that of the respondent in Rahman Md Sheikh Mojibur. In that case, the respondent had deliberately concealed his other job of carrying on a second hand mobile phone business (to which the subject transactions related), only mentioning his job as a casual transportation worker in his VRI, and not giving the slightest hint of such a defence until the judge had ruled a case to answer – but in the present case, D4’s transactions were not related to her own job/businesses[4] and she had maintained her right to silence throughout with regard to these transactions, not saying anything misleading or inconsistent under caution; D4 did not take part in the business of Karl Trading Company and had simply lent her account to her husband, D2[5]; importantly, she disclosed her defence with supporting documents more than 3 months before the commencement of trial. There is evidence that the prosecution’s expert witness, PW3, had the chance to review the evidence before trial. D4’s evidence and her defence was ultimately accepted by the Court and she was acquitted.

10.The prosecution acknowledges that D4 compiled a table showing that the majority of inward payments to her PayPal Account was from Waldie (and that 851 pages of supporting documents were provided along with that table 3 months before trial), but complains that “unlike D4’s online businesses, there was no invoice, email, Facebook captures, WhatsApp or any other kind of communication or supporting document of business between D4 and Waldie Enterprise Ltd shown in the Defend [sic] Bundles to explain their business relationship.”[6]

11.I note that it was held by the Court of Appeal in張鎮泰[7] that the prosecution should not seek to raise the standard of a defendant’s disclosure at the investigation stage to perfection; to require a defendant acquitted after trial to have cooperated with the relevant authorities to their satisfaction at the investigation stage before she could be awarded costs was not the standard specified in Tong Cun Lin.

12.In any event, I accept paragraphs 6, 9 and 10 of the Reply Submissions of D4 on Costs dated 2 October 2026 that with the documents and defence disclosed more than 3 months prior to trial, the prosecution would have been able to link D4’s transactions to the legitimate business.

13.In the circumstances of this case, I disagree that D4 had brought suspicion upon herself or had misled the prosecution into thinking that its case against her was stronger than it actually was. I am of the view that costs should be awarded to D4.

14.Regarding the application for certificate for two counsel, the Court has to take into account factors including the nature and gravity of the offence, the complexity of the case and the sentence a defendant might face.[8] I have borne in mind that an award of costs is compensatory rather than punitive.

15.In this case, the issues were not complex, but the charges faced by all the defendants were very serious; if D4 (a person of clear record) had been convicted, she would have faced a substantial period of imprisonment. Although there were only factual disputes involved and the case was not complex, the documents were voluminous, with the prosecution bundles totalling 4,000 odd pages, and defence bundles totalling almost 1,000 pages. There were many documentary exhibits to go through and numerous transactions to identify, analyse and explain. I am of the view that it was reasonable for D4 to have engaged two counsel for her defence in the case.

16.In summary, D4’s costs application is allowed, and I grant certificate for two counsel. Such costs are to be taxed if not agreed.