Lai Hing v. J. Cater and Another

HCMP000512/1976

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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Coram: Trainor, J. in Court

Date of Judgment: 25th March 1976

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JUDGMENT

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1. The facts which form the background of the application before me are relatively simple and the issue between the parties is clear-cut and well defined; but what is at issue is of the greatest importance to the plaintiff and, indeed, were my decision to be against him could be disastrous for him. The disconcerting thing about these proceedings is that they should have been necessary at all. Had the Commissioner of the Independent Commission Against Corruption (which Commission I shall hereafter refer to as I.C.A.C.) resorted to the procedure open to him in a case of this nature, and which, in fact, he threatened more than once to do then these proceedings, for the return to the plaintiff of three pieces of paper, would have been rendered either unnecessary or futile.

2. The plaintiff is the sole proprietor of a firm which carries on the business of wholesaler and retailer of electrical materials. In addition the firm also undertakes work on contract for the installation of electrical equipment, appliances and systems; it specialises in doing contract work for industrial undertakings. Indeed, according to an affirmation of the plaintiff, his firm has commenced work on two contracts, the contract prices for which are $50,000.00 and $220,000.00 respectively. Whether it is in respect of those contracts or not but the plaintiff has on order goods to the value of about $100,000.00 from England, owes about $200,000.00 for goods already supplied by local firms and still owes $22,000.00 on goods dued in Hong Kong and to which reference is made later in dealing with certain correspondence.

3. A brother of the plaintiff is a Crown servant and is, I understand, under investigation by the Commission. In furtherance of that investigation officers of the Commission, armed with warrants to search and seize issued by the Commissioner pursuant to section 17 of the Prevention of Bribery Ordinance searched the premises of the plaintiff on the 14th and 15th of January of this year. As a result of those searches officers of the Commission acting under another similar warrant searched a deposit box belonging to the plaintiff in the Hang Sang Bank Causeway Bay and from it seized, inter alia, a Savings Account book and three fixed term deposit receipts. Subsequent to an exchange of correspondence between the solicitors and the Commissioner the Savings Account book was returned, but not the three deposit receipts.

4. On the 15th March, 1976 the plaintiff caused an originating summons to be issued citing the first defendant, the Commissioner of I.C.A.C. personally and as representing the other officers of I.C.A.C. and the Attorney General as the second defendant.

5. In the summons the plaintiff claimed inter alia

6. The matter is now before me by way of an inter partes Summons in which the plaintiff seeks an interlocutory mandatory order that the first defendant "whether by himself his agents servants or otherwise" return the three deposit receipts.

7. Before proceeding further I think perhaps it might be useful to quote the power under which the Commissioner purported to act when the deposit box in the bank was searched and the deposit receipts were seized and detained, section 17(1) of the Prevention of Bribery Ordinance (C.201). It reads:

"17(1). If it appears to the Commissioner, that there is reasonable cause to believe that in any place, other than an office, registry or other room of or used by a public body, there may be any document or thing containing any evidence of the commission of any offence under this Ordinance, the Commissioner may, by warrant directed to any investigating officer, empower such officer to enter such place, by force if necessary, and there to search for, seize and detain any such document or thing."

8. At an early stage in his argument Mr. Litton who appeared for the plaintiff conceded that he did not suggest that the search for and seizure of the deposit receipts was unlawful, but that their retention is. He maintained that to justify the Commissioner retaining a document under the section the Commissioner must have reasonable cause to believe that the document contains evidence of the commission of an offence against the Ordinance.

9. He referred to the correspondence which passed between the solicitors for the plaintiff and the Commissioner, commencing with a letter of the 20th January, 1976 in which, inter alia, the solicitors requested the return of all documents seized and suggested that if the Commissioner thought it necessary he might have photostat copies made of them. No reply was received to this letter and on the 7th February the solicitors again wrote requesting the return "at the earliest convenience preferably by the 12th inst" of the Savings Account book and the three deposit receipts by reason of the plaintiff's substantial financial commitments in respect of goods ordered from abroad. On the 11th February the Commissioner replied asking to be informed of the total amount due in respect of the goods, with documentary evidence to support; and details of monies held by the plaintiff in two accounts at the Nanyang Commercial Bank. This letter had not been received by the solicitors on the 12th February when they again wrote demanding the return of the Savings Account book and the deposit receipts by the 16th February, and threatened to institute proceedings for their recovery in default.

10. By a letter dated the 12th February the Commissioner replied to the letter of the plaintiff's solicitors of the 20th January wherein, after dealing with other matters raised in that letter, the writer regretted the documents could not be returned.

11. By a letter dated the 13th February, 1976 the plaintiff's solicitors replied to the Commissioner's letter of the 11th February and enclosed photostat copies of the accounts in the Nanyang Bank and referred to the fact that photostat copies of invoices and other documents pertaining to the goods from abroad had already been sent to the Commissioner.

12. On the 17th February the Commissioner wrote to the solicitors acknowledging receipt of the photostat copies of the Bank accounts and the documents relative to the purchase of the goods from abroad. He stated he was prepared to release the Savings Account book which showed an amount of $184,209.53, adding that that sum together with monies held in the other accounts, in all $468,052.14, was near to the figure which the plaintiff had to pay for the goods from abroad. He went on to say that he was arranging for an ex-parte application to be made for a Restraining Order in respect of the receipts.

13. On the 19th February the solicitors again wrote to the Commissioner pointing out that the amounts available to the plaintiff i.e. the $468,052.14, was still $22,000.00 short of the amount due for the goods from abroad. They further pointed out that the plaintiff owed $229,773.62 for goods purchased locally, giving details, and that he also had to meet monthly expenses of $12,000 for wages and household expenses, and again asked for the deposit receipts. By a letter dated the 21st February the Commissioner refused to return the deposit receipts and again informed the solicitors that an application for a Restraining Order would be made. That letter, according to a letter from the solicitors dated the 24th February to the Commissioner was received on the 24th.

14. On the 25th February the Commissioner released the Savings Bank book.

15. On the 8th March the plaintiffs wrote to the Commissioner informing him that the plaintiff intended to institute proceedings seeking a declaration that the Commissioner wrongfully retained, inter alia, the three deposit receipts. They added that they had been advised by Counsel to join as defendants the officers who had executed the warrants and asked for their names. On the 13th March the Commissioner replied as follows:

16. It was the contention of Mr. Litton that the powers conferred by section 17 on the Commissioner are circumscribed by a well defined ambit: (1) He must have a reasonable cause to believe that documents seized contain some evidence of an offence under the Ordinance; (2) They do in fact contain some evidence; (3) The continued detention is related to the original search and seizure; (4) In all the circumstances, including the duration of the detention the continued detention is reasonable. Mr. Litton contended that however lawful the original detention was the continued retention from at least the 17th February was unlawful. By that date he argued the Commissioner had had the opportunity of examining the documents and must have been satisfied that they, in themselves, did not contain any evidence relevant to an offence. He would submit that there was no difference between the deposit receipts and the Savings Bank book yet on that date the Commissioner agreed to return it. He pointed out that the plaintiff's solicitors had suggested that the Commissioner make photostat copies of the receipts and submitted that they would serve any purpose that the originals would have done.

17. Mr. Litton said that the original stance of the Commissioner was that he detained the documents as he intended to apply ex parte to the District Court for a Restraining Order with respect to them pursuant to Section 14C of the Bribery Ordinance. Although this intention was expressed in correspondence more than once it was never fulfilled. However, he said, by the 2nd paragraph of the letter of the 13th March the Commissioner indicated a change of stance to the effect that the documents were to assist in an investigation of the plaintiff's brother, and that they might be required as evidence at a future trial. Neither ground, Counsel submitted, justified the Commissioner retaining the receipts. He cited the case of Ghani and others v. Jones (1970), 1 Q.B., 693. In that case police enquiring into the disappearance of a woman searched without a warrant, the house of her father-in-law. At their request he handed to them documents including the passports of himself, his wife and daughter, the plaintiffs in the proceedings, who lived in his house. The plaintiffs, who were Pakistanis, asked for the return of the passports and documents as they wished to visit Pakistan. The police refused to return them. The plaintiffs brought an action for a mandatory order for delivery of the passports and documents; an injunction restraining their detention; and damages for detinue. On the plaintiffs' interlocutory application the defendant, a police officer, gave evidence on affidavit of his belief that the woman had been murdered and that the police would arrest those concerned. He said that in the event of charges being preferred some of the documents would be of evidential value and others of potential evidential value. The defendant said that the plaintiffs could help the police enquiries and that if they left the United Kingdom they might not return.

18. No one had been arrested or charged with murder.

19. An order was made by Talbot J. that the passport and documents be returned, and an appeal against his decision was dismissed.

20. Mr. Litton said that the true reason for the Commissioner's action in retaining the deposit receipts was to prevent the plaintiff having the use of the money they represented. He said the position was analogous to the police in the Ghani case withholding the passports to prevent the plaintiffs leaving the country and cited Denning M.R. at 709F in support:

"I cannot help feeling that the real reason why the passports have not been returned is because the officers wish to prevent the plaintiffs from leaving this country pending police enquiries. That is not a legitimate ground for holding them. Either they have grounds for arresting them or they have not. If they have not, the plaintiffs should be allowed to leave - even if it means they are fleeing from justice."

21. Counsel said that in the present case the deposit receipts cannot provide any evidence of the commission of an offence. The receipts only go to show that money was deposited to the credit of the plaintiff. There was nothing on the face of them to show who made the deposit and therefore they had no evidential value as to the commission of an offence under the Ordinance. They could prove nothing that could not be proved by other means e.g. photostat copies. He submitted the documents could not lawfully be detained to prevent the plaintiff using the money for his own purposes; but that was what the first defendant wanted to do. He said there was no suggestion that the plaintiff wanted to remove the money represented by the receipts from the colony; but even if he did Counsel would argue that Ghani supported his contention that he could do so if he wished.

22. Another point stressed by Counsel for the plaintiff was the unfairness of the Commissioner in threatening to seek a Restraining Order but instead of doing so merely retaining the deposit receipts.

23. The right of the Commissioner to seek a Restraining Order is to be found in section 14C of the Ordinance which is as follows:

"14C. (1) If, on application ex parte by or on behalf of the Commissioner, the court is satisfied that -

24. Had the Commissioner sought such an order the Court hearing the application could, if satisfied that the receipts were the property of the suspected person, have made the Order subject to such conditions as it thought fit; but in any case the plaintiff would have had the rights conferred by subsections (2) and (3) of Section 14D.

25. Those subsections read:

26. By failing to make the application the Commissioner had deprived the plaintiff of the opportunity of having the matter considered by the District Judge and of appealing against any order, or the terms of any order made.

27. Mr. Litton relied heavily on the Ghani case in support of his contention that despite the powers conferred on the Commissioner by Section 17 to seize and detain nevertheless the retention of the receipts in the circumstances of this case is unlawful. He cited again Denning M.R. at 708. There the Master of the Rolls having earlier reviewed a number of instances where the detention of articles was held to be lawful went on to say (between F and G).

"What is the principle underlying these instances? We have to consider, on the one hand, the freedom of the individual. His privacy and his possessions are not to be invaded except for the most compelling reasons. On the other hand, we have to consider the interest of society at large in finding out wrongdoers and repressing crime. Honest citizens should help the police and not hinder them in their efforts to track down criminals. Balancing these interests, I should have thought that, in order to justify the taking of an article, when no man has been arrested or charged, these requisites must be satisfied."

28. The Master of the Rolls is there referring to the common law rights of the police to detain an article.

29. The position with regard to the original detention by the Commissioner is not in question in this case and the first three requisites of Lord Denning are not relevant. But what he says about their retention is. His fourth requisite is apt and is:

"Fourthly: The police must not keep the article, nor prevent its removal, for any longer than is reasonably necessary to complete their investigations or preserve it for evidence. If a copy will suffice, it should be made and the original returned. As soon as the case is over, or it is decided not to go on with it, the article should be returned."

30. Mr. Carolan who appeared for the defendants conceded that the retention of the receipts was to maintain in the Bank the money represented by them. He submitted that the retention of the documents was justified by what they represented, the fruits of corruption; but, he said, whether the defendants are justified in retaining them or not is an issue to be tried at the hearing of the action and ought not be dealt with on an interlocutory application. He cited the judgment of Talbot J. appealed against in Ghani where at 698D he said:

"The final point concerns the equitable jurisdiction which I have to exercise. It is exceptional to grant, before trial of the action, an interlocutory injunction which gives substantially the relief claimed in the action, and in particular to make a mandatory order. Furthermore, before doing so, the Court must be quite clear that the right exists."

31. However, Talbot J. went on to make the order.

32. Mr. Carolan referred to the affidavit of an officer of the Commission in which he deposed that he believed the monies represented by the deposit receipts did not belong to the plaintiff but were obtained in violation of the Prevention of Bribery Ordinance and are held by the plaintiff on behalf of his brother. He further deposed that he believed that the receipts will be, or there is a strong likelihood that they will be required in the course of contemplated proceedings against the brother or the plaintiff or both.

33. Mr. Carolan contended that if these receipts were for corrupt monies then in any prosecution involving the plaintiff it would be necessary to prove the deposit of the monies by the plaintiff. He argued that prima facie the best evidence must be produced and photostat copies are not the best evidence. He said that, in principle, concessions may not be made in criminal cases; the Crown must prove everything. He maintained that the receipts are essential in the proof of the deposits in proceedings contemplated against the plaintiff and/or his brother.

34. Mr. Carolan said that Mr. Litton had accused the Commissioner of retaining the receipts simply as a means of preventing the plaintiff from using his money but he would stress: (a) The Commissioner seized and detained the documents lawfully under section 17(1); (b) They were seized only about eight weeks ago; (c) the officers of the Commission had many documents and matters to examine in their investigation of this case; (d) that the retention of the receipts was reasonable; and (e) it would be reasonable to retain them until trial or a decision not to proceed if the trial was brought on or the decision reached with reasonable expedition.

35. He referred to the fourth requisite of the Master of the Rolls at 709 in the Ghani case and submitted that the reference in it to "evidence" must mean evidence at a trial. As to what Lord Denning said about returning the document Mr. Carolan pointed out that the learned Master of the Rolls qualified what he said by prefixing his observation with: "If a copy will suffice". It was Mr. Carolan's point that in this case a copy would not suffice.

36. It was a further contention of Mr. Carolan that if the retention by the Commissioner of the receipts up to date is lawful and he still has one lawful reason for retaining them e.g. to prevent corrupt money being removed or disposed of, then he is justified in retaining them until the conclusion of a prosecution in which they may be used as evidence, or a decision is reached not to prosecute provided the initiation of proceedings is commenced or the decision not to prosecute is reached within a reasonable time.

37. I agree, with respect, with what Talbot J. said at the conclusion of his judgment in the Ghani case: it is only rarely that a judge will in interlocutory proceedings make an order which substantially grants the relief sought in the action. This is particularly so where if the application were refused but the trial judge found for the plaintiff on the matter he could compensate him in damages. It occurs to me, parenthetically, that were I to refuse the plaintiff's application and the trial judge were to grant the plaintiff the relief he seeks the damages might well be considerable. Indeed on such an application as this I think that apart from the fact that a judge will rarely grant or substantially grant the relief sought in the action the less a judge says on an issue to be tried the better. Nevertheless, I must consider all the circumstances of the present case and the legislation and arrive at such conclusion as I think equity demands.

38. The Legislature has conferred on the Commissioner unusual and very extensive powers to assist the Commission in its war against bribery and corruption. He is vested with powers to invade the privacy of a citizen at any time he thinks fit if in the investigation of an offence under the Ordinance he has a reasonable belief that the citizen has documents or articles that might be evidence of that offence. He has that power even though the citizen in question is not himself under investigation. If he is given such powers it is incumbent on him to exercise them with the greatest care and circumspection, and it is the duty of the Courts to ensure that he does so, and that those powers are in no way exceeded.

39. In the present case it is true, as was conceded by the Counsel for the plaintiff, the search for and the seizure and detention of the receipts was clearly within the powers of the Commissioner. From the notices said to have been served on the plaintiff under subsection 14(1)(c) and (d) it would appear that at least up to the 13th March, 1976 (the date of the letter wherein reference is made to section 14(1)) the plaintiff was not being treated as a person under investigation, nevertheless Section 17(1) gave the Commissioner the power to act as he did. But the section limits the power of the Commissioner to seize and detain documents or things which he has reasonable grounds to believe contain "any evidence" of an offence.

40. Do these receipts per se contain any evidence of an offence? On the face of them they do not. They merely show that money was deposited to the credit of the plaintiff. There is nothing on the face of them, even, to show that it was the plaintiff who made the deposit. It occurs to me that it might be more appropriate on a prosecution to call a representative of the bank to give evidence of the deposit to the plaintiff's account, if it were necessary to establish that there had been such a deposit. Be that as it may, it is doubtful if the Commissioner retained the receipts because they contained evidence of an offence. It is true that the officer whose affidavit was filed in these proceedings deposed that the receipts will be, or are likely to be used as evidence against the plaintiff or his brother or both, but Counsel for the defendants conceded that the primary reason was to prevent the plaintiff from using the monies. He did argue that the receipts were the best evidence. That of course is correct if the position were original documents as opposed to copy documents but from the point of view of strength of evidence it is not necessarily; so particularly if there had not been the exchange of correspondence. The production of the receipts is far from being the best way of proving the deposits. It certainly is not the only way.

41. If the intention of the Commissioner was to freeze the monies represented by the receipts he had at his disposal the right to apply to the District Court under section 14C for an order restraining the plaintiff from parting with the receipts, or restraining the Bank from parting with the monies they represented. In either case the plaintiff would have had the benefit of having the application of the Commissioner considered by the Court; or if the Court made an order, of appealing against it and having it revoked or modified. By acting as he did, and as he is doing, the Commissioner has frustrated the right of the plaintiff to have the merits of the Commissioner's might to restraint considered; and any hardship that a Restraining Order might impose on the plaintiff investigated. Indeed an order may only be made if the judge "is satisfied" that the property is "due to" or is held "for or on behalf of or to the order of a suspected person". It occurs to me that if the Commissioner were to obtain ex parte a Restraining Order the effect of depriving the plaintiff of the use of the money which he deposes is his, and which he says he needs for his very heavy present capital commitments and current expenses, must exercise considerable influence on a court considering whether to revoke or amend the Order should the plaintiff appeal. If bankruptcy and financial ruin of the plaintiff by reason of his inability to meet his commitments (while still the owner of adequate funds to meet them) were a likelihood, as suggested by Counsel before me, were established it must, I feel, weigh very heavily in the District Judge's consideration.

42. Where, as in the Bribery Ordinance, drastic powers are given for a particular purpose it is the duty of a court to ensure that those powers are in no way exceeded. When, as in this case, the right to exercise the power is based on grounds which are a camouflage for the real ground then I think the Court must treat the matter with the greatest suspicion and consider the real grounds with the utmost care.

43. It is my opinion that the intention of the Legislature was to empower by section 17(1) the Commissioner to seize an article or document and retain it for so long as is reasonably necessary for him to obtain such information or evidence as is available from it to enable him to investigate an offence under the Ordinance. When that object has been achieved it should be returned, unless the article or document is in itself an essential proof of a fact in issue, or a fact relevant to a fact in issue, in the event of a prosecution. Where a fact in issue or a fact relevant to a fact in issue can be proved otherwise, an article or document seized and detained under section 17(1) should be returned to its owner, more particularly should he request it; and if the Commissioner is in doubt he should apply for a Restraining Order.

44. I am satisfied that when the words "any evidence" were used in section 17(1) of the Ordinance it was never intended that they should be interpreted to mean every scintilla of evidence. I am satisfied that it was the intention of the Legislature to cover any evidence that might reasonably be required, having regard to the circumstances of the case. I am satisfied, for example that it was never intended to cover things the retention of which would be to disrupt an individual's business, unless no alternative was possible. It was never intended to authorise the retention of a document if, as Denning M.R. said, a copy would suffice. The section was never intended, for example, to justify retaining a firm's books of account where photostat copies are provided by the owner or obtained with his authority.

45. In the circumstances of this case there is provision in the Bribery and Corruption Ordinance for preventing the money from passing out of the reach of the Commissioner and its ultimate disposal by an order of the trial court if the District Court should consider such to be necessary in the cause of justice. But there are also provisions for the plaintiff to have his claim to the money and his needs for the immediate use of it considered.

46. I have no doubt that it was never the intention of the Legislature that section 17(1) should be used as a means to get around section 14C and thereby deprive some one of his rights under that section; and it appears that, really, that is what the Commissioner is endeavouring to do in this case. I will not permit it.

47. I grant the application of the plaintiff and order that the three deposit receipts forthwith be returned to the plaintiff.

48. I have heard Counsel on the question of costs and I have given considerable thought to what they said. My first re-action was to award costs to the plaintiff in any event even though such a decision is contrary to the usual practice of ordering the costs to be in the cause. My reason for that is that these proceedings would have been unnecessary had the Commissioner applied for a Restraining Order pursuant to section 14C. With considerable hesitation I have decided not to order costs to the plaintiff but order that the costs be the plaintiff's costs in the cause and I certify the case to be suitable for Counsel including a leader.

49. I refuse the application of Counsel for the defendants that there be a stay of execution.

Representation:

Mr. H. Litton, Q.C. & Mr. A. Li (Edmund Cheung & Co.) for plaintiff.

Mr. Carolan, S.C.C. for both defendants.