Re The Hong Kong and Shanghai Banking Corporation Ltd

Case No.DCMP 974/1991

Court

District Court

Date08 Aug 1991

Judge—

Case Document

100%Judiciary

DCMP000974/1991

DC MP 974 of 1991
DC MP 975 of 1991

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HEAD NOTE

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Ex parte application - Production Orders - Search Warrant - Sections 20 and 21 of the Drug Trafficking (Recovery of Proceeds) Ordinance (Cap. 405) - Order 115 Rule 1A of Rules of Supreme Court - Article 14 of the Hong Kong Bill of Rights - Section 8 of the Canadian Charter of Rights and Freedom.

IN THE DISTRICT COURT OF HONG KONG

MISCELLANEOUS PROCEEDINGS NO. 974 OF 1991

IN THE MATTER OF AN EX-PARTE APPLICATION FOR SIX PRODUCTION ORDERS PURSUANT TO SECTION 20 OF THE DRUG TRAFFICKING (RECOVERY OF PROCEEDS) ORDINANCE, CHAPTER 405, LAWS OF HONG KONG

AND

IN THE MATTER OF

THE HONG KONG AND SHANGHAI BANKING CORPORATION LIMITED

KINCHENG BANKING CORPORATION

HANG LUNG BANK LIMITED

HANG SENG BANK LIMITED

STANDARD CHARTERED BANK

INLAND REVENUE DEPARTMENT

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IN THE DISTRICT COURT OF HONG KONG

MISCELLANEOUS PROCEEDINGS NO. 975 OF 1991

IN THE MATTER OF AN EX-PARTE APPLICATION FOR A SEARCH WARRANT PURSUANT TO SECTION 21 OF THE DRUG TRAFFICKING (RECOVERY OF PROCEEDS) ORDINANCE, CHAPTER 405, LAWS OF HONG KONG

AND

IN THE MATTER OF SHANGRI-LA HOTEL REINER JACOBI

Coram: H.H. Judge Cheung

Date of hearing: 8 August 1991

Date of decision: 8 August 1991

Date of handing down reasons for decision: 27 August 1991

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REASONS FOR DECISION

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Background

1. On 8th August 1991 the Crown applied, ex parte, in Miscellaneous Proceedings No. 974 of 1991, for 6 production orders under Section 20 of the Drug Trafficking (Recovery of Proceeds) Ordinance, (the "Ordinance") and in Miscellaneous Proceedings No. 975 of 1991, for a search warrant under Section 21 of the Ordinance. The two applications are based on 2 sworn information of the police.

2. The production orders were sought to compel 5 banks in Hong Kong and the Inland Revenue Department to disclose details of bank accounts and records of a suspect who is charged with the offence of possession of dangerous drugs for the purpose of unlawful trafficking. Inquiries revealed that the suspect maintained accounts with 5 banks.

3. The search warrant was sought to search 2 suitcases of a suspect who is now remanded in Hong Kong pending his extradiction to the United States of America on an offence relating to drug trafficking. A warrant of arrest of the suspect was issued by the court in U.S.A.. The suspect, before his arrest in Hong Kong, stayed in a local hotel under an assumed name. He later moved to another hotel and had given instructions to the first hotel to send his 2 suitcases to an overseas address immediately.

4. I granted the production orders and search warrant sought by the Crown in Chambers I now give the reasons for my decision in court in view of the importance of the issue raised in theses 2 applications.

Issue

5. The issue involved in these 2 applications is whether Sections 20 and 21 of the Ordinance are incorsistent with Article 14 of the Hong Kong Bills of Rights Ordinance 1991 (the "Bill of Rights")

Drug Trafficking (Recovery of Proceeds) Ordinance

6. The Ordinance was enacted to provide for the tracing, confiscation and recovery of the proceeds of drug trafficking, to create the offence of assisting drug traffickers to retain those proceeds and for incidental or related matters. Sections 20 and 21 are as follows :-

20.	(1)	An authorized officer may, for the purpose of an investigation into drug trafficking, apply to a court for an order under subsection (2) in relation to particular marterial or material of a particular description.
	(2)	Subject to section 23(10), the court may, if on such an application it is satisfied that the conditions in subsetion (4) are fulfilled, make an order that the person who appears to the court to be in possession of the material to which the application relates shall -

	(a)	produce the material to an authorized officer for him to take way or
	(b)	give an authorized officer access to it, within such period as the order may specify.

	(3)	The period to be specified in an order under subsection (2) shall be 7 days unless it appears to the court that. a longer or shorter period would be appropriate in the particular circumstances of the application.
	(4)	The conditions referred to in subsection (2) are

(a)

that there are reasonable grounds for suspecting that a specified person has carried on or has benefited from drug trafficking;

(b)

that there are reasonable grounds for believing that the aterial to which the application relates -

(i)

is likely to be of substantial value (whether by itself or together with other material) to the investigation for he purpose of which the applicat-ion is made; and

(ii)

does not consist of or include items subject to legal privilege; and

(c)

that there are reasonable grounds for believing that it is in the public interest, having regard -

	(i)	to the benefit likely to accrue to the investigation if the material is obtained; and
	(ii)	to the circumstances under which the person in possession of the material holds it,

that the material should be produced or that access to it should be given.

	(5)	Where a court makes an order under subsection (2)(b) in relation to material on any premises it may on the same or a subsequent application of an authorized officer, order any person who appears to him to be entitled to grant entry to the premises to allow an authorized officer to enter the premises to obtain access to the material.
	(6)	Rules of court may provide for -

	(a)	the discharge and variation of ordersunder this section; and
	(b)	proceedings relating to such orders

(7)

Where the material to which an application under this section relates consists of information contained in or accessible by means of any data equipmen -

	(a)	an order under subsection 2(a) shall have effect as an order to roduce the material in a form in which it can be taken away and in which it is visible and egible and
	(b)	an order under subsection 2(b) shall have effect as an order to ive access to the material in a form in which it is visible and legible.

(8)

In subsection (7), "data equipment" means any equipment which -

	(a)	automatically processes information;
	(b)	automatically records or stores information;
	(c)	can be used to cause information to be automatically ecorded, stored or otherwise processed on other equipment (wherever situated);
	(d)	can be used to retrieve information, whether the information is recordedor stored in the equipment itself or in other equip-ment (wherever situated).

(9)

An order under subsection (2) -

	(a)	shall not confer any right to production of, or accessd to, tems subject to legal privilege;
	(b)	shall have effect notwithstanding any obligation as to secrecy or other restriction upon the disclosure of information imposed by statute or otherwise; and
	(c)	may be made in relation to material in the possession of a ublic body as defined in section 23.

21.	(1)	An authorized officer may, for the purpose of an investigation into drug trafficking, apply to a court for a warrant under this section in relation to specified remises.
	(2)	On such application the court may issue a warrant authorizing an authorized officer to enter and search the premises if it is satisfied -
		(a)	that an order made under section 20 in relation to material on the premises has not been complied with; or
		(b)	that the conditions in subsection (3) are fulfilled; or
		(c)	that the conditions in subsection (4) are fulfilled.
	(3)	The onditions referred to in subsection 2(b) are
		(a)	that there are reasonable grounds for suspecting that a specified person has carried on or has benefited from drug trafficking; and
		(b)	that the conditions in section 20(4)(b) and (c) are fulfilled in relation to anymaterial on the premises; and
		(c)	that it would not be appropriate to make an order under that section in relation to the material because -
			(i)	it is not practicable to communicate with any person entitled to produce the material; or
			(ii)	it is not practicable to communicate with any person entitled to grant access to the material or entitled to grant entry to the premises on which the material is situated; or
			(iii)	the investigation for the purposes of which the application is made might be seriously prejudiced unless an authorized officer could secure immediate access to the material.
	(4)	The conditions referred to it subsection (2)(c) are -
		(a)	that there are reasonable grounds for suspecting that a specified person has carried on or has benefited from drug trafficking; and
		(b)	that there are reasonable grounds for suspecting that there is on the premises material relat-ing to the specified person or to drug traffick-ing which is likely to be of substantial value (whether by itself or together with other material) to the investigation for the purpose of which the application is made, but that the material cannot at the time of the application be particularized; and
		(c)	that -
			(i)	it is not practicable to communicate with any person entitled to grant entry to the premises; or
			(ii)	entry to the premises will not be granted unless a warrant is produced; or
			(iii)	the investigation for the purposes of which the application is made might be seriously prejudiced unless an authorized officer arriving at the premises could secure immediate entry to them.
	(5)	Where an authorized officer has entered premises in the execution of a warrant issued under this section, he may seize and retain any material., other than items ubject to legal privilege; which is likely to be of substantial value (whether by itself or together with other material) to the investigation for the purpose of which the warrant was issued.
	(6)	Any person who hinders or obstructs an authorized officer in the execution of a warrant issued under this section commits an offence and is liable -
		(a)	on conviction upon indictment to a fine of $250,000 and to imprisonment for 2 years; or
		(b)	on summary conviction to a fine of $50,000 and to imprisonment for 6 months.

7. An authorised officer is described in Section 2 as meaning any police office, any member of the Customs and Excise Service and any person authorized in writing by the Attorney General for the purposes of the Ordinance.

8. Section 22 defines court in relation to the provisions of Sections 20 and 21 as meaning the High Court and District Court.

Hong Kong Bills of Rights Ordinance 1991

9. The Bill of Rights came into operation in Hong Kong on 8th June 1991. It is an ordinance which provides for the incorporation into the law of Hong Kong of provisions of the International Covenant on Civil and Political Rights as applied to Hong Kong and for ancillary and connected matters. Section 3(2) of the Bill of Rights provides that all pre-existing legislation that does not admit of a construction consistent with the Bill of Rights is, to the extent of the inconsistency, repealed.

10. Article 14 of the Bill of Rights is as follows : -

	(1)	No one shall be subjected to arbitrary or unlawful interference with his privacy, family, home or correspondence, nor to unlawful attacks on his honor and reputation.
	(2)	Everyone has the right to the protection of the law against such interference or attacks.

11. Section 14 of the Bill of Rights and the Schedule thereto provide that 6 specific ordinances are not subject to the provisions of the Bill of Rights for a period of 1 year from the date of its commencement. The Ordinance is not one of the excepted ordinances.

Interpretation of Article 14

12. In interpreting Article 14, considerable assistance is derived from the decisions of the Canadian courts dealing with the Canadian Charter of Rights and Freedoms (the "Canadian Charter of Rights"). The Canadian Charter of Rights is, of course, entrenched in the Constitution of Canada and is part of the Constitution. Elaborate procedures are prescribed for the amendment or repeal of the provisions of the Constitution. In interpreting the provisions of the Charter of Rights, the Canadian courts have adopted a purposive approach. For example, in Hunter et al v. Southam Inc (1984) 11 D.L.R. (4th) 641, Dickson J. of the Supreme Court of Canada had this to say :-

"I begin with the obvious. The Canadian Charter of Rights and Freedoms is a purposive document. Its purpose is to guarantee and to protect, within the limits of reason, the enjoyment of the rights and freedoms it enshrinesIt is intended to constrain governmental action inconsistent with those rights' and freedoms; it is not in itself an authorisation for governmental action."

13. The Bill of Rights is not part of the constitutional documents of Hong Kong. It was enacted by the Hong Kong Legislature and could be repealed like any other legislation in Hong Kong. However, to the extent that existing legislat-ion is deemed to be repealed if its construction is inconsistent with the Bill of Rights, it is clear that the Legislature intended that the Bill of Rights should take precedence over other legislation. Thus ordinary principles of statutory interpretation. is not appropriate in construing the provisions of the Bill of Rights. I am of the view that it is appropriate to adopt the purposive and generous approach in interpreting the Bill of Rights which is consistent with the interpretation of similar provisions entrenched in the constitutions of other countries.

Arbitrary or unlawful interference with privacy

14. The execution of a search warrant or a production order would necessarily interfere with the privacy of an individual. However it is only arbitrary or unlawful interference with privacy that is prohibited by the Bill of Rights.

15. Sections 20 and 21 provide a detailed scheme dealing with the application and granting of the production order and search warrant. There is no dispute that in making the present application the procedure prescribed by the Ordinance has been observed by the Crown and the jurisdiction of the court to grant the relief is fully set out in the Ordinance. No issue arises on the question of lawfulness of the application.

16. The only question to be decided is whether there is an arbitrary interference with the privacy of the individual. In this connection, reference can be made to the case of Hunter et al. v. Southam Inc (supra) which I have referred to earlier. In that ease the Combines Investigation Act of Canada authorized the Director of the Combines Investigation Branch, or his representative to enter any premises on which the Director believes there may be evidence relevant to an inquiry under the Act, to search for evidence on premises, and to seize the evidence found there. The Act qualifies this power by requiring the Director, before exercising the power, to obtain an authorization from a member of the Restrictive Trade Practices Commission. The statutory power was employed to search the premises of a newspaper, as part of a combines inquiry into the newspaper industry in Edmonton.. The search of the newspaper is files was interrupted by the newspaper owner's application for an injunction. The application raises the question whether the Act infringed Section 8 of the Charter of Rights which provides that :

"Everyone has the right to be secure against unreasonable search or seizure."

17. Dickson J. in delivering the unanimous judgment of the Supreme Court held that :

"The guarantee of security from unreasonable search and seizure only protects a reasonable expection. This imitation on the right guaranteed by section 8, whether it is expressed negatively as freedom from "unreasonable" search and seizure or positively as an entitlement to a "reasonable" expectation of privacy, indicates that an assessment must be made as to whether in a particular situation the public's interest in being left alone by government must give way to the government's interest in intruding on the individual's privacy in order to advance its goals, notably those of law enforement."

18. Dickson J. held that a search of the kind in issue was reasonable only if it were authorized by statute and 3 conditions were stipulated by the authorizing statute :

	(1)	a requirement of a search warrant or other authorization, to be obtained in advance of the search;
	(2)	a requirement that the warrant be issued by a person who must be capable of acting judicially, that is, who must not be involved in the investigation; and
	(3)	a requirement that the warrant be issued only after it has been established upon oath that reasonable and probable grounds exist to believe that an offence has been committed and that evidence is to be found in the place to be searched.

19. In respect of the first requirement, Dickson J. held that a warrantless search is prima facie unreasonable and it is for the party seeking to justify a warrantless search to rebut the presumption of unreasonableness, He recognized, however, that it may not be reasonable in every instance to insist on prior authorization in order to validate governmental intrusions upon individuals' expectations of privacy (The situations in which it is not feasible to obtain a prior authorization are the situations in which a statute or the common law could authorize a warrantless search or seizure. See, for example R. v. Longtin (1983) 41 O.R. (2nd) 545).

20. In respect of the second requirement, Dickson J. held that the person who gives the authorization need not be a judge, but he must at a minimum be capable of acting judicially.

21. In respect of the third requirement, Dickson J. held that an applicant's reasonable belief that evidence may be uncovered in the search is not sufficient.In the case before him, Dickson J, held that the second and third requirements' had not been fulfilled because the person who issued the warrant was entrusted with investigatory functions and therefore could not act impartially. Furthermore the Act did not stipulate upon what standard or by what means of proof the member of the Commission should decide whether there was sufficient reason to issue a warrant.

22. I would respectfully adopt the same requirements in construing whether Sections 20 and 21 are inconsistent with Article 14 of the Bill of Rights. I find that there is little difference in principle in regard to the questions of "unreasonable search" and "arbitrary interference with privacy". I am fortified in this view by the construction placed by the Canadian courts on Section 10 of the Charter of Rights which states that :

''Everyone has the right not to be arbitrary detained or imprisoned".

23. The courts there held that an arbitrary detention. would be one that was unreasonable or capricious or one made without reference to an adequate determining principleor standard (see Levitz v. Ryan [1972] O.R. 783)

Sections 20 and 21 of the Ordinance

24. I now turn to examine whether the three requirements are satisfied in the provisions of Sections 20 and 21 of the Ordinance. There is no dispute that the first and second requirement have been satisfied. The sections provide for the prior authorization of the production order and search warrant. The orders are to be made by a judge of the District Court or the High Court and the judge has a discretion whether to grant the orders or not.

25. In relation to the third requirement, Section 20(6) states that rules of court may provide for proceeding relating to. the orders applied for under the section. Order 115 of the Rules of Supreme Court were enacted to prescribe for the proceedings under the Ordinance. Rule 1A of Order 115 provides that the applications under Sections 20 and 21 are to be made ex parte to a judge by laying an information on oath Section 20 sets out the conditions that have to be fulfilled before the court may make the order for the production of material. The Crown has to show firstly the particulars of the material (Section 20(1)) and that a specified person is in possession of the material (Section 20 (2)). Under Section 20 (4)(a) and Section 20(4)(b)(i), it is further necessary to show that there are reasonable grounds for suspecting that a suspect has, inter alia, carried on drug trafficking and the material to which the application relates is likely to be of substantial value to the investigation for the purpose of which the application is made. In my view, Section 20(4)(b)(i) provides more than a reasonable belief that evidence may be found. The existence of the material having been identified by Sections 20(1) and 20(2), the reference in Section 20(4)(b)(i) to a reasonable belief that the material is likely to be of substantial value to the investigation clearly points to a reasonable belief that there is evidence to be found in the material sought to be produced.

26. Section 20(4) refers to the other conditions, namely that the material is not subject to legal privilege (Section 20(4)(b)(ii)) and that public interest requires the product ion of the material (Section 20(4)(c)). Even without these 2 conditions, Section 20 clearly satisfies the requirement that an order can only be issued after it has been established on oath that reasonable and probable grounds exist to believe that an offence has been committed and that there is evidence to be found at the place of search, or, as in this instance, in the material in the possession of a specified person.

27. In relation to the application for search warrant under Section 21 the court may, pursuant to Section 21 (2), issue a warrant under either one of the following situations :-

	1.	a production order issued under Section20 has not been complied with (Section 21 (2) (a);
	2.	it would not be appropriate to make a production order under Section 20 in respect of materials referred thereto because, inter alia, it is not practic-able to communicate with any person entitled to produce the material(Section 21(2)(b)); and
	3.	the conditions set out in Section 21 (4) have been met (Section 21(2) (c))

28. No issue arises in this application on the first and second situations because they referred to the conditions under Section 20 which I find have satisfied the third requirement profounded by Dickson J.

29. Under the third situation, which is the one relied by the Crown in this application, the conditions that have to be fulfilled under Section 21(4) are that there must be reasonable grounds for believing that a suspect has, inter alia, carried on drug trafficking and there is on the premises material. relating to the suspect which is likely to be of substantial value to the investigation, but that the material cannot at the time of the application be particularized. Further it is necessary to show that. inter alia it is not practicable to communicate with any person entitled to grant entry to the premises. Again the reference to a reasonable belief that there is on the premises material relating to the suspect which is likely to be of substantial value to the investigation points to a reasonable belief that there is evidence to be found on the premises. In my view the conditions set out in Section 21(4) satisfy the third requirement propounded by Dickson J..

30. As Sections 20 and 21 of the Ordinance satisfy the three requirements, any orders issued therein could not be an arbitrary interference with the privacy of the individual.

31. I am further satisfied that on the information disclosed by the Crown, the conditions for obtaining the production orders and the search warrant have been satisfied in these 2 applications.

32. In respect of the application for production orders, the suspect is charged with the offence of drug trafficking in Hong Kong. He has 5 bank accounts. Statements and records of transaction of these accounts are in the possession of the banks. The Crown. is also seeking production of documents in the possession of the Inland Revenue Department. I am satisfied that the Crown has shown that there are reasonable grounds to believe that an offence has been committed by the suspect and that there is evidence to be found in the bank documents and in the tax files of the suspect in connection with the offence of drug trafficking.

33. In respect of the application for search warrant, the suspect is charged with a drug trafficking offence in the U.S.A.. He came to Hong Kong and checked into a hotel under an assumed name. He had given instructions to the hotel to deliver his suitcases to an overseas address immediately. I am satisfied that the Crown has shown that there are reasonable grounds to believe that an offence has been committed by the suspect and there is evidence to be found in the 2 suitcases in the premises of the hotel.

Conclusion

34. The conclusion I reached is that Sections 20 and 21 of the Ordinance are not inconsistent with Article 14 of the Bills of Rights and the productions orders and search warrant issued therein do not constitute an arbitrary or unlawful interference with the privacy of the suspects.

Dated the 27th day of August 1991.

(Peter Cheung)
District Judge

Representation:

Mr. Bailey, Senior Crown Counsel for the Crown.