"A" v. The Securities & Futures Commission and Another
Read the full judgment text of HCAL 84/2007 on BabelCite. This High Court CFI judgment was delivered on 14 December 2007.
1. This is an application to quash a search warrant dated 11 July 2007, issued by a magistrate at Eastern Magistracy on the application of the SFC.
Cited by 1 case · Cites 4 cases
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HCAL 84/2007 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST NO. 84 OF 2007 ____________ BETWEEN
____________ Before: Hon Saunders J in Court Date of Hearing: 5 December 2007 Date of Judgment: 14 December 2007 _______________ J U D G M E N T _______________ Introduction: 1.This is an application to quash a search warrant dated 11 July 2007, issued by a magistrate at Eastern Magistracy on the application of the SFC. 2.The search warrant was executed on the applicant’s residential address by SFC officers on 12 July 2007, and certain documents have been seized and sealed pending the determination of this matter. The warrant was issued by the magistrate in relation to an investigation being undertaken by the SFC into certain insider dealing. 3.The Applicant has been granted an Order of Anonymity, without objection from the SFC, because the investigation has not yet been completed, and it is feared that premature publication of his name will prejudice his opportunities for employment, should he be ultimately cleared, as he believes he will be, of any allegation of insider dealing. There is no objection to the continuation of this order, and I make an order accordingly. The issues: 4.The application raises two discrete issues. They are:
The power of an SFC investigator to investigate: 5.A police officer has a broad power of arrest, without warrant, “on reasonable suspicion” that an offence has been committed: see s 50 Police Force Ordinance, Cap 232 (PFO). Consequently, merely by his appointment as a police officer, a police officer may investigate a matter. An SFC investigator does not have a similar power. Instead, on a case by case basis, he is given a “Direction to investigate”, (the Direction), in writing, to investigate any of the matters referred to in s 182(1)(a)-(g) SFO. In the absence of a Direction from the SFC, an SFC investigator has no power at all to investigate a particular matter. 6.Once directed to investigate, the investigator is entitled to exercise certain powers contained in Part VIII SFO. These include a power to require persons to produce to the investigator records or documents, to give to the investigator explanations or further particulars in respect of records, see s 183; and to obtain search warrants, see s 191. 7.Where an investigator requires a person to produce records or documents to him pursuant to s 183(1), he must first produce a copy of his Direction to that person for inspection: see s 182(3). The power to obtain a search warrant: 8.The power given to an investigator of search and seizure pursuant to a warrant, is contained in s 191, the relevant provisions of which are as follows:
The relevant factual background: 9.On 20 June 2007, a Direction to investigate pursuant to s 182(1) SFO, was issued by the SFC to a number of investigators, including Mr Tong Hon Fai. The Direction, (to which no exception is taken by the Applicant), insofar as relevant to the challenge before me, is in the following terms:
10.On 11 July 2007, some three weeks after receiving the Direction, Mr Tong sought and obtained a search warrant from the magistrate at Eastern Magistracy. The search warrant is in the following terms:
11.The warrant was executed at the Applicant’s residence, the premises referred to in the warrant, at approximately 7:50 a.m. on 12 July 2007. The Applicant was given a copy of the warrant by Mr Tong and those accompanying him, upon them gaining access to the premises. 12.The Applicant contacted his legal adviser, Mr Kwan Sui Ming, a partner of Deacons, who arrived at the premises at about 8:45 a.m. On arrival Mr Kwan was shown a copy of the warrant. He then asked for a copy of the Direction. There is a dispute about the precise time at which that request was initially declined, but it is agreed that during the course of the search a copy of the Direction was sent by fax, first to Mr Kwan’s office in Central, and from there to the Applicant’s residence. Nothing turns on the disagreement as to the time the request was made or declined. 13.Mr Kwan, on behalf of the Applicant, reserved the right to challenge the validity of the warrant, and it was agreed that no legally privileged information or documents would be seized or read by those undertaking the search. The search was then undertaken and certain documents and passbooks of some bank accounts were seized. The searching officers also noted some information from documents and cheque books found on the premises, relating not only to the Applicant and his spouse, but also to his relatives. 14.Mr McCoy accepts that all of the items seized fall within the scope of the Direction. The challenge to the search warrant: 15.On 16 July 2007, promptly, only 4 days after the search, the Applicant sought, and was granted leave to bring these Judicial Review proceedings. In the course of the hearing the grounds upon which the warrant was challenged became confined to the two matters set out in paragraph 4 above. 16.As to the first issue, Mr McCoy argues that the search warrant is over broad, lacking in specificity and parameters, consequently leading it to be uncertain and unclear as to its ambit and effect. 17.Mr McCoy accepted that if the dates contained in the Direction, (“during or around the period from 15 February 2007 to 30 April 2007”), and the name of the company involved in the alleged insider dealing, had been included in the warrant he could have no complaint as to specificity and parameters. The submission was that the omission of those factors was fatal to the warrant. 18.As to the second issue, Mr McCoy argues that the reference to s 183 SFO in the warrant inextricably linked the provisions of that section with the warrant, thereby making production of the Direction a pre-requisite to any right to search for or seize records or documents. The law as to the validity of a search warrant: 19.The principles to be applied in determining the validity of a search warrant necessarily begin with the Basic Law and the Bill of Rights Ordinance, and proceed from there to the decision of the Court of Appeal in Apple Daily Ltd v Commissioner of the Independent Commission Against Corruption (No. 2) [2000] HKLRD 647. 20.Article 29 of the Basic Law provides:
Article 14 of the Hong Kong Bill of Rights provides:
Mr McCoy does not raise any constitutional issue, but correctly reminds me that I must bear these provisions in mind in the course of this judgment, as they establish the very high value placed by our society on these fundamental rights. I do so. 21.The question of the validity of search warrants arose directly for consideration in Apple Daily Ltd. The judgment of Chan CJHC, (as he then was), at pp 673-4, established four guiding principles to be borne in mind when examining a warrant which was being challenged. I have had regard to, and have applied those principles. 22.The court in Apple Daily relied principally upon a decision of the House of Lords in IRC v Rossminster Ltd & Anor [1980] AC 952. Chan CJHC, at p 674, distilled three matters constituting the essence of that decision. They are:
The warrant in Rossminster established the parameters of the search by use of the following expression:
The warrant was held by the House of Lords to be valid, as it was strictly and exactly with in the authority of the provision authorising the grant of warrant; s 20C of the Taxes Management Act 1970. The relevant portion of that provision is:
Was the warrant sufficiently specific: The argument for the Applicant: 23.Mr McCoy relied principally, initially, on the decision of Sears J in Re An Application by Messers Ip & Willis [1990] 1 HKLR 154. In that case the learned judge adopted three important principles in relation to search warrants, set out in a New Zealand decision of Davison C. J. in Rosenberg v Jaine [1983] NZLR 1. The case involved a search warrant in relation to a solicitor’s office, which undoubtedly placed the warrant in a special class, but I am satisfied that the three principles are generally applicable in relation to all search warrants. They are:
Unfortunately, it appears that Rossminster was not cited in that case. Further, anything said in Ip & Willis must be read, now, subject to the decision in Apple Daily. That said, I can find nothing in Apple Daily to indicate that the three principles, so stated by Sears J., do not remain valid. 24.The importance of the warrant containing appropriate parameters, usually supplied by the description of the alleged offence, and appropriate specificity as to what is authorised to be searched for and seized, is obvious. 25.First, the right to search is a right given by the exercise of judicial authority which is limited by the terms of the empowering statute. The parameters of the warrant cannot exceed the parameters of the empowering statute. 26.Second, and for obvious reasons, the occupier of the premises to be searched must be able to understand the scope of the authority that has been given. 27.The warrant in Ip & Willis referred only to:
28.That is a provision which refers specifically to offences under the Prevention of Bribery Ordinance, (Cap 201), (POBO), and the Elections (Corrupt and Illegal Conduct) Ordinance (Cap 554), (ECICO), but also to any other offence that might be connected with, or that either directly or indirectly facilitated the offences under the named ordinances. Consequently, the warrant gave no indication whatsoever as to the particular offence that might have been committed, whether an offence under POBO, or ECICO, or some other connected offence; evidence for which a search was being made. In those circumstances it is perhaps not surprising that the warrant was held to be insufficiently specific. 29.Relying upon the decision Mr McCoy argued that the warrant in the present case lacked specificity. The argument for the SFC: 30.Mr Bell for the SFC relied upon both Apple Daily and Rossminster. His argument was, quite simply, that in confining the parameters of the warrant to criminal or civil insider dealing, with appropriate reference to the relevant legislation, and limiting the records and documents which may be searched for and seized to those which may be required to be produced pursuant to s 183, the SFC had obtained a warrant that was strictly and exactly within the provisions of the empowering statue. 31.As to the absence of dates or other particulars Mr Bell relied upon R v Chief Constable, ex p Fitzpatrick [1998] 1 All ER 65. There the warrants were issued in relation to what the police believed was a conspiracy to defraud, in particular an advance fee fraud. 32.The precise terms of the warrant are not set out in the judgement. However, it is clear that no particular offence was stated in the warrant. Instead, the specific offence, an advance fee fraud, had been stated to the magistrate in the course of obtaining the warrant. 33.This may be discerned from the judgment where in a response to a (fourth) submission that the wide scope of the warrants left the police a completely free hand to decide what they should search for and seize, this meaning that the task of defining the scope of the warrants had been delegated to by the magistrate to the police, Jowitt J said, at p 73:
It is right however to note that it is clear that the attack made on the warrant was not that the occupier of the premises would not be able to know the scope of the warrant, but that on its terms the scope of the warrant exceeded the jurisdiction given to the magistrate pursuant to the empowering statute. That said, notwithstanding the absence of specific words as to the offence, the warrant was upheld. Discussion: 34.Unlike the warrant in Ip & Willis, the warrant in this case appropriately delineates the offence, and informs the occupier of the premises clearly, albeit without precise detail as to the company involved or the period, of the offences which are suspected. In this respect it cannot be distinguished from the warrant in Rossminster, and, apparently, the warrant in Fitzpatrick. In Ip & Willis the occupier of the premises had no way of determining which of a wide range of offences was being investigated. In the present case it is absolutely plain to the occupier of the premises that both criminal and civil insider dealing were being investigated. 35.Mr McCoy accepted that the warrant, referring as it did to two particular offences, and being further delimited by reference to the restriction to records or documents that “may be required to be produced pursuant to section 183 under Part VIII of the Ordinance”, which necessarily imported the Direction, did not go beyond the permissible extent available. The Direction is necessarily imported through the reference to section 183, because it is by reference to the Direction that the nature of the documents which may be required to be produced under that section is determined. 36.The argument open to Mr McCoy is confined to the contention that the absence of the dates and name of the relevant company means that the occupier of the premises is not properly informed of the scope of the warrant. 37.There may be many reasons why such precise information may not be included in a warrant. At an early stage of investigation may simply not be known to the investigators. There may be sound operational reasons for the investigators not yet wishing to let the occupier of premises know the precise direction in which the investigation is proceeding, other than being required to state the nature of the offences being investigated. 38.Having regard to the terms of the warrant in Rossminster and Fitzpatrick, and the criteria laid down in Apple Daily, I am not persuaded that, as a matter of principle, further information was required in the warrant. That is not to say that where the information is available to the investigators, as it was here, it would be wrong to include it in the warrant. To the contrary, it will often be sensible to include such information, particularly where there are issues of legal professional privilege. But it need not be included as a matter of course, so long as there is an appropriate description of the offence, and the parameters of the warrant can be determined by the court. The CFA in P v ICAC: 39.Mr McCoy, in his reply, relied upon a very recent decision of the Court of Final Appeal in P v Commissioner of the Independent Commission Against Corruption (Unreported FACC 11/2006, 31 May 2007). P v ICAC dealt with a special investigatory power in s 14(1)(d) POBO, under which the ICAC may seek from a Judge of the Court of First Instance an order authorising the Commissioner of ICAC to given notice in writing, requiring a person to furnish to an investigating officer a statement in writing enumerating certain specified matters. The authorisation given by the Order was in simple terms:
40.Rossminster was cited, but only in relation to public interest immunity, and was not otherwise considered relevant to the decision. It is clear however that the Order was, to adopt the expression used in both Rossminster andApple Daily, “strictly and exactly within the authority” of the empowering provision. 41.The Court of Final Appeal determined that the Order in the circumstances was a general order simply authorising the Commissioner to issue a notice, and effectively gave carte blanche to the Commissioner to decide the width of the notice: see paragraph 31. The argument that the Order might be open to challenge on the basis that the subject of the s 14 POBO Notice might not be properly aware of the information he must furnish was not raised, and did not form part of the basis of the decision of the Court. That argument was clearly not open, because the Notice itself properly delineated the scope of the answers that must be given. 42.The complaint was that the general nature of the Order left the Commissioner of the ICAC with a carte blanche to formulate the terms of the notice. The matter was capable of simple remedy. By requiring that a draft notice was attached to the order, with appropriate reference to it in the order, it would be the Court, and not the Commissioner who decided the scope s 14 Notice. Without a draft notice attached the general terms of the order made it an objectionable carte blanche to ICAC to draw the notice in whatever terms they wished. 43.In my view, the decision does not advance the Appellant’s argument in the present case, the circumstances being quite different. The New Zealand authority: 44.In an attractively presented argument Mr McCoy relied upon a line of decisions from New Zealand, including a decision of the Full Bench of the Court of Appeal of New Zealand in Tranz Rail Ltd v Wellington District Court [2002] 3 NZLR 180. There the warrant was in the following terms:
45.I accept that the parameters thereby given to the warrant are indistinguishable from the parameters contained in the warrant under challenge. 46.The most significant feature of the New Zealand decisions to which I was referred, (Rosenberg v Jaine [1983] NZLR 1, R v Mitchell (1993) 10 CRNZ 485, R v Sanders [1994] 3 NZLR 450, Calver v District Court at Palmerston North (No 1) (2004) 21 CRNZ 371, Tranz Rail, and A Firm of Solicitors v District Court at Auckland [2006] 1 NZLR 586 CA[1]), is that in none of those cases was Rossminster mentioned, either in the judgments, or even as having been cited in the course of argument. Mr Bell submitted that the plain conclusion to be drawn from the omission of reference to Rossminster is that the law in New Zealand has, in this respect, taken a different direction from that in Hong Kong. 47.I agree. That the law in two different Commonwealth countries may diverge is not unknown. Further, it is apparent from the New Zealand decisions that in New Zealand, public interest immunity is not claimed in relation to information filed in support of a search warrant. The authorities in New Zealand appear to be far less reticent than those in the United Kingdom and Hong Kong in relation to the contents of the information. That the reviewing court is accordingly in possession of greater information may well have provided a basis upon which the New Zealand courts have been able to proceed in a different direction. 48.While it may be that developments in constitutional and human rights law in the seven years since Apple Daily was decided may lead the Court of Appeal to find the approach taken in New Zealand to be now more appropriate, that approach does not enable me to depart from Apple Daily, by which I am bound. 49.As I have noted above, Rossminster was not cited to Sears J in Ip v Willis. In my view however, it is unlikely that the decision would have been any different. In that case the difficulty faced by ICAC was the bland and open ended reference to “s 10 ICACO”, from which it was not possible to delineate the parameters of the warrant. In both the present case and in Rossminster, there is a clear statement of the suspected offence. 50.For the foregoing reasons I am satisfied that the absence of the range of dates or the specific company under investigation from the warrant did not invalidate the warrant. Production of the Direction: 51.Mr McCoy’s argument goes this way. When, under s 183, an investigator requires a person to produce records or documents he is obliged pursuant to s 182(3), to produce a copy of the Direction to that person for inspection. As the warrant entitled the investigator to seize only documents required to be produced pursuant to s 183, it inevitably and inexorably follows that, before searching and seizing any record or document, the Direction must be produced. 52.I reject the argument. 53.I am satisfied that the requirement in s 182(3) to produce the Direction is a machinery requirement only, and does not go to delineate in any way the records or documents which may be searched for or seized under a warrant giving power to search for or seize documents that may be required to be produced pursuant to s 183. 54.The plain purpose of the requirement to produce the Direction is to establish to the person required to produce the records or documents the authority of the investigator. A requirement to produce records and documents under s 183 carries the sanction of a criminal offence under s 184, the penalty for which is, on conviction on indictment, a fine of $200,000 and imprisonment for one year, or on summary conviction, to a fine at level 5 and imprisonment for 6 months. 55.In relation to a requirement to produce under s 183, the Direction serves precisely the same purpose as a warrant to search. It demonstrates to the subject the authority of the investigator. 56.It is accepted that the terms used in the warrant do not extend the parameters of the documents for which the investigator may search or seize. While it might be convenient and appropriate to attach the Direction to the warrant, I am satisfied that the requirement to produce the Direction contained in s 182(3) does not extend to a requirement to incorporate the Direction within, or attach the Direction to, a search warrant issued under s 190. Conclusion: 57.Both grounds upon which the Applicant has challenged the validity of the warrant fail. The warrant is valid, and the SFC may inspect and use the records and documents seized in accordance with their powers under the SFO. 58.There will be an order nisi that the Applicant must pay the costs of the Securities and Futures Commission. The scope of an investigator’s powers: 59.In the course of argument a question arose as to the entitlement of the investigator to seize documents which were either outside the scope of the date parameters contained in the Direction, or which might constitute evidence of some other offence under the SFO, or in relation to some other company. 60.If a police officer, lawfully, pursuant to a warrant, searching the premises for, say, a weapon, discovers a kilo of cocaine, his general power to investigate under s 50 PFO, means that without further ado, he may seize the cocaine, and take any necessary further steps in relation to that seize you, including if necessary, arrest. 61.An investigator, empowered under a Direction, is however limited by the terms of the Direction. In the present case the use of the expression “during or around the period” in the Direction affords a level of flexibility to the investigator should he find documents appropriately proximate to the specific dates. It may be a matter for argument as to what is appropriately proximate, but the issue does not arise in the present case. 62.A real issue does arise however if an investigator should discover records or documents relating to either, other offences under the SFO, or the same offences but plainly outside the period authorised, or the same offences in relation to some other company. As the law presently stands it appears that it would be necessary for the investigator to pause in his search, obtain a new or expanded Direction, and a new or expanded warrant. Such a course may be impracticable. 63.The SFC may think it appropriate in the circumstances that this matter should be reviewed and if necessary be the subject of amending legislation.
Mr Gerard J X McCoy, SC and Mr Kevin Patterson, instructed by Messrs Deacons, for the Applicant Mr Adrian Bell and Mr William M F Wong, instructed by the Securities & Futures Commission. [1] A further New Zealand Decision, Auckland Medical Aid Trust v Taylor & Ors [1975] 1 NZLR 728 CA, referred to is pre-Rossminster. |
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