Chan Mei Yiu, Paddy and Others v. Secretary for Justice and Another

HCAL 74/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST

NO 74 OF 2013

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D E C I S I O N

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1.This is an application for leave to apply for judicial review. The decision under challenge is the Secretary for Justice’s (“Secretary”) direction – given by the Law Officer (International Law) (“Law Officer”) by delegated power – on 15 April 2013 pursuant to s 12(8) of the Mutual Legal Assistance in Criminal Matters Ordinance (Cap 525) (“the Ordinance”) that copies of documents seized from the applicants’ premises on 18 January 2007 be transmitted to the appropriate authority of the Italian Republic.

2.Since the criminal trial for which the documents in question are proposed to be used is currently in progress in Milan, and there is at least a possibility that the evidentiary phase of those proceedings will end in July 2013, the present application has had to be dealt with urgently.  It has been directed that there is to be a “rolled up” hearing so that, if leave is granted, the substantive application for judicial review will be dealt with together and disposed of at the same time.

Background

3.By a letter of request dated 10 July 2006, Mr Fabio de Pasquale, Public Prosecutor at the Milan Court and an assistant of the Chief Prosecutor in Milan, requested the assistance of the Secretary for Justice pursuant to the Ordinance in relation to certain prosecution and investigation, the scope of which, as I shall presently discuss, is the crux of this judicial review.

4.Ms Susanna Sit, who was a Senior Government Counsel at the time entrusted by the Law Officer with the responsibility for handling the request, sought clarification and additional information from Mr de Pasquale.  He responded to her in writing on 27 October 2006, 27 November 2006, 18 December 2006 and 19 December 2006.  It is not in dispute that these written communications should be read together with and as part of the request for assistance.

5.In the request, Mr de Pasquale stated as follows.  For over two decades, Farouk Agrama had been purchasing broadcasting rights from Paramount for Silvio Berlusconi’s group which included three national television networks.  Over the period from 1988 to 1999, Agrama conspired with Berlusconi and arranged fictitious sales of the broadcasting rights to a number of dummy companies under the control of the Berlusconi group at an inflated price.  These companies had been reselling the broadcasting rights at a further inflated price to Italian companies and to Mediaset SpA (“Mediaset”), a listed company in Italy since 1996 whose management was controlled by Berlusconi.  Senior officers of Mediaset were bribed by Agrama.

6.Certain funds generated by these activities were channelled into the accounts of companies under the control of Berlusconi. Other funds had gone into the bank accounts of Agrama’s companies including the 3^rd applicant (a Hong Kong company) and Melchers Limited NV (“Melchers”) (domiciled in the Netherlands).  Agrama had also set up other companies to facilitate the laundering of the criminal proceeds including the 4^th applicant.  The 1^st and 2^nd applicants, who are Hong Kong residents, are the shareholders and directors of these companies.

7.The 3^rd and 4^th applicants and Melchers were set up and interposed in order to defraud the US Inland Revenue of tax on the profits obtained through the buying and selling of Paramount products on behalf of the Berlusconi group.

8.An approximate amount of SFr 150 million had been credited to the accounts opened at UBS Lugano under the names of the 3^rd and 4^th applicants and other companies traceable to Agrama.  Substantial deposits came from the account of Melchers held at another bank in Lugano.  The 1^st and 2^nd applicants were the authorised signatories of Melchers’s accounts.  The 1^st applicant was also the authorised signatory of the accounts of the 3^rd applicant and Melchers opened at UBS’s New York Branch.

9.By the letter of request, Mr de Pasquale requested assistance in the form of (i) examination on oath or affirmation of the 1^st and 2^nd applicants herein on a number of matters including the activities they carried out for Agrama; (ii) production of bank documents; (iii) the search of the 1st and 2nd applicants’ respective residential premises and the 6th applicant’s office premises, which were shared by the 4th and 5th applicants (a further office address was subsequently added which was the 3rd applicant’s address); and (iv) the seizing of funds in the amount of US$40 million in an account with UBS AG held in the name of the 4th applicant.  The oral examination mentioned in (i) above never took place as the applicants soon filed proceedings for judicial review, as described below.  The bank documents were sent to Italy and the court had refused the applicants’ application for the bank documents to be placed under embargo in Italy.[1] The present application for judicial review relates to the documents seized pursuant to (iii) above. 

10.To render assistance by way of search of premises as requested, on 15 January 2007, pursuant to s 12(1) of the Ordinance, the Law Officer nominated Detective Senior Inspector Leung King-hung of the police to apply to a magistrate for the necessary search warrants.

11.On 16 January 2007, pursuant to s 12(2) of the Ordinance, Inspector Leung laid an information before a magistrate and applied for the issue of four search warrants covering the residential premises of the 1st and 2nd applicants and the office premises of the 3^rd to 6^th applicants.

12.The search warrants were duly granted by the magistrate on the same day and executed on the following day.  A substantial volume of documents were seized as a result of the searches.  (It appears that nothing was seized from the residential address of the 2nd applicant whose standing in this application is therefore open to question, but it is unnecessary to delve into this issue.)  Pursuant to s 12(7) of the Ordinance the materials seized were delivered into the custody and control of the Commissioner of Police.

13.Four representatives of the Italian prosecutor took part in the searches on 17 January 2007, namely, Mr de Pasquale, another prosecutor and two forensic accountants.  The involvement of these foreign officials in the searches was, together with other complaints, soon relied upon as the grounds for four applications for judicial review in HCAL 16, 17, 18 & 19 of 2007 by the same applicants as in the present application.  They contended there that the search warrants and searches should be quashed and that all documents seized should be returned to them and not be transmitted to Italy or otherwise provided to any Italian officials.  Leave to apply for judicial review was granted by Hartmann J on 22 March 2007.

14.Those applications for judicial review did not come on for substantive hearing until exactly three years after leave was granted, on 22 March 2010.  The intervening period was taken up by litigation arising from the applicants’ attempt to obtain, for the purposes of the judicial review proceedings, the evidence of the Italian officers who took part in the searches.  Thus the applicants applied by originating summons (HMCP 1175 of 2007), with the Secretary as defendant, for a letter of request to issue from Hong Kong to Italy for the examination of those officers in Italy.  The Secretary opposed the application on the ground of lack of jurisdiction.[2]  On 23 July 2007 Saunders J ruled in favour of the applicants on the question of jurisdiction.[3]  The Court of Appeal dismissed the Secretary’s appeal on 18 March 2008.[4]  On 18 April 2008 Saunders J ordered the issue of a letter of request to Italy.

15.The letter of request in HCMP 1175 of 2007 was eventually issued on 13 June 2008 by the Registrar of the High Court of Hong Kong to the competent judicial authority of Milan.  In January 2009 the Court of Appeal in Milan authorised execution of that letter of request, directing that the evidence of the Italian officers was to be taken on 4 March 2009. Unfortunately, because of a postal error, the notification by the Italian court to Hong Kong was returned unopened to Milan.  As a result the evidence of the Italian officers was taken in Italy on 4 March 2009 in the absence of the parties from Hong Kong and without any cross-examination.

16.On 18 May 2009, pursuant to a further order of Saunders J, a new letter of request was issued by the Registrar to Italy.  On 17 July 2009 the Court of Appeal of Milan authorised the execution of the letter of request but, on 12 October 2009, revoked that authorisation upon the intervention and representation of the Attorney General of Italy, holding that the Italian officers were not competent under Italian law to give evidence in the proceedings.

17.After this detour, the substantive hearing of the judicial review applications brought in respect of the search warrants and the searches in 2007 finally commenced in Hong Kong on 22 March 2010 before Saunders J.  On 30 July 2010, the learned judge dismissed the applications for judicial review.

18.The applicants appealed.  In its judgment handed down on 8 May 2012 (CACV 172-175 of 2010)[5], the Court of Appeal dismissed the appeals, holding, inter alia, that it was quite lawful for the Italian officers to have actively participated in the searches, assisting the Hong Kong police to identify relevant documents.

19.Both the Court of Appeal[6] and, subsequently, on 19 November 2012, the Appeal Committee of the Court of Final Appeal[7] refused the applicants leave to appeal further to the Court of Final Appeal.  That eventually marked the end of that set of judicial review proceedings.

20.While those judicial review proceedings were pending between 2007 and 2012, the materials seized in the searches remained in the custody of the Commissioner of Police in Hong Kong.  To give assistance to the Italian authority as requested, it remained for the Secretary to make a direction pursuant to s 12(8) of the Ordinance for them to be transmitted to Italy.  S 12(8) provides as follows:

“(8) Where a thing is delivered into the custody and control of the Commissioner under subsection (7), the Commissioner shall arrange for the thing to be kept for a period not exceeding one month from the day on which the thing was seized pending a direction in writing from the Secretary for Justice as to the manner in which the thing is to be dealt with (which may include, subject to subsection (11), a direction that the thing be sent to an appropriate authority of a place outside Hong Kong).”

21.In this case, before the Secretary made a direction under s 12(8), he afforded the applicants an opportunity to make representations to him.[8]  This they did by letter dated 10 December 2012, and again on 15 March 2013 in reply to the representations made by Mr de Pasquale by letter dated 29 January 2013.

22.On 15 April 2013, the Law Officer by delegated authority from the Secretary made a direction in writing to the Commissioner of Police to arrange for copies of the documents seized (except those covered by legal professional privilege which had been returned to the applicants) to be sent to Ministero della Giustizia, the central authority of Italy and to return the originals to the applicants.  On 23 April 2013, the Department of Justice wrote to the applicants informing them of the direction made by the Law Officer under s 12(8) of the Ordinance and the reasons therefor.  The Department of Justice also, as promised earlier, gave the applicants three days’ notice that the materials would be transmitted to Italy on 26 April 2013.

23.On 25 April 2013, 1^st and 2^nd applicants filed a Form 86 in these proceedings to seek leave to apply for judicial review and to seek an interim injunction to prevent the transmission of the materials to Italy.  The Secretary and Commissioner of Police have undertaken not to transmit the documents to Italy pending the hearing of the present application on an expedited basis.  On 30 May 2013, the Form 86 was amended, inter alia, to add the 3^rd to 6^th applicants.

Criminal investigations and prosecutions in Italy

24.To understand the arguments advanced by the applicants on this application, it is necessary to look more closely at the criminal investigation and prosecution in Italy.  Since 2006 two sets of criminal proceedings have been instituted by the Italian prosecuting authority against Agrama, Berlusconi and their associates.  They have been termed the “Mediaset proceedings” and the “Mediatrade proceedings” respectively in the evidence in this case and I shall adopt the same terminology.

25.The Mediaset proceedings, which bore the number 22694/01 RGNR at the investigative stage, were at a more advanced stage when the letter of request in question was issued in July 2006.  These proceedings relate to the purchases of broadcasting rights at inflated prices in the years 1994 to 1998 which were reported in Mediaset’s accounts from 1995 onwards, including the tax returns for 2002 and 2003.  On 26 October 2012, the Court of Milan issued a judgment after trial.  Agrama and Berlusconi and two others were convicted of the offence of tax fraud, but only in relation to the years 2002 and 2003.  The limitation periods for the other offences charged had expired during the trial.

26.The Mediatrade proceedings bore the number 40382/05 RGNR during the investigative stage.  They were still in the early stages of investigation when assistance was sought from Hong Kong in 2006.  Based on the evidence since obtained, including evidence obtained through the international assistance of Switzerland and the United States, preliminary investigations were concluded in January 2010.  The 1^st and 2^nd applicants had by then become the targets of the investigation into the offence of money laundering in those proceedings. 

27.The request for indictment was issued on 9 March 2010.  On the same date, the Mediatrade proceedings were split into two sets of proceedings in accordance with jurisdictional rules under Italian law, namely one based in Rome, which concerned several of the years of tax fraud, and one based in Milan.

28.In the Milan part of the Mediatrade proceedings, on 18 October 2011, the Judge of the Preliminary Hearing of Milan (Vicidomini J):

(1) acquitted Agrama of the offence of misappropriation allegedly committed in the years 2000-2002 on the ground of limitation;

(2) acquitted Berlusconi of all charges he was facing on the merits including the allegation that he was the “hidden partner” of Agrama;

(3) ordered the indictment of all the defendants including the 1^st and 2^nd applicants herein, with the exception of Berlusconi.  The trial is currently in progress before the Court of Milan II Criminal Section in respect of alleged offences of misappropriation (in relation to the years 2004 and 2005), tax fraud and money-laundering.

29.This decision of Vicidomini J was affirmed by the Supreme Court of Cassation of Italy on 18 May 2012 and rendered final under Italian law.

30.As for the Rome part of the Mediatrade proceedings, on 27 June 2012, the Judge of the Preliminary Hearing in Rome decided “not to proceed” with the trial with regard to all the defendants, including Agrama and Berlusconi, based apparently on statutes of limitation and insufficiency of evidence.  The appeal by the prosecutor was held inadmissible by the Supreme Court of Cassation on 6 March 2013.  The outcome in Rome, however, has no effect on the Milan part of the proceedings.

Grounds for judicial review

31.The grounds on which judicial review is sought by the applicants may be broadly stated as follows:

(1) The proceedings referred to in the request have already concluded in Italy with the acquittal of Agrama on 18 October 2011 in the Mediatrade proceedings.  The Secretary must refuse the request pursuant to s 5(1)(e) of the Ordinance.  His direction to transmit the documents to Italy is therefore unlawful.

(2) In view of the significant divergence between the basis on which the request for assistance was made and the purpose for which the documents are proposed to be used, and in view of the mandatory assurances given in the request for assistance, the Secretary’s decision was irrational.

(3) It was an abuse of the process under the Ordinance to send the documents to be used in criminal proceedings against the 1^st and 2^nd applicants in circumstances where the letter of request had merely named them as witnesses and at the time when the letter of request was issued there was no criminal investigation against them.

(4) Collateral use of the materials seized cannot be permitted under Article VII(2) of Schedule 1 to the Mutual Legal Assistance in Criminal Matters (Italy) Order (Cap 525G) (“MLACM Italy Order”) because it would amount to retrospective application of a statutory provision of a criminal character.

(5) The respondents have unlawfully chosen to send all the seized materials en bloc to Italy without distinguishing between the different proceedings in Italy.

32.I shall deal with the grounds in turn but I should first set out some general points made by Mr Wayne Walsh, Deputy Law Officer (Mutual Legal Assistance), who appears on behalf of the Secretary.  Mr Walsh accepts that the direction made by the Secretary under s 12(8) of the Ordinance is amenable to judicial review.  He submits, however, on the basis of R (Hafner) v Secretary of State for the Home Department [2007] 1 WLR 950, 958E, that such a direction is “more procedural and ministerial than substantive”.  I do not find it useful in this case to seek to characterise the Secretary’s decision as procedural and ministerial or substantive.  Hafner was a case where the Secretary of State had nominated the Bow Street Magistrates’ Court to receive any evidence to which the request related.  It was in that context that it was said that the decision of the Secretary of State was merely a decision to put in place arrangements which would subject the request in question to a judicial process.  In the present case, the direction of the Secretary under s 12(8) is the final “gateway” through which the seized materials may leave Hong Kong for the requesting State without any further judicial process here.  It is not in dispute that in deciding whether to make a direction, s 5(1) of the Ordinance is relevant.  In deciding whether s 5(1)(e) applies in this case, the task of the Secretary is one that cannot, in my view, be described as ministerial.

33.What are more relevant, in my view, are two general points mentioned by Tuckey LJ in R (on the application of Abacha) v Secretary of State for the Home Department [2001] EWHC Admin 787 at para 17 to which Mr Walsh has drawn my attention:

“We bear in mind also two general points. First, as Lord Bingham said[9], the section 4 process[10] is not a trial.  It leads only to the transmission of evidence to the requesting State where, if it is to be used, one can assume that the criminal defendant will have the opportunity of answering it.  Secondly, such requests are made by friendly, foreign countries with whom we have treaty or similar obligations of mutual co-operation.  The expectation must therefore be that we will comply with the request unless there are compelling reasons for not doing so and that we will do so as quickly as possible.”

The first ground – s 5(1)(e)

34.The first ground of challenge is based on s 5(1)(e) of the Ordinance, which provides:

“(1) A request by a place outside Hong Kong for assistance under this Ordinance shall be refused if, in the opinion of the Secretary for Justice –

…

(e) the request relates to the prosecution of a person for an external offence in a case where the person has been convicted, acquitted or pardoned by a competent court or other authority in the place, or has undergone the punishment provided by the law of that place, in respect of that offence or of another external offence constituted by the same act or omission as that offence;

…”

35.The applicants’ argument is that the request for assistance relates only to the offence of misappropriation by Agrama for the years 2000-2002 being investigated in the Mediatrade proceedings and that, Agrama having been acquitted of such offence on 18 October 2011 (see paragraph 28(1) above), s 5(1)(e) mandates the Secretary for Justice to refuse to give any further assistance pursuant to the request.

36.In an ordinary case, s 5(1)(e) falls to be considered when the request is first received, whereupon the Secretary must refuse to give assistance if the person in question has already been convicted, acquitted or pardoned of the offence in relation to the prosecution of which the request has been made.  In the present case there is no suggestion that the request was precluded by s 5(1)(e) when it was first received in 2006 and when the Secretary decided to give assistance by applying for search warrants in 2007.  At that time no relevant criminal proceedings against any relevant person had been concluded.  The effect of the judicial review proceedings commenced in 2007, however, is that the question of transmission of the documents seized has only come to be considered now, after much has happened in Italy since the letter of request.  Mr Walsh accepts, rightly in my view, that s 5(1)(e) continues to apply to the transmission stage.

37.Mr Gerard McCoy SC, who appears for the applicants, says that the rationale that underlies s 5(1)(e) is the principle against double jeopardy.  On that basis it is notable that the person seeking judicial review here is not Agrama, who has been acquitted by Vicidomini J of the offence of misappropriation for the years 2002-2003, but the applicants who have not been convicted, acquitted or pardoned of any offence.  The crux of their complaint, as it seems to me, is not double jeopardy but that the letter of request is limited in scope. Essentially, they contend that once the basis of the original letter of request, the scope of which is very limited, is “spent”, assistance can no longer be given and any evidence already collected can no longer be transmitted pursuant to that request.  The original letter of request is “dead” and the solution for the Italian prosecutor, they argue, is not to try to revive it, which is impermissible, but to issue a new letter of request for the same evidence to be used in any further criminal proceedings in Italy which are not within the scope of the original letter of request.

38.Mr McCoy makes two concessions.  First, he accepts that, despite the literal wording of s 5(1)(e), if a request relates to two offences and only one has been disposed of by conviction or acquittal, s 5(1)(e) does not apply to preclude assistance being rendered pursuant to the request.  It is only where the request relates only to offences which have all been disposed of that s 5(1)(e) applies.  It seems to me that this concession is correct in principle.

39.Secondly, s 5(1) mandates the refusal of assistance if “in the opinion of the Secretary for Justice” the request falls within certain specified descriptions.  Mr McCoy accepts that, as is consistent with court’s function upon an application for judicial review, the court should not substitute its opinion for that of the Secretary nor should it “second guess” the Secretary.  He is content for me to adopt the orthodox criterion of Wednesbury unreasonableness in reviewing the Secretary’s decision including his opinion under s 5(1)(e) as to whether the request relates only to the prosecution of a person for an external offence in a case where the person has been convicted, acquitted or pardoned by a competent court in respect of that offence or of another external offence constituted by the same act or omission. 

40.I am satisfied that this is the correct approach to take in the circumstances of this case.  The question arising on this ground is therefore not what the court’s opinion is as regards the scope of the letter of request, but whether the Secretary’s opinion that the facts here do not fall within s 5(1)(e) is an opinion he is lawfully entitled to reach, that is to say, an opinion that is not irrational.

41.The lynchpin of the applicants’ argument on s 5(1)(e) is their contention that the only matter under investigation at the time of the request for assistance is the alleged misappropriation by Agrama for the years 2000–2002 (as stated in paragraph 42 of their Form 86).  On that footing, they argue that the only “criminal matter” to which the request relates – indeed the only criminal matter to which it can properly relate having regard to the requirement of specificity in s 8 of the Ordinance – is that offence, of which Agrama has since been acquitted.

42.“Criminal matter” is an important concept in the statutory scheme.  Under s 12 of the Ordinance, assistance in the form of search and seizure is to be given only if “a criminal matter involving an external serious offence has commenced in a place outside Hong Kong” (s 12(1)(a)) and “there are reasonable grounds to believe that a thing … relevant to the criminal matter is located in Hong Kong” (s 12(1)(b)).  “Criminal matter” is defined in s 2 to mean “(a) an investigation; (b) a prosecution …”.  “Investigation” is defined to mean, so far as relevant, “an investigation into [an] external offence”.  “Prosecution” is defined to mean, relevantly, “a trial of a person for [an] external offence, and includes any proceedings to determine whether a person should be tried for such an offence”.  “External offence” means “an offence against a law of a place outside Hong Kong”, while “external serious offence” means “an external offence the maximum penalty for which is death, or imprisonment for not less than 24 months”.

43.S 8 of the Ordinance sets out what needs to be specified by way of particulars in a request to Hong Kong for assistance:

“(1) A request by a place outside Hong Kong to Hong Kong for assistance in a criminal matter may be made to the Secretary for Justice.

(2) A request under subsection (1) shall be accompanied by-

(a) the name of the authority concerned with the criminal matter to which the request relates;

(b) a description of the nature of the criminal matter (in particular, details of the external offence to which the criminal matter relates) and a statement setting out a summary of the relevant facts and laws;

(c) a description of the purpose of the request and of the nature of the assistance being sought;

(d) details of the procedure that the place outside Hong Kong concerned wishes to be followed by Hong Kong in giving effect to the request, including details of the manner and form in which any information, document or thing is to be supplied to the place pursuant to the request;

(e) a statement setting out the wishes of the place concerning the confidentiality of the request and the reason for those wishes;

(f) details of the period within which the place wishes the request be complied with;

(g) if the request involves a person travelling from Hong Kong to the place, details of allowances to which the person will be entitled, and of the arrangements for accommodation for the person, while the person is in the place pursuant to the request;

(h) a statement setting out the maximum penalty for the external offence to which the criminal matter relates; and

(i)      any other information that may assist in giving effect to the request.”

44.Mr McCoy refers to an extension of time for preliminary investigations granted by an Italian “preliminary investigations judge” in April 2006 in relation to certain time limit under Italian criminal procedure.  The extension related to the preliminary investigations of Agrama for an offence against a specified provision of the Criminal Code.  He argues that this shows that the investigation going on at the time related exclusively to the alleged misappropriation by Agrama for 2002-2003.  In my view, while such special “preliminary investigations”, which under Italian law require the involvement of the court, are “investigation” within the meaning of the Ordinance, they are not the only kind of investigation that can qualify as such.  The Ordinance is intended and designed to apply with respect to requests made by diverse jurisdictions with different criminal procedures.  The word “investigation” is not to be defined by reference to the procedures of a particular foreign jurisdiction that may or may not bear the label “investigation”, but is to be given its ordinary meaning, independent of the terminology used in the foreign law.

45.In my view, a number of passages in the letter of request and the clarifications provided by Mr de Pasquale subsequently in 2006 make it clear beyond doubt that the request read as a whole relates not only to the alleged misappropriation by Agrama in the years 2000 to 2002, but also to an investigation into offences of tax fraud and money-laundering against Agrama and others for the period from 2000 onwards.  I set out below some passages extracted from the request by way of illustration, with added emphasis on relevant words:

(1) “The request relates to:

i.    the prosecution of a serious and complex fraud including money-laundering offences committed in the period 1995-1999 and

ii.   a further investigation concerning the same offences committed in more recent times.” (p 1 of the letter of request)[11]

(2) “The question of who is involved in the offences with regard to the period from the year 2000 onwards appears more complex.

It is clear that Agrama, over that period, continued to benefit from the complicity of top managers in the Berlusconi Group – such as Roberto Pace and Gabriella Ballabio – and thus was able to sell Paramount products to Mediaset at inflated prices.

It has not yet been completely clarified whether the main majority shareholder of Mediaset (Berlusconi) and the top executives of the companies involved (in primis the chairman Fedele Confalonieri) simply tolerated this illegal activity or whether they contributed to it.” (p 8 of the letter of request)

(3) “2.2   The new investigation

In the new investigation, in the context of which this request has been made, the offences of misappropriation of Mediaset financial resources and the subsequent laundering of these funds have been assumed.  The investigation was initiated very recently and it is not yet possible to calculate the effects of the fraud on the tax returns and balance-sheets of Mediatrade and RTI and the Mediaset spa Holding.” (p 9 of the letter of request)

(4) “With regard to the offences which took place in the nineties, I was granted the committal to trial of both Agrama and Berlusconi.  I consider the latter as Agrama’s ‘hidden partner’.

The context of the new investigation is a little bit different ...

...

The evidence obtained will be used in the new proceedings. However, if the HK Authorities don’t see any obstacle, I would like to use the HK evidence in the trial as well (according to Italian Law I can do that)” (document attached to Mr de Pasquale’s email to Ms Susana Sit of 27 October 2006)

46.The letter of request itself is also marked with the number 40382/05 RGNR which is the number of the Mediatrade proceedings at the investigative stage. 

47.The Department of Justice also recognised that the request related not only to intended prosecution of Agrama for misappropriation in 2000 to 2002.  The information laid by the nominated inspector in 2007 before the magistrate stated:

“5. The Italian authorities are conducting a prosecution and continuing investigation against … Agrama, … Silvio Berlusconi … and their associates for offences relating to fraud, false-accounting, misappropriation and money laundering of the criminal proceeds. …”

“6.5 Other funds had gone into the accounts of Agrama’s companies including [the 3^rd applicant] (domiciled in Hong Kong) and Melchers Limited NV (domiciled in the Netherlands) … It was known that Agrama had also set up other companies to facilitate the laundering of the criminal proceeds. They include [the 4^th applicant] (domiciled in Hong Kong) … These companies have accounts in Hong Kong, United States, Switzerland and United Kingdom. It was further discovered that the above companies had shareholders and company directors in common. The roles had been held by the same two persons namely [the 1^st and 2^nd applicants] who are Hong Kong residents.”

48.Mr McCoy submits that having regard to the requirements of particularity in s 8 of the Ordinance, the request must be read as being confined to one relating to the specified offence alleged against Agrama for the years 2000 to 2002.  I am unable to accept this submission.  So far as investigation is concerned, the statute lays down no requirement for identifying in the request all the suspects for the offence in question.  While the statute defines “prosecution” in terms of trial of a person, it defines “investigation” as investigation into an offence. The very purpose of an investigation may be to identify the persons responsible.  In my opinion, the level of particularity that is required of a request for assistance will depend on, inter alia, whether the criminal matter is a prosecution or an investigation and, if an investigation, its stage of progress.

49.In Brady v Haughton [2006] 1 IR 1, a case concerning s 51 of the (Irish) Criminal Justice Act 1994, which empowered the relevant minister to give assistance where he has received a request from a foreign state “in connection with a criminal investigation that is being carried on”, Murray CJ said (at pp 17-18):

“36. The test is the investigation of an offence and not the investigation of a particular person. One could probably assume that in most cases a particular person or persons may be identified as being, to a greater or lesser degree, the object of the investigation in relation to a relevant offence or offences. This is obviously the case in the present instance but the section is clearly intended to apply to readily envisagable circumstances where the relevant authority in the requesting country seeks evidence in relation to the commission of an offence even though it has not yet identified any individual as a potential culprit. The evidence sought may be concerned with the identity or recent movements of a deceased victim or evidence from some person in this jurisdiction who had witnessed a serious offence and thus in a position to give material evidence concerning the commission of the offence without being in the position to implicate or identify its currently unknown author. These are just a couple of examples illustrating that the procedures pursuant to s. 51 may fall to be applied even though they could not then be considered as affecting any identifiable person.

37. In cases where a requesting authority has, for the purposes of its investigation, identified an actual or potential suspect or suspects, their status as suspects may vary greatly from one who is already charged with an offence, or who is a prime suspect on the basis of cogent evidence connecting him or her with its commission, or someone who is very tentatively a suspect (perhaps with others), whose involvement in the offence the investigation will tend to confirm or exclude.”

The same may be said, in my view, in relation to the term “investigation” in the Ordinance.

50.It follows that the applicants’ first ground of challenge fails.

The second ground – irrationality

51.The applicants submit that, even if s 5(1)(e) does not apply to preclude further assistance from being given, in view of the significant divergence between the basis on which the request for assistance was made and the purpose for which the documents are proposed to be used, and in view of the mandatory assurances given in the request for assistance, the Secretary’s decision was irrational.

52.Page 12 of the letter of request contains the mandatory assurances given by Italy as the requesting State to Hong Kong.  The relevant assurance states as follows:

“I can confirm that this request does not relate to the prosecution of a person for an offence in a case where the person has been convicted, acquitted or pardoned by a competent court or other authority of the Italian Republic in respect of that offence or another offence constituted by the same act or omission as that offence.”

53.It can be seen that the assurance is in substance equivalent to s 5(1)(e).

54.As explained above in relation to the first ground, the request for assistance was made in the context of, inter alia, the Mediatrade proceedings which were then at an early investigative stage.  The documents seized pursuant to the request are now proposed to be used as evidence in the trial of the Milan part of the Mediatrade proceedings.  I do not think there is any divergence between the basis on which the request was made and the purpose for which the documents are now proposed to be used.  The applicants’ second ground therefore also fails.

The third ground – 1^st and 2^nd applicants being mere witnesses at the time

55.The applicants contend that it would be an abuse of the process under the Ordinance to send the documents seized to be used in criminal proceedings against the 1^st and 2^nd applicants in circumstances where the letter of request had merely named them as witnesses.

56.It is true that at the time when the letter of request was issued, there was no criminal investigation against the 1^st and 2^nd applicants in the sense of the “preliminary investigations” presided over by the “preliminary investigations judge” in Italy.  It is however far from accurate to say there was no investigation of them in the ordinary sense.

57.In particular, the clarification provided by Mr de Pasquale on 3 November 2006 makes it clear, in my view, that there was no settled conclusion that the 1^st and 2^nd applicants were mere witnesses as opposed to persons investigated.  That document lists the evidence of the extensive involvement of the 1^st and 2^nd applicants in Agrama’s activities.  In particular, Mr de Pasquale stated:

“… with regard to Chan and Hsu Chun an ‘approach strategy’[12] should be discussed. The Police may ask them whether they accept to release a voluntary statement and only subsequently they should be heard in Court. The question is delicate as it involves points of Law (are Chan and Hsu Chun to be considered mere witnesses or potential suspects?) …”

58.That there was an investigation about the roles of the 1^st and 2^nd applicants is also clear from paragraph 6.5 of the information laid by the inspector in 2007, as quoted in paragraph 47 above.  It seems to me the premise of the applicants’ third ground is not established.  In any event, even if they were mere witnesses initially, it seems to me the fact that the documents seized are intended to be used as evidence in a trial in which the 1^st and 2^nd applicants, among others, are defendants cannot be a categorical bar against the transmission of the documents to Italy.  There is nothing to suggest that the Law Officer has not taken this into account when she made the direction under s 12(8).

The fourth ground – Article VII(2) of the bilateral agreement

59.Article VII(2) of the agreement between the Government of Hong Kong and the Italian Government made in 1998 (which is set out in Schedule 1 to the MLACM Italy Order) provides:

“The Requesting State shall not disclose or use information or evidence furnished for purposes other than those stated in the request without the prior consent of the Central Authority of the Requested State.”

60.Legal effect is given to the agreement by the MLACM Italy Order which however only came into operation in August 2010.  The applicants contend therefore that collateral use of the materials seized in this case cannot be permitted under Article VII(2) because that would amount to retrospective application of a statutory provision of a criminal character.

61.Mr de Pasquale’s primary stance in his representations to the Secretary in January 2013 was that the letter of request does relate to the Mediatrade proceedings that are now before the Milan court. Although Mr de Pasquale also sought consent “[i]n the event there is uncertainty” and “to the extent necessary” under Article VII(2), the Secretary’s case is that the MLACM Italy Order did not come into operation until 14 August 2010 and has no application to the request for assistance here.  Ms Susana Sit, now Deputy Principal Government Counsel, has stated in an affidavit sworn on 27 May 2013 that the Law Officer considered that the use of the materials for the Mediatrade proceedings was covered by the request and did not give consent under Article VII(2).  There is nothing to gainsay what Ms Sit has said on oath.

62.Accordingly this ground does not arise. 

The fifth ground – transmitting documents en bloc without discrimination

63.Finally, the applicants contend that the Secretary has acted unlawfully in deciding to send all the seized materials en bloc to Italy without distinguishing between the different proceedings in Italy some of which have come to an end.

64.The short answer to this is that Mr de Pasquale has stated that all the documents are relevant today in the Mediatrade proceedings which are on trial.  Bearing in mind that he is one of the four Italian officers who actively participated in and assisted the searches, in particular by identifying the relevant documents, as referred to in paragraphs 13 and 18 above, and that he is intimately familiar with the Italian criminal proceedings, there is nothing wrong, in my view, for the Secretary to take into account Mr de Pasquale’s explanation in making a direction under s 12(8).  The applicants have wholly failed to show that the decision to send all the seized documents (except those covered by privilege and returned) to Italy is in any way irrational or unlawful.

Conclusion

65.For the above reasons, I have come to the conclusion that the applicants’ attempt to seek judicial review has no merit.  There is no reasonably arguable case with a realistic prospect of success.  Leave to apply for judicial review is therefore refused.  There will be an order nisi that the applicants pay the (putative) respondents’ costs.

Interim stay

66.By letter to this Court dated 4 June 2013, before the handing down of this decision, the applicants seek, in case their application is unsuccessful, an interim stay or injunction preventing the transmission of the documents to Italy for seven days.  The applicants state that if the documents are sent, any appeal by them would be rendered nugatory. I have to bear in mind, however, that further delay in the transmission of the documents may also render the assistance given nugatory.  In these circumstances, I grant an interim stay until 1 pm on 10 June 2013.  I expect the applicants to have decided by then whether to appeal and, if so, to have the papers ready.

Post-script

67.I would add this.  Whilst submitting that the original letter of request was “spent” and “dead”, Mr McCoy says that there is nothing to prevent the Italian authority from issuing a fresh letter of request and thereby obtaining the very same materials.  On this basis, it seems to me that even if some of the grounds for challenging the Secretary’s decision were made out, there is a serious argument whether the court should not as a matter of discretion refuse to grant an order of certiorari.  As Geoghegan J said in Brady v Haughton, supra, at p 97:

“283. … even if it were thought that the relief could still be justified and perhaps appropriate on one view, at the end of a hearing certiorari or any other discretionary relief on judicial review can always be refused as a matter of discretion provided of course the discretion is properly exercised. In a purely domestic case, it may well be a valid exercise of the discretion to grant the relief where it is thought that the State’s behaviour in the case ought to be penalised. But where the case is one such as this with international dimensions and where the State is effectively playing the role of agent for a requesting State under an international convention, I think that the court should solely be concerned with what might be just or unjust and should not be precluded necessarily from refusing certiorari merely because the Irish State authorities have adopted wrong procedures provided that no injustice is caused to a party concerned.”

68.It seems to me that the court’s discretion in relation to remedies upon judicial review is a wide one and may in an appropriate case be exercised in a wholesome manner to prevent Hong Kong’s ability to provide timely assistance to friendly foreign jurisdictions under the Ordinance from being brought into disrepute.  However, as this was not argued before me and does not arise in light of my conclusions, I need not dwell on it.

Mr Gerard McCoy SC and Mr Steven Kwan, instructed by Haldanes, for the 1^st to 6^th Applicants

Mr Wayne Walsh, Deputy Law Officer of Department of Justice, for the 1^st and 2^nd Respondents

Please refer to CACV125/2013 for the relevant appeal(s) to the Court of Appeal.