Case Detail

HCAL 16/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST

NO. 16 OF 2007

____________

BETWEEN
	CHAN MEI YIU, PADDY	1st Applicant
	HARMONY GOLD LIMITED	2nd Applicant
and
	SECRETARY FOR JUSTICE	1st Respondent
	COMMISSIONER OF POLICE	2nd Respondent
	LEUNG KING HUNG Detective Senior Inspector	3rd Respondent
	A MAGISTRATE SITTING AT EASTERN MAGISTRACY ON 16th JANUARY 2007	4th Respondent

____________

AND

HCAL 17/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST

NO. 17 OF 2007

____________

BETWEEN
	WILTSHIRE TRADING LIMITED	Applicant
and
	SECRETARY FOR JUSTICE	1st Respondent
	COMMISSIONER OF POLICE	2nd Respondent
	LEUNG KING HUNG Detective Senior Inspector	3rd Respondent
	A MAGISTRATE SITTING AT EASTERN MAGISTRACY ON 16th JANUARY 2007	4th Respondent

____________

AND

HCAL 18/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST

NO. 18 OF 2007

____________

BETWEEN
	HSU MAY CHUN, KATHERINE	1st Applicant
	HARMONY GOLD LIMITED	2nd Applicant
and
	SECRETARY FOR JUSTICE	1st Respondent
	COMMISSIONER OF POLICE	2nd Respondent
	LEUNG KING HUNG Detective Senior Inspector	3rd Respondent
	A MAGISTRATE SITTING AT EASTERN MAGISTRACY ON 16th JANUARY 2007	4th Respondent

____________

AND

HCAL 19/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST

NO. 19 OF 2007

___________

BETWEEN
	HARMONY GOLD LIMITED	1st Applicant
	CS SECRETARIES LIMITED	2nd Applicant
	LOONG PO MANAGMENT LIMITED	3rd Applicant
	CHAN MEI YIU, PADDY	4th Applicant
and
	SECRETARY FOR JUSTICE	1st Respondent
	COMMISSIONER OF POLICE	2nd Respondent
	LEUNG KING HUNG Detective Senior Inspector	3rd Respondent
	A MAGISTRATE SITTING AT EASTERN MAGISTRACY ON 16th JANUARY 2007	4th Respondent

____________

AND

HCMP 1175/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 1175 OF 2007

____________

BETWEEN
	CHAN MEI YIU, PADDY	1st Plaintiff
	HARMONY GOLD LIMITED	2nd Plaintiff
	CS SECRETARIES LIMITED	3rd Plaintiff
	LOONG PO MANAGMENT LIMITED	4th Plaintiff
and
	SECRETARY FOR JUSTICE	Defendant
____________
	(Heard Together)

Before: Hon Saunders J in Court

Date of Hearing: 14 December 2010

Date of Completion of written submissions: 1 February 2011

Date of Decision: 9 March 2011

_____________

D E C I S I O N

_____________

1. On 9 December 2010, I handed down a decision in this matter on the question of costs. Subsequently, I learned, for the reasons outlined by me to the parties in Chambers on 14 December 2010, that reply submissions and authorities put in by counsel for the Respondents had not come to my attention properly, and had not been considered by me in the course of reaching my decision. I invited the parties to make written submissions to me on any steps that should be taken.

2. The parties are agreed, correctly, that until such time as the order as to costs is perfected the court has power to reopen and vary the decision: see HKSAR v Tin’s Label FactoryLtd (2008) 11 HKCFAR 637. This is not an appropriate case for the slip rule, under which the court does not change its order but merely ensures that the order accurately reflects what the court had originally intended when making the order: see Chow Tai Fook Jewellery Co Ltd, HCMP 6992/1998, unreported, 12 October 2000. It is common ground between the parties that, although the court has power to reopen in this case, strong reasons, synonymous with an exceptional case, must be shown before the decision is reopened: see Taylor v Lawrence [2003] QB 528, CA.

3. The argument for the Plaintiffs is that two points of law were advanced by the Respondents in the reply submissions; first that the Elgindata[1] principles had been followed by the Hong Kong courts post CJR, and second, that the present case, which concerned search warrants, did not meet the criteria set out by Lam J in Chu Hoi Dick v Secretary to Home Affairs (No 2) [2007] HKC 428. That is a correct reflection of the submissions. The Plaintiffs then say that none of the points made in the reply submissions would have affected the decision, which is accordingly not plainly wrong.

4. I accept that submission.

5. I have reviewed the authorities submitted by the Respondents and am satisfied that nothing contained in the submissions or the authorities would have affected my statement of the legal principles to be applied, and set out in paragraphs 5-7 of the decision. In his original submissions, Mr. Grossman for the Respondents, relied upon Elgindata principles and argued that they had been applied in Hong Kong. I found however that following CJR in Hong Kong those principles must be viewed in a different light.

6. As to the relevance of Elgindata principles, I have considered the authorities contained in the reply, and note the following comments which were made by the Plaintiffs, which I accept:

(i)     Regent National Enterprises v Goldlion Properties FACV 10/2008: the unsuccessful party relied upon Elgindata principles and succeeded in obtaining a reduced costs order, as they were here; none of the post CPR English authorities relied on by the Plaintiffs in this matter, and upon which I distinguished Elgindata, were put before the Court;
(ii)    Chinachem Charitable Foundation Ltd v Chan Chun Chuen HCAP 8/2007: again the unsuccessful party relied upon Elgindata principles, and again the successful party’s costs were reduced, as they were here;
(iii)   Wang Din Shin v Nina Kung CACV 67/2003; by applying Elgindata principles, the successful party’s costs were reduced, as they were here;
(iv)   Chan Lai Ying & Ors v Lee Lim & Ors HCA 1413/2005; recognising the general principle that cost should follow the event, and with none of the post English CPR authorities relied upon by the Applicants before me, being cited, the court deprived a successful party of one third of her costs;
(v)    Heibei Enterprises Ltd v Livisari & Co FACV 23 & 25/2007; this decision pre-dated CJR, and, it being common ground between the parties that Elgindata principles were applicable, the matter was not subject to any argument;
(vi)   La Chemise Lacoste SA v Crocodile Garments Ltd [2004] 4 HKC 317 and Goldenwick Ltd v Standard Chartered Bank (Hong Kong) Ltd [2008] 3 HKLRD 266; these are both pre Hong Kong CJR, again with none of the post English CPR authorities being cited;
(vii) Seepersad v Persad [2004] UKPC 19; this decision is simply inapplicable, relating to the consequences of costs if issues of damages can be separated.

7. The second point raised in the reply is the issue of costs in judicial review cases involving public interest. At paragraph 28 of the decision I reviewed the nature of these proceedings, and in particular at paragraph 28(i)-(iii) considered factors relevant to the public interest issue. The authorities referred to in the submissions, with the exception of Philip KH Wong, Kennedy YH Wong & Co v Commissioner of ICAC (No 2) [2009] 5 HKLRD 379, were all decided before the introduction of the new factors in Order 62 rule 5(1) under CJR. The decision in Philip KH Wong did not raise the issue of a public interest challenge.

8. Consequently, I have reached the conclusion that even if I had taken into account the Respondents reply submissions and the authorities cited in support of those submissions, it would have no impact on the decision that I ultimately reached.

9. For these reasons, I am satisfied that this is not an appropriate case in which I should recall and vary the decision made on 9 December 2010.

10. There will be no order for costs in respect of the hearing on 14 December 2010, or in respect of the written submissions made subsequent to that hearing.

(John Saunders)
Judge of the Court of First Instance
High Court

Mr G J X McCoy, SC leading Mr Steven Kwan, instructed by Messrs Haldanes, for the Applicants, in HCAL 16 – 19/2007 and the Plaintiffs, in HCMP 1175/2007

Mr Wayne Walsh, Deputy Law Officer (Mutual Legal Asst) of the Department of Justice, for the 1^st – 3^rd Respondents, in HCAL 16 – 19/2007 and the Defendant, in HCMP 1175/2007

[1]Re Elgindata Ltd (No. 2) [1992] 1 WLR 1207

HCAL 16/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST

NO. 16 OF 2007

____________

BETWEEN

	CHAN MEI YIU, PADDY	1^st Applicant
	HARMONY GOLD LIMITED	2^nd Applicant
and
	SECRETARY FOR JUSTICE	1^st Respondent
	COMMISSIONER OF POLICE	2^nd Respondent
	LEUNG KING HUNG Detective Senior Inspector	3^rd Respondent
	A MAGISTRATE SITTING AT EASTERN MAGISTRACY ON 16th JANUARY 2007	4^th Respondent

____________

AND

HCAL 17/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST

NO. 17 OF 2007

____________

BETWEEN

	WILTSHIRE TRADING LIMITED	Applicant
and
	SECRETARY FOR JUSTICE	1^st Respondent
	COMMISSIONER OF POLICE	2^nd Respondent
	LEUNG KING HUNG Detective Senior Inspector	3^rd Respondent
	A MAGISTRATE SITTING AT EASTERN MAGISTRACY ON 16^th JANUARY 2007	4^th Respondent

____________

AND

HCAL 18/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST

NO. 18 OF 2007

____________

BETWEEN

	HSU MAY CHUN, KATHERINE	1^st Applicant
	HARMONY GOLD LIMITED	2^nd Applicant
and
	SECRETARY FOR JUSTICE	1^st Respondent
	COMMISSIONER OF POLICE	2^nd Respondent
	LEUNG KING HUNG Detective Senior Inspector	3^rd Respondent
	A MAGISTRATE SITTING AT EASTERN MAGISTRACY ON 16^th JANUARY 2007	4^th Respondent

____________

AND

HCAL 19/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST

NO. 19 OF 2007

____________

BETWEEN

	HARMONY GOLD LIMITED	1^st Applicant
	CS SECRETARIES LIMITED	2^nd Applicant
	LOONG PO MANAGMENT LIMITED	3^rd Applicant
	CHAN MEI YIU, PADDY	4^th Applicant
and
	SECRETARY FOR JUSTICE	1^st Respondent
	COMMISSIONER OF POLICE	2^nd Respondent
	LEUNG KING HUNG Detective Senior Inspector	3^rd Respondent
	A MAGISTRATE SITTING AT EASTERN MAGISTRACY ON 16^th JANUARY 2007	4^th Respondent

____________

AND

HCMP 1175/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 1175 OF 2007

____________

BETWEEN

	CHAN MEI YIU, PADDY	1^st Plaintiff
	HARMONY GOLD LIMITED	2^nd Plaintiff
	CS SECRETARIES LIMITED	3^rd Plaintiff
	LOONG PO MANAGMENT LIMITED	4^th Plaintiff
and
	SECRETARY FOR JUSTICE	Defendant

____________

(Heard Together)

Before: Hon Saunders J in Court

Date of Completion of written submissions: 19 October 2010

Date of Decision on Costs: 9 December 2010

____________________________

DECISION ON COSTS

____________________________

The applications

1. On 30 July 2010, I handed down judgment in HCAL 16-19/2007, (the substantive proceedings), dismissing the application for judicial review. The question of costs was reserved. After considering correspondence from the parties I directed the written submissions be filed in respect of costs. This is my decision in respect of costs.

2. Throughout the substantive proceedings, in which there have been numerous interlocutory applications in all respects costs have been reserved. The proceedings in HCMP 1175/2007 related to a discrete issue, the issue of a letter of request. In those proceedings costs were, as the summons sought, ordered to be in the cause in HCAL 16-19/2007.

The principles to be applied

3. Mr Grossman, for the Respondents, acknowledges that costs are in the discretion of the court and argues, relying upon the well-known passage from Re Elgindata Ltd (No. 2) [1992] 1 WLR 1207 at 1214A-C, per Nourse LJ, that there is a general rule arising from a matter of accepted practice and case law that costs should follow the event, even if the successful party has raised issues or made allegations on which he fails, (i.e., principle (iii) referred to by Nourse LJ).

4. Mr Grossman then reminds me that those principles have been adopted by the Hong Kong Court of Appeal in La Chemise Lacoste SA v Crocodile Garments Ltd [2000] 4 HKC 317. Finally, he acknowledges that the following civil justice reform, the terms of O 62 R 3(2A), are now in permissive rather than mandatory terms, enabling the court in the exercise of its discretion to order costs to follow the event or make such an order as it sees fit.

5. However, I accept Mr McCoy’s submission that the proper approach to costs, having regard to the changes brought about by civil justice reform, is that the proposition that costs follow the event is not a general rule, but only operates to shift to the unsuccessful party the burden of showing why some different approach should be adopted on the facts of a particular case. When regard is had to the provisions of O 62 R 5(1):

“The Court in exercising its discretion as to costs shall, to such extent, if any, as may be appropriate in the circumstances take into account –
(aa) the underlying objectives set out in Order 1A, rule 1;
(e) the conduct of all parties;
(f) whether a party has succeeded on part of his case, even if he has not been wholly successful,”

it becomes abundantly apparent that the dictum of Lord Lloyd of Berwick in Bolton MBC v Enc Sec (Practice Note) [1995] 1 WLR 1176 at 1178 more properly reflects the approach to costs:

“As in all questions to do with costs, the fundamental rule is that there are no rules. Costs are always in the discretion of the court, and a practice, however, widespread and long standing, must never be allowed to harden into a rule.”

6. The proper context in which Nourse LJ’s statement in Elgindata, should now be viewed, and the effect of the changes consequent upon civil justice reform, is demonstrated by the following passages from the decision of Lord Woolf MR in AEI Ltd v Photographic Performance Ltd [1999] 1 WLR 1507:

“I draw attention to the new Rules because, while they make clear that the general rule remains, that the successful party will normally be entitled to costs, they at the same time indicate the wide range of considerations which will result in the court making different orders as to costs. From 26 April 1999 the ‘follow the event principle’ will still play a significant role, but it will be a starting point from which a court can readily depart. This is also the position prior to the new Rules coming into force. The most significant change of emphasis of the new Rules is to require courts to be more ready to make separate orders which reflect the outcome of different issues. In doing this the new Rules are reflecting a change of practice which has already started. It is now clear that too robust and application of the ‘follow the event principle’ encourages litigants to increase the costs of litigation, since it discourages litigants from being selective as to the points they take. If you recover all your costs as long as you win, you are encouraged to leave no stone unturned in your efforts to do so.” (1522H-1523B)
The ‘well-established practice’ on which Nourse LJ based his third principle is, as I have already indicated, less generally followed than has been in the past and it is no longer necessary for a party to have acted unreasonably or improperly to be deprived of his costs of a particular issue on which it has failed.” (1523H)

7. Relying upon that decision, and two other decisions, Stoczina Gdanska SA v Latvian Shipping Co, Times Law Reports, 25 May 2001, and Summit Property Ltd v Pitmans [2001] EWCA Civ 2020 at §§ 16-17, Mr McCoy formulates the following propositions:

(1)   It is no longer necessary for a party to have acted unreasonably or improperly before he can be required to pay the costs of the other party on a particular issue on which he (the first party) has failed;
(2)   The Court may make different orders for costs in relation to discrete issues - and, in particular, should consider doing so where a party has been successful on one issue but unsuccessful on another issue and, in that event, may make an order for costs against the party who has been generally successful in the litigation; and
(3)   It may be appropriate, in a suitably exceptional case, to make an order which not only deprives the successful party of his costs of a particular issue but also an order which requires him to pay the otherwise unsuccessful party’s costs of that issue, without it being necessary for the court to decide that allegations have been made improperly or unreasonably; and
(4)   The above propositions give effect to the particular purpose of encouraging litigants to be selective as to the points they took, thus decreasing the costs of litigation.

I am satisfied that the authorities, and the new Rules justify those propositions, which I apply.

8. Mr McCoy goes on to remind me that in respect of judicial review proceedings involving the public interest the Government, when successful, does not always apply for an order for costs in its favour. The seminal case of Liversidge v Anderson [1942] AC 206 is cited as a good example of that practice.

9. In R (Davey) v Aylesbury Vale DC [2008] 1 WLR 878 at § 21, Sedly LJ (with the concurrence of Lloyd LJ and Sir Anthony Clark MR, now a justice of the United Kingdom Supreme Court) laid down the following guidelines for costs in public law litigation:

“(1) On the conclusion of full judicial review proceedings in a defendant’s favour, the nature and purpose of the particular claim is relevant to the exercise of the judge’s discretion as to costs. In contrast to a judicial review claim brought wholly or mainly for commercial or proprietary reasons, a claim brought partly or wholly in the public interest, albeit unsuccessful, may properly result in a restricted or no order for costs.
(2) If awarding costs against the claimant, the judge should consider whether they are to include preparation costs in addition to acknowledgement costs. It will be for the defendant to justify these. There may be no sufficient reason why such costs, if incurred, should be recoverable.”

10. These are principles to which the court will invariably have regard in judicial review proceedings, for on very many occasions judicial review proceedings involve fundamental human rights and the liberty of the subject thereby involving issues of public interest which go beyond those of the individual parties. As Hale LJ (as she then was) said in R (Munjaz) v Mersey Care NHS Trust [2004] QB 395, in such circumstances:

“It would be wrong to discourage any party from raising any proper and reasonable argument even if it ultimately failed.”

11. In the light of these principles is necessary to consider each of the individual orders for costs reserved. I propose to deal first with the incidence of the costs to be awarded, and second with the amount of those costs.

Costs reserved on 22 March 2007 in HCAL 16-19/2007

12. Hartmann J (as he then was) required submissions from counsel for both the Applicants and the Respondents in determining whether or not leave should be granted to apply for judicial review. The Applicants were successful in obtaining that leave.

13. Mr McCoy says that nothing has been said by Mr Grossman as to why the Respondents should have costs in that respect. The usual practice is that an application for leave to issue judicial review proceedings is heard on an ex parte basis, unless the judge requires assistance from counsel for the proposed Respondent. In my view it is sufficient that the Respondents were required by the judge to appear, and no further justification is required.

14. The Respondents will have their costs on that appearance.

Costs reserved on 28 June 2007 in HCAL 16-19/2007

15. This relates to an application for discovery by the Applicants, of the Italian letter of request for mutual legal assistance dated 10 July 2006. The Respondents were successful in resisting discovery on the basis of confidentiality, although the letter of request was voluntarily disclosed subsequently by the Respondents, ten days prior to the commencement of trial.

16. It is right that the Court derived assistance from the terms of the letter of request in reaching its final factual conclusions, but it does not follow from that that the Respondents should not have their costs on their successful resistance to the order for discovery. The cost reserved are to go to the Respondents.

Cost reserved on 23 July 2007 in HCMP 1157/2007

17. The 1st and 2nd Applicants in HCAL 16/2007, and the 1st, 2nd and 3rd Applicants in HCAL 19/2007, as plaintiffs, by originating summons brought against the 1st Respondent as defendant, sought a Letter of Request to take evidence from witnesses in Italy. The 1st respondent challenged the jurisdiction of the court to issue a Literate Request in judicial review proceedings. That challenge failed. The Letter of Request was issued.

18. Mr McCoy argues that the 1st respondent should bear the plaintiff Applicants’ costs in respect of the unsuccessful challenge to the jurisdiction to issue the letter of request.

19. Unfortunately, the submission does not have regard to the fact that, when ultimately exercising the discretion in the court to issue the Letter of Request, an order was made, as had been sought on the summons, is that the costs of the proceedings be in the cause, a reference to the cause of HCAL 16-19/2007. No application was made to vary the order which consequently became an order absolute: see Hong Kong Civil Procedure, 2011, §42/5B/1.

20. That order plainly deals with any costs reserved in HCMP 1157/2007, and I may make no further order in that respect now. The situation illustrates the problems that may occur in relation to costs when premature costs orders are made in satellite litigation.

21. The evidence to be obtained by the Letters of Request related to a vital matter in the proceedings, namely the evidence of the very persons whose conduct was called into question. That evidence was not ultimately obtained as a result of an ex parte intervention in the proceedings in Italy by the prosecuting authorities in Italy (see Reasons for Judgment, 30 July 2010, §§11-25). Had the evidence been obtained and used in the proceedings, plainly, the Applicants, even if ultimately unsuccessful, should have been entitled to their costs in obtaining a letter of request.

22. Notwithstanding that the plaintiff Applicants may feel a real sense of injustice in the particular circumstances, a matter to which I will refer later, there is no jurisdiction existing now by which any other costs order may be made in respect of the Letter of Request proceedings.

Costs Reserved on 3 August 2007 in HCAL16-19/2007:

23. On 1 August 2007, I heard an application by the Applicants to amend the grounds upon which the application for judicial review was sought. That application was opposed by the Respondents. Although resisted by the Respondents, the application was successful.

24. In the course of the hearing became apparent that the fact of shredding of notes and copies of seized documents by the 2^nd Respondent had been concealed from the Applicants by the 1^st and 2^nd Respondents for a period of nearly 6 months. An order in the nature of an injunction was made in order to preserve seized documents. No application has been made by the Respondents to discharge or vary that order.

25. Applying the principles I have outlined above, and having regard to the fact that the Applicants were successful on the application to amend the grounds, the Applicants will have their costs of and incidental to the orders made on 3 August 2007.

Other Reserved Costs in Interlocutory Steps in HCAL 16-19/2007

26. In respect of any other reserved costs in interlocutory matters the parties are in agreement that the Court may make such order as will achieve overall justice in the case.

27. I am satisfied that the overall justice of the case, in so far as the incidence of such costs are concerned, is such that it is appropriate that the Respondents should have any such other costs.

The amount of the costs awarded

28. In determining the amount of the costs to be awarded I have taken the following factors into account:

(i)     while the immediate issue stimulating the proceedings was the Applicants’ personal interest in protecting those ultimately holding the various companies from criminal proceedings, there was a strong element of public interest in the proceedings;
(ii)    insofar as the proceedings involved potential criminal action against those ultimately holding the various companies, the proceedings related directly to issues of fundamental human rights and the liberty of the subject, particularly in determining the scope of search powers;
(iii)   the Respondents’ evidence on the involvement of the Italian offices during the searches at Ms Hsu’s home and the premises at Prince’s Building was rejected;
(iv)   a finding was made that the investigating police officers and the Department of Justice had, for a period of time, concealed critical information from the Applicants that certain important evidence should not have been destroyed by the police;
(v)    a concession was made by the Respondents that it was wrong for the police to permit the Italian officers to take notes and make copies of seized documents. It follows from that concession that those actions were unlawful;
(vi)   an argument on the part of the Respondents’ pressed extensively in cross-examination of the Applicants’ witnesses that they had consented to the searches, was rejected.

29. The Applicants will undoubtedly harbour a deep sense of grievance over the way in which the Letter of Request to Italy was dealt with in Italy. Shortly before the evidence was to be taken, on an ex parte basis, undoubtedly upon the stimulation of the principal witnesses to be examined in Italy, the orders by the Italian courts enabling the Letter of Request to be exercised were set aside. No explanation has ever been offered by the Respondents of this action. It is extraordinary that the Letter of Request should have been dealt with in this manner.

30. Had the parties been aware of the possibility of such a course of action I have no doubt at all that the costs order in HCMP 1157/2007 would have been reconsidered. As it stands, because of the order, (sought in the summons), that the costs in those proceedings should be “in the cause” in the substantive proceedings, the Applicants will have to pay the Respondents’ costs of the Applicants’ own entirely successful, but unfortunately abortive through no fault of the Applicants, effort in obtaining highly relevant evidence in the proceedings.

31. In fixing the amount of the costs, in order to do substantial justice to the parties, I also take these circumstances into account.

32. Finally, I recognise that the proceedings have clarified a number of matters of law, including the exercise of the court’s jurisdiction to order discovery in cross-examination judicial review proceedings, the jurisdiction of the court to issue letters of request in Mutual Legal Assistance cases, the exercise of such jurisdiction, the operation of the MLAO, and in particular the meaning of the phrase “such assistance.... as is necessary and reasonable” in the MLAO.

33. Weighing all those matters into account I am satisfied that the order for costs in favour of the Respondents should be an order that the Applicants must pay 60% of the Respondents’ costs to be taxed on the party and party basis.

34. In respect of the cost reserved on 30 August 2007, payable by the Respondents to the Applicants, the Respondents must pay 100% of the Applicants costs so awarded, on a party and party basis.

(John Saunders)
Judge of the Court of First Instance
High Court

Mr G J X McCoy SC leading Mr Steven Kwan, instructed by Messrs Haldanes, for the Applicants, in HCAL 16 –19/2007 and the Plaintiffs, in HCMP 1175/2007

Mr Clive Grossman SC instructed by the Department of Justice, leading Mr Wayne Walsh, Deputy Law Officer (Mutual Legal Asst) of the Department of Justice, for the 1^st-3^rd Respondents, in HCAL 16 –19/2007 and the Defendant, in HCMP 1175/2007

HCAL 16/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST

NO. 16 OF 2007

----------------------

BETWEEN
	CHAN MEI YIU, PADDY	1^st Applicant
	HARMONY GOLD LIMITED	2^nd Applicant
	and
	SECRETARY FOR JUSTICE	1^st Respondent
	COMMISSIONER OF POLICE	2^nd Respondent
	LEUNG KING HUNG Detective Senior Inspector	3^rd Respondent
	A MAGISTRATE SITTING AT EASTERN MAGISTRACY ON 16^th JANUARY 2007	4^th Respondent

----------------------

AND

HCAL 17/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST

NO. 17 OF 2007

----------------------

BETWEEN
	WILTSHIRE TRADING LIMITED	Applicant
	and
	SECRETARY FOR JUSTICE	1^st Respondent
	COMMISSIONER OF POLICE	2^nd Respondent
	LEUNG KING HUNG Detective Senior Inspector	3^rd Respondent
	A MAGISTRATE SITTING AT EASTERN MAGISTRACY ON 16^th JANUARY 2007	4^th Respondent

----------------------

AND

HCAL 18/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST

NO. 18 OF 2007

----------------------

BETWEEN
	HSU MAY CHUN, KATHERINE	1^st Applicant
	HARMONY GOLD LIMITED	2^nd Applicant
	and
	SECRETARY FOR JUSTICE	1^st Respondent
	COMMISSIONER OF POLICE	2^nd Respondent
	LEUNG KING HUNG Detective Senior Inspector	3^rd Respondent
	A MAGISTRATE SITTING AT EASTERN MAGISTRACY ON 16^th JANUARY 2007	4^th Respondent

----------------------

AND

HCAL 19/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST

NO. 19 OF 2007

----------------------

BETWEEN
	HARMONY GOLD LIMITED	1^st Applicant
	CS SECRETARIES LIMITED	2^nd Applicant
	LOONG PO MANAGMENT LIMITED	3^rd Applicant
	CHAN MEI YIU, PADDY	4^th Applicant
	and
	SECRETARY FOR JUSTICE	1^st Respondent
	COMMISSIONER OF POLICE	2^nd Respondent
	LEUNG KING HUNG Detective Senior Inspector	3^rd Respondent
	A MAGISTRATE SITTING AT EASTERN MAGISTRACY ON 16^th JANUARY 2007	4^th Respondent

----------------------

(Heard Together)

Before: Hon Saunders J in Court

Dates of Hearing: 22-26, 29-31 March, 28, 29 April, 2010

Date of Judgment: 30 July 2010

----------------------

J U D G M E N T

----------------------

The decisions challenged:

1. These are judicial review proceedings in which the applicants challenge a number of decisions arising from the issue of certain search warrants pursuant to the provisions of the Mutual Legal Assistance in Criminal Matters Ordinance, Cap 525, (MLAO).

2. The specific decisions or actions which are subject to challenge are as follows:

(i) A decision made by or on behalf of the Secretary for Justice on 15 January 2007, to accept a request for mutual legal assistance made on behalf of the Italian Republic by Mr Fabio De Pasquale, an Italian prosecutor, as contained in a letter of request dated 10 July 2006;

(ii) A decision by the Secretary for Justice to nominate an authorised officer pursuant to s 12(1) MLAO, to apply to a magistrate for a search warrant, as requested by the Italian Republic;

(iii) A decision made by that authorised officer to apply, under s 12(2) MLAO, to a magistrate for four search warrants, on 16 January 2007;

(iv) A decision made by a magistrate at Eastern Magistracy, on 16 January 2007, to issue four search warrants pursuant to s 12(3) MLAO;

(v) The searches purportedly conducted under the authority of those search warrants by the Hong Kong Police at the various premises occupied by the applicants, on 18 January 2007.

3. Leave to apply to judicial review was given by Hartmann J (as he then was) on 22 March 2007.

4. The application for judicial review involves the determination of the following main issues:

(i) Whether the letter of request from the Republic of Italy to the government of Hong Kong contains misrepresentations or omissions that may have operated in the mind of either the Secretary for Justice or the magistrate when they respectively made the decisions they made in relation to the ultimate issue of the search warrants;

(ii) In particular, whether the failure to draw to the attention of the magistrate the fact that Italian law enforcement agents would be present and may take part in the search constituted a material nondisclosure in an ex parte application, such as to justify the quashing of the search warrants and their execution;

(iii) Whether the failure to include temporal limits in the warrants, upon the material that may be seized, invalidates the warrants;

(iv) Whether the MLAO, properly construed, permits foreign law enforcement agents to take part in the execution of search warrants issued thereunder;

(v) The correct procedure to be followed, once things have been seized in consequence of a search pursuant to MLAO.

5. An issue also arose as to whether or not any of the materials seized in the searchers pursuant to the search warrants were “items subject to legal privilege”, as that expression is defined in s 13(1) MLAO. In the event, it was not necessary to give any consideration to this issue, as ultimately, all claims for legal professional privilege in respect of the items seized were abandoned by the applicants.

The applicants:

6. There are four sets of proceedings, one in respect of each of the four search warrants that were issued. The first, HCAL 16/2007, relates to the residential premises of Ms Paddy Chan, who is an officer of Harmony Gold Ltd and Wiltshire Trading Ltd.

7. The second, HCAL 17/2007, relates to office premises of Wiltshire Trading Limited. Loong Po is a management company, that acts as a company director for Wiltshire Trading. CS Secretaries act as secretary for Wiltshire Trading.

8. The third, HCAL 18/2007, relates to the residential premises of Ms Katherine Hsu, also an officer of Harmony Gold Ltd and Wiltshire Trading Ltd.

9. The fourth, HCAL 19/2007, relates to the office premises of Harmony Gold Ltd, Loong Po, and CS Secretaries, which are all companies which operate from Room 1253, Prince’s Building Hong Kong. Both Ms Chan and Ms Hsu have offices in those premises from where the companies are operated.

The procedural background:

10. It is appropriate that the procedural background should be briefly set out having regard to the unfortunately very long period of time between the issue of the search warrants and the substantive hearing. It will be noted that the search warrants were issued as long ago as 16 January 2007, and were executed at the various premises on 18 January 2007. Leave to apply for judicial review was given on 22 March 2007. However, the substantive hearing of the application for judicial review did not commence until 22 March 2010.

11. Unusually in judicial review proceedings, there was a factual dispute. That dispute was as to the events that occurred during the course of the searches, in particular, the extent of the involvement of two Italian prosecutors and two Italian forensic accountants assisting the prosecutors, (collectively called “the Italian officers”), in the searches. To resolve that dispute, it was necessary to hear evidence from those involved or present at the searches. That evidence will be dealt with later in this judgment.

12. The applicants were to give evidence, as were the Hong Kong police officers involved in the execution of the warrants. The factual issue centred upon the conduct of the Italian officers in the course of the searches. Notwithstanding their central involvement in the factual dispute Department of Justice indicated to those advising the applicants that they did not propose to call the Italian officers to give evidence.

13. Counsel for the applicant, Ms Chan, then indicated that he would call the four Italian investigators as witnesses for Ms Chan. He was reminded that as they were his witnesses he would not be entitled to cross-examine them. I was informed that that procedural rule could be overcome, as counsel for the remaining applicants, other than Ms Chan, who did not call the four witnesses, would be entitled to cross-examine them.

14. A request was made to the Department of Justice as to whether or not the Italian officers would be willing to come to Hong Kong to give evidence and be cross-examined. The four witnesses declined to come to Hong Kong for that purpose.

15. Consequently, an application was made by Ms Chan for the issue of a letter of request to have the evidence of the Italian officers taken in Italy. The respondents challenged the jurisdiction of this Court to issue that letter of request. On 23 July 2007, I held that the Court had the necessary jurisdiction[1].

16. The respondents appealed, and the Court of Appeal dismissed the appeal on 18 March 2008, affirming my decision[2].

17. The respondents then argued, relying on alleged prosecutorial immunity in Italy on the part of the Italian officers, that the Court should exercise its discretion against the issue of the proposed letter of request. Having considered competing evidence on relevant Italian law I ordered that the letter of request be issued to the Italian authorities[3]. The letter of request was issued by this Court on 13 June 2008.

18. The execution of a letter of request was authorised by the Court of Appeal of Milan on 13 January 2010. Unfortunately, the notification of that authorisation, and the fixing of the date for taking the evidence in Milan on 4 March 2009, was dispatched to the Court of Appeal in Hong Kong with the address, in Hong Kong, written in Italian.

19. Remarkably, the Hong Kong Post Office was apparently unable to decipher the address[4], and returned the notification to the Court of Appeal in Milan.

20. Consequently, on 4 March 2009, when the evidence was due to be taken in Italy, the applicants had not received notice of the hearing. I have not been told whether the Italian prosecutors had informed the Department of Justice of the date upon which the evidence was to be taken.

21. On that day, the four Italian officers duly appeared before the judge in Milan, and their evidence was taken. Because they had not been notified of the date, counsel for the applicants were absent, and so there was no cross-examination.

22. The first the applicants learned of the matter was when they received the transcript of the evidence taken in Milan. Having determined what had happened, a new letter of request was issued to the Italian authorities on 18 May 2009. On 7 July 2009, the Court of Appeal of Milan again authorised taking of the evidence. Procedural directions for the taking of the evidence were made by Bichi J in Milan on 17 July 2009.

23. On 29 September 2009, the principal proposed witness, Mr de Pasquale, wrote to the Deputy Public Prosecutor of Milan, complaining that the letter of request, dated 18 May 2009, and authorised by the Court of Appeal of Milan, was ‘an abnormal action’, and urged the Deputy Public Prosecutor to have the matter reconsidered by the Court of Appeal in Milan. He did not notify the applicants of this step. There is no evidence as to whether or not he informed the Department of Justice of his action.

24. On 12 October 2009, approximately 10 days before the date fixed for the taking of the evidence, without hearing from the applicants in any way, the Court of Appeal of Milan revoked the order it had made on 7 July 2009. There is no evidence as to whether or not the Deputy Public Prosecutor for Milan informed the Court of Appeal of Milan that the application made by the Deputy Public Prosecutor was being made without the knowledge of the applicants.

25. In the result, the order authorising the letter of request having been revoked, the evidence of the four witnesses was not taken. Those advising Ms Chan elected not to take further steps to take evidence from the four Italian officers, and the way was cleared for the trial proper to proceed.

26. The evidence that had been taken, in the absence of the applicants, and without cross-examination, on 4 March 2009, was put into evidence by Mr McCoy SC for Ms Chan. Mr Grossman SC, for the Department of Justice said that he did not rely upon that evidence. Mr McCoy, however, did rely upon that evidence.

The factual background:

27. Other than the factual issue relating to the conduct of the various persons present during the searches, there was no dispute between the parties as to the facts which gave rise to the judicial review proceedings.

28. On 16 May 2005, Italian prosecutors requested the Milan court to commit Mr Frank Agrama and others for trial for alleged offences of misappropriation, tax fraud and false accounting in relation to a company called Mediaset SpA. On 13 October 2005, parallel proceedings began against Mr Agrama and others in relation to another company, Mediatrade SpA.

29. A preliminary hearing of the Mediaset proceedings commenced before Paprella J in Milan on 28 October 2005. On 6 April 2006, Mr de Pasquale requested the Milan court to extend the preliminary investigations in the Mediatrade proceedings, citing ‘foreign pending rogatory activities’ as the ground for extension.

30. On 7 July 2006, Paprella J dismissed the majority of charges in the Mediaset proceedings, ruling that they were alleged to have been committed between 1998-1999, and were accordingly time barred by a statute of limitations. Mr McCoy contends that the result of that dismissal was to reduce the amount involved in the alleged offences from US$170 million to about US$19 million. On the same day, the Judge committed Mr Agrama and others for trial on the remainder of the charges, the trial apparently to commence on 21 November 2006.

31. As a result of further procedural steps in Milan, and a further application of the limitation period, the amount involved in the alleged offences was further reduced to US$741,024, as a result of a judgment given on 15 January 2007.

32. On 10 July 2006, Mr de Pasquale issued a letter of request to the Department of Justice seeking assistance in the following ways:

1. That the applicants, Ms Chan and Ms Hsu be examined on oath before a magistrate and that the examination be recorded on a video camera;

2. That there be a production order against the Hong Kong branch of UBS AG Bank, a bank holding accounts for Harmony Gold and Wiltshire Trading;

3. That the residential premises of Ms Chan and Ms Hsu, and the office premises of Loong Po, be searched;

4. That a sum of US$40 million believed to be held by UBS AG in Hong Kong in a particular account, in the name of Harmony Gold, be seized.

33. In the letter of request, addressed to the Secretary for Justice, Mr de Pasquale specifically stated:

“I ask to take part in the execution of the present request, in particular of the witness interviews and the searches.

I also ask that the authorisation to take part in the execution of the request be extended to Police officers and/or experts (auditors) collaborating on the investigation.”

34. The letter of request was dispatched from Milan, through appropriate diplomatic channels, to Hong Kong.

Steps taken by the Italian authorities overseas:

35. On 20 July 2006, Mr de Pasquale had issued a letter of request to the Attorney General of the United States, requesting searches of Mr Agrama’s offices and residence in Los Angeles, and that documentation from several banks be obtained. That letter of request was in similar terms to that issued to Hong Kong.

36. The letter of request concluded with the following statement by Mr de Pasquale:

“I ask to take part in the search.”

37. By 15 November 2006, acting upon the letter of request, an Assistant United States Attorney for the Central District of California had obtained search warrants permitting the search of the office and residential premises of Mr Agrama in Los Angeles. The searches were undertaken on that day. Documents and computers were seized. Mr de Pasquale and two KPMG auditors, instructed as part of Mr de Pasquale’s prosecution team, were present in the offices and residential premises that were searched.

38. Mr Agrama challenged the search and seizure. He instructed Mr Alejandro N Mayorkas, a partner in the respected US law firm of O’Melveny & Myers LLP. An unchallenged affidavit from Mr Mayorkas said that amongst the grounds on which the challenge was made the following assertions were made:

“(b) the Italian prosecution team, which I understand was comprised solely of members of the trial prosecution team in Italy, participated in the searches;

(c) adequate procedures were not in place to protect attorney-client communications and work-product from disclosure to the Italian prosecution team;

(d) the Italian prosecution team have access to attorney-client communications and work product;

(e) attorney-client communications at work product were seized; and

(f) the Italian prosecutor provided misleading information in connection with securing the search warrants.”

39. As part of its opposition to Mr Agrama’s challenge, the United States Government filed, as an exhibit to an affidavit by Linda English, a special agent with the FBI, a statement, unsworn, by Mr de Pasquale. In the course of that statement Mr de Pasquale said:

“(7) I participated in the search, together with consultants from my office, in order to assist the FBI in selecting the documents that were really relevant and excluding routine or excessively old correspondence and business documents.

(8) In the course of the briefing at the FBI offices on November 14^th 2006 I was warned that during the search the documents would be brought to our attention by the FBI agents, and that, in any case, we would not have access to documents that might at first sight appear privileged.

(9) During the search of Mr Agrama’s home, the documents (including several photographs of persons under investigation or persons relevant to the case whose appearance was not known to the FBI) were brought to my attention by Linda English and another agent, Andrew Forristel. The latter accompanied my every move inside the home.

(10) During the search of Harmony Gold, the documents were brought to my attention by Marie Kondzielski, Christopher Phillips and the other team leaders. When moving around inside the rooms I was accompanied mostly by Christopher Phillips.

(11) I examined the papers in some rooms where business and financial documents were kept in filing cabinets.

….

(14) No document concerning communications between Mr Agrama and his attorneys, regarding legal questions directly or indirectly connected to the trial in Italy or the ongoing investigations, was ever shown to me by the FBI agents.

(15) Indeed, no privileged document concerning the trial in Italy or the ongoing investigations against Mr Agrama, regardless of who they might have been written by or address to, was seen by me during my movements inside the premises.

(16) I did not see any attorney client or work product material of any kind, relating to any matter whatsoever, during the search.”

40. The United States Government was not, however able to maintain the position asserted by Mr de Pasquale in the proceedings. The affidavit of Mr Mayorkas exhibited a letter from Jason P Gonzalez, the Assistant United States Attorney for the Central District of California, who was dealing with the challenge to the search and seizure. That letter, dated 21 January 2007, contained the following:

“…. the government wishes to disclose to you the following: An FBI Agent (Paul Bertrand) saw the KPMG auditors reviewing in a first-floor room boxes, some of which may have been marked “legal chron.” He does not know which, or how many, boxes the auditors reviewed, but estimates it was at least five. This review lasted, in the agent’s estimation, approximately 10 to 15 minutes. The KPMG auditors only were allowed access to boxes that contain material the agents already had determined was responsive to the warrant. In the boxes that were reviewed by the KPMG auditors, the agents had not noted anything that they considered privileged. The agent does not know whether each page in the boxes had been reviewed by agents.

My subsequent review of the boxes (on Friday and today) that I understand were seized from this room (based on the markings on the boxes) indicates that at least some of them contained privileged attorney-client correspondence. Based on my understanding there are over 25 of these boxes, and I have not yet completed my review. I therefore cannot say at this time whether all the boxes contain attorney-client information. Most of these boxes were labeled “legal chron”, “chron”, “chron legal file”, or something similar.”

41. On the next day, 22 January 2007, the light of that advice, the United States Government filed a further document in the United States District Court, entitled “Government’s Notice Regarding its Response to Motion for Return of Property”. That Notice contained the following statements:

“In its Response, the government indicated that the searching agents followed “taint” procedures to protect movant’s attorney-client and work product materials, and did not allow the Italian Prosecutor or his staff to review such materials.

The government has since learned that agents, while apparently endeavouring to follow the taint procedures, did not correctly implement those procedures. These mistakes included: (1) agents did not set aside as “tainted” correspondence that, in fact, appears to be attorney-client material; (2) agents allowed the Italian Prosecutor’s staff access to materials that, although pre-screened by agents and determined by agents to be “non-tainted”, in fact contained attorney-client material.

….. the government also has withdrawn the Declaration of Fabio de Pasquale (the Italian Prosecutor), as indicated in the government’s January 19, 2007, filing, and therefore no longer relies upon the assertions therein to support its Response.”

42. It is clear from the evidence from California that there is a striking conflict between the assertions of Mr de Pasquale in his declaration, and the results of the investigation by Mr Gonzalez as to what had happened. Mr de Pasquale had said that the Italian officers had seen only documents shown to them by the FBI investigators. The investigation by Mr Gonzalez showed that assertion to be palpably false.

43. Further, it is clear that the fact that Mr de Pasquale’s statement was not sworn, and that he was not willing to go to California to be cross-examined on that statement, was a factor in the decision of the United States Government to withdraw the declaration, and to cease to rely upon the assertions made by him.

44. The challenge by Mr Agrama to the search and seizure was entirely successful and the documents and computers were returned to him. The circumstances which I have outlined above are relevant to the assessment of the evidence on the factual issue to be resolved.

The application for the search warrants:

45. Mr de Pasquale’s letter of request to Hong Kong proceeded through diplomatic channels, and was received by the Mutual Legal Assistance Unit of the Department of Justice in Hong Kong on about 11 September 2006. There it was assigned by the Law Officer (International Law) to Senior Government Counsel, Ms Susana Sit.

46. It is apparent from the correspondence exhibited to the affidavits that Ms Sit and Mr de Pasquale had been in communication about the matter well prior to September 2006. Upon receipt of the letter of request, Ms Sit proceeded to clarify a number of matters with Mr de Pasquale prior to preparing a note for the Law Officer, requesting the formal appointment of an authorised officer pursuant to s 12(1)(c) MLAO, to make application for a search warrant. That authorised officer was DSI Leung, King Hung, a police officer attached to the Narcotics Bureau.

47. The factual background justifying the application for the search warrants by the DSI Leung, as authorised person pursuant to the MLAO, is conveniently set out in an affidavit of DSI Leung, in the following terms:

“The Request from Italy

5. The request was made by the Public Prosecutor at the Milan Court of Italy in connection with a prosecution and continuing investigation that had commenced in Italy involving external serious offences relating to fraud, false-accounting, misappropriation and money laundering, against Farouk Agrama (also known as Frank Agrama) (“Agrama”) and Silvio Berlusconi (“Berlusconi’) and their associates.

6. It was alleged that for over two decades, Agrama had been purchasing broadcasting rights from Paramount for the Berlusconi Group which included three national television networks. He conducted his business through his company Harmony Gold USA. Between 1988 and 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 dummy companies had been reselling the broadcasting rights at an over-price to Italian companies and to Mediaset spa (“Mediaset”) a listed company in Italy since 1995. The initial estimate of the amount involved in the criminal matter is USD200 million.

7. The management of Mediaset had been under the control of Berlusconi. Prior to 2000, Berlusconi owned 50% of Mediaset. After 2000, his share had decreased to 35% since he increasingly involved in politics. He had become the prime minister in 2001. Even so, he still exercised influence over the management of Mediaset and manipulated its affairs through his associates who were top executives in the company.

8. Investigations had also revealed that a number of directors of Mediaset were involved. They had received bribes from Agrama to facilitate the inflated sales agreements.

9. Certain funds generated from the criminal activities were found to have channelled into the accounts of the companies under the control of Berlusconi, including the Fininvest Group, Principal Network Ltd and International Media Services Ltd.

10. Other funds had gone into the bank accounts of Agrama’s companies, including Wiltshire Trading Ltd (domiciled in Hong Kong) and Melchers Limited N.V. (domiciled in the Netherlands), maintained at Sanwa Bank in Los Angeles and UBS New York. It was alleged that Agrama had also set up other companies to facilitate the laundering of the criminal proceeds. They included Harmony Gold Ltd (domiciled in Hong Kong), Meadowview Overseas Ltd and Olympus Trading Ltd (domiciled in Ireland). It was further discovered that the above companies had common shareholders and company directors. Paddy Chan Mei Yu (“Paddy Chan”) and Katherine Hsu May Chun (“Katherine Hsu”), who are Hong Kong residents, are the shareholders and directors of these companies.

11. Italian authorities had also discovered that an approximate amount of 150 million Swiss Francs had been credited to the accounts opened at UBS Lugano under the names of Harmony Gold Ltd, Wiltshire Trading Ltd and other companies traceable to Agrama. Substantial deposits came from the account of Melchers Ltd held at Banca del Gottardo in Lugano. Paddy Chan and Katherine Hsu are the authorised signatories of Melchers Ltd’s account.

12. Italian investigations had also revealed that Paddy Chan is the authorised signatory of the accounts of Wiltshire Trading Ltd and Melchers Ltd opened at UBS’s New York Branch.

13. Assistance sought by the request included, inter alia, searching the premises: (i) Flat C, 16/F Hung Fook Court, 169 Tin Hau Temple Road, Bedford Gardens, Hong Kong (residence of Paddy Chan); (ii) Flat C, 16/F Yuan Kung Mansion, Kam Din Terrace, 20 Taikoo Shing Road, Taikoo Shing, Hong Kong (residence of Katherine Hsu); (iii) 12/F Inchape Insurance Tower, 3 Lockhart Road, Wanchai, Hong Kong (registered address of Wiltshire Trading Ltd); and (iv) Room 1523, Prince’s Building, 10 Chater Road, Hong Kong (registered address of Harmony Gold Ltd, CS Secretaries Ltd and Loong Po Management Ltd) and seizing the things as itemized at A below relating to the persons and entities as identified at B below:

A: Things to be seized

(i) company incorporation documents, articles of association, shareholding and capital (including the transfer, sale or purchase of shares) details, beneficial ownership, written resolutions, change of name, directors and secretaries or addresses information;

(ii) correspondence, notes agreements, contracts, letter of engagement, instructions;

(iii) invoices, receipts and payments;

(iv) financial records, including company accounts, cash books, ledgers, profit and loss accounts, balance sheets and statements;

(v) banking records including mandates, cheque books, cheques journals, statements of account for all accounts held, cheque stubs and paid cheques, money transfer instructions and any correspondence with banks;

(vi) powers of attorney;

(vii) bank drafts, loan certificates of deposits, and guarantees;

(viii) documents relating to Trusts (including trust deeds and appointment of trustees) set up for the benefit of the company or associated persons;

(ix) investment certificates, share certificates, certificate of title and ownership;

(x) minutes of meetings, file notes, working papers, reports, diary notes, telephone attendance notes, internal memoranda;

(xi) documents relating to service provided, including valuation services, acquisition, sale or possession of film rights;

(xii) contact addresses and telephone numbers;

(xiii) documents relating to any external storage facility; and

(xiv) documents relating to any management agency, fiduciary or formation agent used by the individual or company.

B: Persons and entities identified

Persons

Farouk Agrama (also known as Frank Agrama)

Colleen Morris

Vilma Thomas

Silvio Berlusconi

Pier Silvio Berlusconi

Marina Berlusconi

Daniele Lorenzano

Carlo Bernasconi

Roberto Pace

Gabriella Ballabio

Giovanni Stabilini

Aldo Spagnoli

Guido Babieri

Luca Dermitzel

Oscar Garzotto

Bruce Gordon

Peter Mustaky Cary

Gary Marenzi

Joe Lucas

Companies connected with Farouk Agrama

Harmony Gold HK Ltd

Harmony Gold Usa

Wiltshire Trading Ltd

Melchers N.V. Ltd

Meadowview Overseas Ltd

Olympus Trading Ltd

The Agrama Trust

Companies connected with Silvio Berlusconi

Fininvest

Silvio Berlusconi Finanziaria

Societé Financiére d’Investissement

Principal Network Ltd

International Media Services Ltd

Waotu Investment Ltd

Other companies

Mediaset

Mediatrade

RTI

Paramount

Banks

Sanwa Bank

Bank of The West

UBS Lugano

UBS New York

UBS Hong Kong

Banca del Gottardo

Cedars Bank

National Irish Banks

14. It was also requested that the Italian authorities that were involved in the prosecution and investigation of the criminal matter in Italy be allowed to assist the Hong Kong authorities in the execution of the search warrants.”

48. The evidence of DSI Leung was that, on 16 January 2007, he laid an information before the magistrate at Eastern Magistracy which sought:

“….the issuance of the search warrants authorising myself, with such other assistance and by such force as is necessary and reasonable, to enter the above premises and to search for and seize any such things (specified)”.

The things to be searched and seized were specified in the information in the terms contained in paragraph 13A, of DSI Leung’s affidavit as set out in paragraph 49 above.

49. Mr McCoy takes the point that in the letter of request there was no formal request for the search of the office premises of Harmony Gold, Wiltshire Trading, or CS Secretaries.

50. It is clear however that warrants were issued by a magistrate in respect of those premises in response to information by affidavit. Although the information itself is normally a confidential matter and is usually not disclosed, in the present case, albeit with some reluctance, the information was ultimately disclosed. It is essentially in the terms set out in DSI Leung’s affidavit, and I am satisfied that that affidavit accurately reflected the terms of the information. The involvement of the three companies, and their particular association with the investigation, was set out in the information.

51. There is no dispute that the three companies could not have been properly involved in the warrants. I see no reason at all why, following the issue of the formal letter of request, and in the discussions which undoubtedly followed, between Mr de Pasquale and the Department of Justice, the matter was clarified, resulting in those three companies being included in the warrants.

52. The omission of those three companies from the letter of request, is not a basis upon which the warrants may be set aside. The point, to be fair, was not pursued other than in written submission.

53. DSI Leung said that he did not specifically inform the magistrate that “such other assistance” would include the Italian investigation team who would be present and assist the police during the execution of search warrants.

54. In cross-examination DSI Leung said that although there had been no mention in the information that the representatives of the Italian prosecutors wanted to be present research, he felt comfortable to proceed with the application for the warrant in terms without those facts being stated. He gave his reasons for that in the following terms:

“So I regarded the presence of the Italian officers as some kind of assistance. They only assist me in identifying documents relevant to their investigation. That’s what I always keep -- I kept on reminding my boys during my subsequent briefings, that they should not allow the Italian offices to do the search, they are only present -- they were only present to assist us to identify relevant documents.”

55. The four warrants were issued by the magistrate, addressed to DSI Leung in the following terms:

“NOW THEREFORE I, under section 12 of the Ordinance, hereby authorise you, for the purpose of assisting in that prosecution and continuing investigation in relation to those external offences, with such assistance, and by such force, as is necessary and reasonable:

At any time of the daily between 7:00 a.m. and 10:00 p.m., to enter into the said premises to search for the things kept in paper or computerized form, described in Schedule A being things connected with the individuals and/or institutions listed in Schedule B;

and to seize those things found in the course of the search that you believe, on reasonable grounds, to be relevant to the prosecution and continuing investigation in relation to those external serious offences.” (original emphasis)

The warrant thereafter set out, in Schedule A, the documents, and in Schedule B, the persons and companies and banks, described in paragraph 14 of DSI Leung’s affidavit. It will be noted that the expression that appears in s 12(3) MLAO; “with such assistance, and by such force, as is necessary and reasonable”, was included in the warrants.

56. Four search warrants were issued, one in respect of each of the four sets of premises at Taikoo Shing, (Ms Chan’s home), Tin Hau Temple Rd, (Ms Hsu’s home), Wanchai, (the office of Wiltshire Trading and Prince’s Building, (the office of Ms Chan and Ms Hsu and the companies Harmony Gold, CS Secretaries and Loong Po.

The execution of search warrants:

57. The Italian officers came to Hong Kong in order to take part in the searchers, as Mr de Pasquale had indicated in the letter of request. They were Mr de Pasquale, a prosecutor, (as I understand it, the equivalent of a Hong Kong Government Counsel), Mr Sergio Spadaro, also a prosecutor, and two KPMG forensic accountants who were described as “consultants” to the prosecutors, Ms Gabriella Chersicla, and Mr Stefano Martinazzo. Of those four, at least Mr de Pasquale, Ms Chersicla, and Mr Martinazzo had been involved in the searches undertaken in California.

58. Prior to the execution of search warrants DSI Leung briefed his team members, comprising himself, a sergeant, two detective constables, and two constables. The team was divided into two, with DSI Leung, a woman detective constable, and a constable to be responsible for searching the residence of Ms Hsu, and the office premises of Wiltshire Trading in Wanchai. The other team, led by Sgt 20868, Ho Chi Pui, with a detective constable and constable, was assigned to search the residence of Ms Chan. After those searches, the two teams would join together in order to search the office premises of Harmony Gold and other companies, at Prince’s Building in Central.

59. Each team was assisted by two of the Italian officers. With DSI Leung’s team were Mr Spadaro and Ms Chersicla. With Sgt Ho’s team were Mr de Pasquale and Mr Martinazzo.

60. DSI Leung said that in the course of the briefing he instructed the teams that the Italian officers were to be present to help them to identify materials relevant to the criminal matter in Italy. He said that they were told that if the searching police officers found anything apparently covered by the search warrants during the search, they would confirm with the Italian officers the relevancy of the documents, which would then be seized. Each team had a copy of the search warrants.

61. DSI Leung agreed that he would have been able to conduct the searches without the presence of the Italian officers. He said however, and I accept, that in those circumstances the search would have been more difficult. His evidence was that with the Italian officers present the search was more “conveniently” undertaken because of their ability to identify relevant documents.

62. At each search scene, the Hong Kong police officers, announced their presence to the person answering the door, and informed that person that the police were present to execute a search warrant. On each occasion, in response to that information, the police were granted admission to the premises. The Italian officers were immediately introduced, the reason for their presence explained.

Ms Chan’s home:

63. Upon the police entering Ms Chan’s home, Ms Chan requested the opportunity to telephone a lawyer friend. She did so, and as a result of advice received from that lawyer, raised no objection to the search taking place. Ms Chan said that during the search, whilst she was watching, the two Italian officers remained in her sitting room. She was informed that the search was concluded, and went to a shrine room in her home, for approximately one hour.

64. She was unaware of what happened during the time that she was in the shrine room, but believed, because documents had apparently been found next to her fax machine, that further searching had taken place in her absence. Because she had been absent she was not able to identify the nature of that search. She said that when she came out of the shrine room she was asked to turn on her laptop computer which uses a Chinese operating system. She said that one of the Hong Kong police officers went through the documents saved on the computer, describing those to an Italian officers, in English.

65. Ms Chan did not see the Italian officers undertaking any search at all at her home. She “believes” that they may have engaged in searching during the period that she was in her shrine room but there is no substantive evidence to substantiate that belief. It is right that she had earlier been told the search was concluded, and that when she came out of the shrine room, after about an hour, further documents had been located. However, there is nothing to suggest that it was the Italian officers who had located those documents.

66. The evidence of the solicitor, Ms Grace Fong was that by the time she arrived at Ms Chan’s home, and inspected the search warrant, she was informed that the search of the premises had been concluded. She did not suggest that the Italian officers were involved in the search in Ms Chan’s home. After giving advice Ms Fong left the premises and went to the home of Ms Hsu. Before she left it was agreed with the police officers that they would remain in contact with her, as Ms Fong wished to be present at the search of the office at Prince’s Building.

67. The evidence of the police officers was that it was they who conducted the search, only consulting the Italian officers when they wished to clarify the relevance of documents found. They said that the Italian officers did not take part in the search.

68. Two exhibits were seized from Ms Chan’s home. Those two documents came from the documents that had been adjacent to the fax machine.

69. Ms Chan was subsequently taken to Prince’s Building for the office search.

Ms Hsu’s home:

70. The evidence of Ms Hsu was that the police arrived at her home at approximately 7:30 a.m. when she was asleep. Her husband answered the door, and realising that the matter concerned his wife, called Ms Hsu to the door. Upon being told that the police had a search warrant, Ms Hsu admitted the police party to her flat. Ms Hsu then telephoned Ms Chan, as a result of which she too contacted the solicitor, Ms Fong.

71. Ms Hsu’s evidence was that a female Italian officer, (Ms Chersicla), searched the sitting room, and the male Italian officer, (Mr Spadaro), searched a workroom. She said that two male Hong Kong police officers remained in the sitting room with her, observing what was happening as the search was undertaken by the two Italian officers. In the course of the search, she said that Mr Spadaro asked to switch on her laptop computer, which she did, after which Mr Spadaro went through all of the computer files, including checking the contents of floppy disks. No documents were seized.

72. Again it was the evidence of the police officers engaged in the search that it was they who had undertaken the search, consulting the Italian officers to determine the relevance of documents found.

73. WDPC Lai was part of the police party who searched Ms Hsu’s home. In her affidavit she said:

“During the search in the living room, Ms Chersicla was to help me identify whether the documents were relevant. When I found documents that may be relevant, I passed them to Ms Chersicla and she would read the documents and advise me on their relevance. She did not pick up any documents herself or rummage through the items in the premises, although she had opened one or two drawers of the shoes locker and briefly look into the drawers for about 10 seconds or so, in which they contained medicines, photos, and other miscellaneous items but not any document.” (sic)

74. She said that she did not pay attention to the details of the search of the computer, although she noticed that it was DSI Leung who was controlling the computer, but not Mr Spadaro, who was there beside DSI Leung. The evidence of DSI Leung was that it was he who requested Ms Hsu to turn on her computer and that he, together with Mr Spadaro went through the contents.

75. However, the evidence of WDPC Lai was inconsistent with a notebook entry made by her at the time of the search, and countersigned at her request by Ms Hsu. The entry stated:

“During the period of search conducted by police, a prosecutor from Italy and the forensics accountant from Italy also conducted a search of the scene.” (my emphasis)

76. WDPC Lai was cross-examined on this entry. In cross-examination WDPC Lai, when asked if the notebook entry was true, said:

“A: Well, but, well, what I meant by writing these few lines here actually, what I meant is - please refer to page 49 in Chinese original - the search was conducted by us, the Narcotics Bureau’s people, we were responsible for. And on page 50 in the Chinese original, here, the sentence I wrote on page 50, I meant, during the search that we police were conducting, the Italian prosecutor and the forensic accountant - Italian forensic accountant were also present during the search. So what I meant was the search was being conducted with the presence of that.

Q But you – sorry.

A That’s that I thought and these were the words I put down, and that was what I actually meant but it did not mean that they actually do it.” (sic)

77. WDPC Lai was pressed by counsel on the notebook entry, it being suggested that the words used were used because the two Italian officers had in fact conducted a search. That was denied.

78. Ms Fong said that when she arrived at Ms Hsu’s home, a Caucasian male and female:

“…were searching through Ms Hsu’s papers, so the house was messy when I first arrived. They continued their search and whilst going through all documents and they did not pay any attention to me. The search continued for over an hour.” (sic)

79. She said further:

“A man I later learned to be one Italian prosecutor sat himself at Ms Hsu’s computer workstation and started reading the contents of Ms Hsu’s computer. He also opened and examine the content of her floppy disks. The search took just over two hours in total during which I believe the Italian and the Hong Kong Police officers went through almost each and every document and paper in Ms Hsu’s home.”

80. No documents or computer files were seized from Ms Hsu’s home.

Wiltshire Trading’s premises:

81. Following the search of the home premises of Ms Hsu, DSI Leung’s went, with Ms Hsu, to Inchape Insurance Tower, 3 Lockhart Road in Wanchai, the office address of Wiltshire Trading.

82. The search warrant was produced to Ms Anita Leung, the assistant manager of a firm of certified public accountants who occupied the premises. At the request of DSI Leung, Ms Leung, after obtaining approval from a partner in the firm, located two files relating to Wiltshire Trading and produced them to the police. She said that the police officers showed the file to the Italian officers who checked the documents. She said that upon seeing letters marked “sent client”, the Italian officers made an enquiry as to who the client was, and were informed by her that it was Ms Chan.

83. Other than acknowledging that the Italian officers looked at the documents that were produced to them, Ms Leung did not suggest that the Italian officers engaged in a physical search.

84. A Wiltshire file marked “Part 2” was seized and removed by the police.

Prince’s Building:

85. Ms Chan, Ms Hsu and Ms Fong were present at the office in Prince’s Building during the course of the search. When they arrived in the company of the police they found that other police officers were already there, perfectly sensibly, to secure the premises pending the search.

86. The evidence of Ms Chan was that after the police officers took photographs of the office, and drew a diagram, the Italian officers asked Ms Chan’s assistant, Daisy To, (who did not give evidence), where files concerning the specific companies mentioned in the search warrant were located. She said that Ms To showed them where the files were, and that the Italian officers then went through those files, reading the materials in the files.

87. Ms Fong described the activities in this way:

“Immediately after arrival, Ms Chan told his staff to get out the files concerning the companies listed in the search warrant. The Italian prosecutors, apart from going through the documents in files concerning the companies listed on the search warrant, they were examining other papers, documents, and files, including shelves and papers in Ms Chan’s office. They were directing the Hong Kong police officers as to which documents to seize and which to make copies of. Detective Senior Inspector Eddie Leung did not examined the documents.” (sic)

88. She said further that all of the Italian officers, but particularly Mr de Pasquale, were: “going through each and every drawer and cupboard”. The essence of her evidence was that the Hong Kong police took a passive role, being mainly responsible for compiling the list of materials they took away in preparing the boxes and making copies.

89. Again, it was the evidence of the police officers that it was they who conducted the search, again, taking documents to the Italian officers to confirm relevance prior to seizure.

90. The notebook of Sgt Ho contained the following entries:

“0615 DSI Leung K H briefed us regarding search warrant execution…. My team would go with Italian prosecutor Mr de Pasquale Fabio and Italian KPMG Mr Stefano Martinazzo assisting our search.

0735 I then explained to Ms Chan that the purpose of search and introduced to Italian officials to Ms Chan. They would assist us in seizing relevant documents.

0815 Solicitor (Ms Fong) arrived. I then showed her the search warrant - introduced the two Italian officials to her. They would assist us in seizing relevant documents.

1113 Italian prosecutor Sergio Spadaro and Italian accountant Gabriela turned up to the office and joined us for searching.” (sic)

91. As well as the notebook entry, WDPC Lai made a formal Investigation Report, in which she described being briefed:

“….for a joint operation would be with the Italian Prosecutor and Italian accountant for the execution of E Mag Search warrant.”

92. The notebook entry of PC Li Wai Chun, in relation to the search of the Prince’s Building search, contained the following entry:

“1100 Party started to search the office in the presence of F/Chan and solicitor F/Fong.”

93. A total of 58 documents were seized from the office at Prince’s Building.

Analysis of the evidence as to the searches:

94. First, the evidence does not substantiate an assertion that the Italian officers were physically engaged in the search at Ms Chan’s home. There can be no complaint in this respect as to that search.

95. Second, the evidence does not substantiate an assertion that the Italian officers were physically engaged in the search at the office premises of Wiltshire. Following the production of the search warrant the documents were produced and only then examined for relevance. Again, there can be no complaint in this respect as to that search.

96. But there is evidence to substantiate the assertion that the Italian officers were physically engaged in the search at Ms Hsu’s home and in the office premises at Prince’s Building.

97. There was however a direct contradiction in the evidence. The entire police party asserted that the only involvement on the part of the Italians was to observe the search and give advice on the relevance of documents. The subjects of the search were equally insistent that the Italian officers had taken an active role in the search, in the sense that they had physically engaged in going through desks, drawers, boxes and the like, searching for documents.

98. I have come to the conclusion, on the balance of probabilities, bearing in mind the seriousness of the allegation, that the Italian officers were, as asserted by the subjects of the search, actively engaged in the search of Ms Hsu’s home, and the office premises at Prince’s Building. I have reached that conclusion for the following reasons.

99. First, it is quite plain from Mr de Pasquale’s original application for assistance that he wished to personally take part in the search. He said so in terms. There is nothing in the evidence to suggest that he changed his mind, or that he was persuaded by the Department of Justice or the police officers that the role of the Italian officers would be limited to merely giving advice is to relevance of documents. He came to Hong Kong to “take part in the search” and he has not said otherwise.

100. It is right that the police notebooks show that “the role of the Italians” was a matter that was discussed at the briefing. But although Sgt Ho’s notebook records the Italians officers were to be consulted as to relevance, he says also that the Italian officers: “would assist us in seizing relevant documents”. The contemporary documentary evidence does not suggest that the role of the Italian officers was to be limited in the manner asserted at trial.

101. To the contrary, the whole tenor of the notebook entries set out above indicates no distinction whatsoever between the role of the Hong Kong police officers and the Italian officers. The plain message conveyed by those notebook entries is that the whole party intended to, and in fact, acted together in undertaking the physical search.

102. There is nothing to suggest that Mr de Pasquale, having expressed an intention to come to Hong Kong to take part in the search, and having come to Hong Kong for that purpose, decided not to have his team engaged in the active searching, but to restrict them to a passive role, that of examining seized documents for relevance at the scene.

103. Second, that the Italian officers took an active part in the search in Hong Kong is entirely consistent with their activities in California.

104. The great weight of the evidence, notwithstanding Mr de Pasquale’s untested attempts to say otherwise, points to the active involvement by the Italian officers in the California searches. That was precisely why the United States Attorney for the Central District of California capitulated in the proceedings there, and returned all the documents.

105. It is not without significance that the searches in Hong Kong took place prior to the decision by the United States Attorney to return the documents seized in the search in California. Although an argument was going on in California, and Mr de Pasquale was asserting his position, he had no reason to believe at that time, that his team’s active involvement in the search would have the result that ultimately occurred. That being the case, there was no reason why he would not “take part” in the searches in Hong Kong, as he had asked.

106. Having actively and physically engaged in the search in California, it is entirely logical that the Italian officers should also actively and physically engage in the searches in Hong Kong.

107. Third, the entry in the notebook by WDPC Lai is particularly significant.

108. It is plain in its terms. The plain meaning of the words is that the Italian officers were physically and actively engaged in the search in Ms Hsu’s home. The terms of WDPC Lai’s affidavit are quite inconsistent with the notebook entry and are an attempt to minimise the involvement of Ms Chersicla in the search. I am satisfied that the affidavit has been drawn with hindsight of the issue, and the knowledge of the notebook entry, resulting in a clumsy attempt to escape the plain meaning of the words in the notebook.

109. The answers given by WDPC Lai in cross-examination were evasive, and again sought to deny the plain meaning of plain words in the notebook. I have no doubt at all, that if the Italian officers had simply observed the search, giving advice as to relevance of documents, and not actively taken part in the search, the entry would not have been made in the terms that were made.

110. I am accordingly satisfied that both Mr Spadaro and Ms Chersicla were actively and physically engaged in the search in Ms Hsu’s home.

111. Having so found, for the same reasons, I prefer the evidence of Ms Chan, Ms Hsu and Ms Fong as to the activities of the Italian officers in the Prince’s Building office. I am satisfied that all four Italian officers were actively and physically engaged in the search of those office premises.

112. It is clear however, that the active physical engagement of the Italian officers in the search process was collateral to their primary role in determining the relevance of documents. I am satisfied, on the whole of the evidence, that their primary role was to inspect documents or files brought to them by the Hong Kong police officers for the purpose of ascertaining the relevance of those documents or files to their investigation. But addition to that, in both Ms Hsu’s home, and the office at Prince’s Building, I am satisfied that the Italian officers from time to time physically examined shelves drawers or cupboards, and removed for inspection documents there located.

113. In reaching my conclusion I have not placed no weight upon the submissions made by Mr McCoy as to the circumstances in which the letters of request from Hong Kong for the examination of the Italian officers in Milan came to be revoked.

114. In the context of common law proceedings the only relevant factor that arises from the failure of the Italian officers to come to Hong Kong to give evidence and be cross-examined, or to submit to cross examination pursuant to letters of request, is that I do not have the benefit of hearing directly from them as to any answers they may have the assertions made against them. That must impact, adversely, on the assertions of the respondents in the evidence. In simple terms, the best evidence that could have been put before the court, that a person is personally involved, was not before me.

115. For the foregoing reasons, I am satisfied that, as alleged by the applicants, the Italian officers took an active role in the search of Ms Hsu’s home, and the office at Prince’s Building.

Steps taken with the documents after seizure:

116. The procedure to be followed, after seizure of anything in the search under MLAO is set out in s 12 (7-11), see para.128 below.

117. First, anything seized must be delivered into the custody and control of the Commissioner of Police: s 12(7). The Commissioner keeps those things for a period not exceeding one month from the date of seizure, pending a direction from the Secretary for Justice as to the manner in which the thing is to be dealt with: s 12(8). That direction may include a direction that the thing be sent to an appropriate authority of a place outside Hong Kong.

118. The authorised officer who executes a search warrant is required, as soon as practicable after the execution of the warrant, to give to the occupier of premises a notice setting out his name and rank, the name of the magistrate who issued the warrant and the day on which it was issued, a description of anything seized, and, if that occupier requests, a copy of any documents seized: s 12(9).

119. The Secretary for Justice cannot give a direction to send the original thing outside Hong Kong unless the appropriate authority of the place to where it is to go again is notice in writing setting up the grounds on which the original of the thing is required for the purposes of the criminal matter concerned in that place: s 12(11). There is apparently no restriction upon copies being given to the overseas authorities who have requested the search.

120. The two documents seized at Ms Chan’s home, one documents seized at the Lockhart Road premises of Wiltshire Trading, and 58 documents seized at the office at Prince’s Building were collected together by WDPC Lai, who had been designated as the exhibits officer. Following the search, she took those documents to Police Headquarters in Arsenal Street Wanchai, where they were kept for safe custody.

121. That afternoon, on the instructions of DSI Leung, WDPC Lai assisted the Italian officers to study the seized documents at Police Headquarters.

122. At 16:53 hours on the afternoon of the search DSI Leung received a faxed letter from the solicitors for the applicants asserting legal professional privilege, (LPP), in relation to the seized documents. In her first affidavit, dated 23 May 2007, WDPC Lai said that following the receipt of letter:

“…DSI Leung therefore asked me to stop studying these documents and I locked all the seized documents. At 1730 hours, the Italian officers left our office.”

123. The affidavit proved to be significant in the matters that it did not disclose. The affidavit did not disclose that the Italian officers had not only been inspecting documents, but that they had been making notes and photocopies of documents. In a subsequent affidavit, not filed until 13 September 2007, DSI Leung revealed this:

“In view of the LPP claim, I asked the Italian officers to stop inspecting the seized documents and hand all the notes and photocopies of the seized documents to the Police as I believed they were not empowered to keep the documents until the matter was resolved in court. The Italian officers understood and agreed, and the notes and photocopies of the seized documents were handed to (WDPC Lai). I also asked WDPC Lai to check the bags of the Italian officers and confirm that they did not take away any notes or photocopies of the seized documents and WDPC Lai did so.

At the material time, it was my concern and I wished to confirm that the Italian officers would not take away the notes and photocopies of the seized documents and that nobody could read them again. As all the seized documents would be sealed later, I considered that the best way to deal with the notes and photocopies of the seized documents was to destroy them so that nobody could read them again before the matter was resolved. Therefore, I instructed WDPC Lai to shred the notes and photocopies of the seized documents and she did so with the shredding machine placed near the Conference Room. Only WDPC Lai and I were involved in getting back the notes and photocopies of the seized documents and the shredding of them. No log or copy of the shredded notes and photocopies of the seized documents was kept.”

124. This information, plainly, should have been disclosed to the applicants immediately, when the events occurred in January 2007. The concealment of the information, for that is what it was, serve no purpose other than to heighten the suspicion of the applicants as to the conduct of the police officers and Italian officers in this matter.

125. Equally plainly, the notes and photocopies should not have been shredded, but should have been retained and sealed as they potentially constituted relevant evidence in the proceedings.

126. At the end of the day, there being no LPP issue, and the documents and notes having been shredded, and accordingly not taken to Italy, there has been no harm. That is merely fortuitous.

The provisions of the MLAO:

127. It is appropriate at this point to review the statutory regime. The long title of the MLAO sets out its purpose:

“An Ordinance to regulate the provision of obtaining of assistance in criminal matters between Hong Kong and places outside Hong Kong; and for matters incidental thereto or connected therewith.”

Although formal regulations applying in the Ordinance between Hong Kong and the Italian Republic have been gazetted[5], those regulations are not yet in force and are not applicable to the present issues. Notwithstanding that, there was no dispute that it was open to the Italian Republic to approach Hong Kong and seek assistance under the provisions of the MLAO.

128. The starting point for a consideration of the regime is s 8. By that provision a request by a place outside Hong Kong, to Hong Kong for assistance in criminal matter may be made to the Secretary for Justice. The specific information that is required to accompany a request is set out in s 8(2). Section 10 sets out the procedure where the request is made for the taking of evidence in Hong Kong.

129. Part III of the MLAO, in s 12, deals with assistance sought to be given by Hong Kong in relation to search and seizure. The relevant provisions of the section, so far as this litigation is concerned are as follows:

“12 (1) Where-
(a) a criminal matter involving an external serious offence has commenced in a place outside Hong Kong;
(b) there are reasonable grounds to believe that a thing (including a thing belonging to a class of things) relevant to the criminal matter is located in Hong Kong; and
(c) an appropriate authority of that place requests the Secretary for Justice to arrange for the issue of a search warrant under this section in relation to that thing,
the Secretary for Justice may nominate in writing an authorized officer to apply to a magistrate for the search warrant so requested. (Amended L.N. 362 of 1997)
(2) Where an authorized officer nominated under subsection (1) has reason to believe that the thing to which the request relates is, or will, at a specified time, be-
(a)- (d) (omitted)
(e) upon or in any premises,
the relevant officer may-
(i) lay before a magistrate an information on oath setting out the grounds for that belief; and
(ii) apply for the issue of a warrant under this section.
(3) Where an application is made under subsection (2), the magistrate shall, subject to subsection (4), issue a warrant authorizing an authorized officer (whether or not named in the warrant), with such assistance, and by such force, as is necessary and reasonable to do such of the following as are specified in the warrant-
(a) (omitted)
(b) to enter upon land, or upon or into premises, specified in the warrant;
(c) to search any such land or premises for the thing; and
(d) to seize any thing found in the course of any such search that the relevant officer believes, on reasonable grounds, to be relevant to the criminal matter in the place outside Hong Kong concerned.
(4) A magistrate shall not issue a warrant under this section unless-
(a) the informant or some other person has given to the magistrate either orally on oath or by affidavit, such further information, if any, as the magistrate requires concerning the grounds on which the issue of the warrant is sought; and
(b) the magistrate is satisfied that there are reasonable grounds for issuing the warrant.
(5) There shall be stated in a warrant issued under this section-
(a) the purpose for which the warrant is issued, including a reference to the nature of the criminal matter in relation to which the search is authorized;
(b) whether the search is authorized at any time of the day or night or during specified hours of the day or night;
(c) a description of the kind of things authorized to be seized; and
(d) a day, not being later than one month after the issue of the warrant, on which the warrant ceases to have effect.
(6) If, in the course of searching, under a warrant issued under this section, for a thing of a kind specified in the warrant, the authorized officer finds another thing that the authorized officer believes on reasonable grounds-
(a) to be relevant to the criminal matter in the place outside Hong Kong concerned or to afford evidence as to the commission of a Hong Kong offence; and
(b) is likely to be concealed, lost, destroyed or altered if it is not seized,
the warrant shall be deemed to authorize the authorized officer to seize the other thing.
(7) Where an authorized officer finds, as a result of a search in accordance with a warrant issued under this section, a thing which the authorized officer seizes wholly or partly because he believes the thing on reasonable grounds to be relevant to the criminal matter in the place outside Hong Kong concerned, the authorized officer shall deliver the thing into the custody and control of the Commissioner.
(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). (Amended L.N. 362 of 1997)
(9) An authorized officer who executes a search warrant issued under this section shall, as soon as practicable after the execution of the warrant, give to the person, or give to the owner or occupier of the land or premises or leave in a prominent position on the land or at the premises, as the case requires-
(a) a notice setting out-
(i) the name and rank of the authorized officer;
(ii) the name of the magistrate who issued the warrant and the day on which it was issued; and
(iii) a description of any thing seized and removed in accordance with the warrant; and
(b) in the case of any such thing which is a document, a copy of the document if that person, owner or occupier, as the case may be, so requests.
(10) (Omitted)
(11) The Secretary for Justice shall not give a direction under subsection (8) that the original of a thing be sent to the appropriate authority of a place outside Hong Kong unless-
(a) the appropriate authority of the place has, not more than 1 month after the thing was seized, given the Secretary for Justice a notice in writing setting out the grounds on which the original of the thing is required for the purposes of the criminal matter concerned in that place; and
(b) in any case where the Secretary for Justice is of the opinion, after considering all the circumstances, that the original of the thing should be returned to Hong Kong upon the conclusion of the proceedings relating to that criminal matter, the appropriate authority has given an unqualified undertaking to the Secretary for Justice that the original of the thing will be so returned. (Amended L.N. 362 of 1997)
(12) In this section, "Commissioner" (部門首長) means, where the authorized officer concerned is an authorized officer by virtue of-
(a) paragraph (a) or (d) of the definition of "authorized officer", Commissioner within the meaning of the Police Force Ordinance (Cap 232);
(b) paragraph (b) of the definition of "authorized officer", Commissioner within the meaning of the Customs and Excise Service Ordinance (Cap 342);
(c) paragraph (c) of the definition of "authorized officer", Commissioner within the meaning of the Independent Commission Against Corruption Ordinance (Cap 204).
(13) (Omitted)

130. The MLAO contains a specific definition of a “thing”. There was no dispute that the items sought and seized in the searches fell within that definition. There was no dispute that the matters being investigated by the Italian authorities constituted an “external serious offence”, as that expression is defined by the MLAO.

131. The provision that was central to the argument for the applicants was that contained in s 12(3), permitting an authorised officer in possession of a warrant to have “such assistance as is necessary and reasonable”.

The context in which the issues are to be examined:

132. Mr McCoy said, and Mr Grossman did not dispute the point, that the context in which the examination of the issues must take place, must begin with Article 29 of the Basic Law:

“The homes and other premises of Hong Kong residents shall be inviolable. Arbitrary or under for search off or intrusion into a resident’s home or other premises shall be prohibited.”

133. The MLAO is legislation which authorises an invasion of the homes and premises of Hong Kong residents, which would otherwise be impermissible, both by Article 29, and at common law. In George v Rockett (1990) 170 CLR 104 at 110 the High Court of Australia said this:

“A search warrant thus authorises an invasion of premises without the consent of persons in lawful possession or occupation thereof. The validity of such a warrant is necessarily dependent upon the fulfilment of the conditions governing its issue. In prescribing conditions governing the issue of search warrants, the legislature has sought to balance the need for an effective criminal justice system against the need to protect the individual from arbitrary invasions of his privacy and property. Search warrants facilitate the gathering of evidence against, and the apprehension and conviction of, those who have broken the criminal law.

…..

Nevertheless, in construing and applying such statutes, it needs to be kept in mind that they authorise the invasion of interests which the common law has always valued highly and which, through the writ of trespass, it went to great lengths to protect. Against that background, the enactment of conditions which must be fulfilled before a search warrant can be lawfully issued and executed is to be seen as a reflection of the legislature’s concern to give a measure of protection to these interests. To insist on strict compliance with the statutory conditions governing the issue of search warrants is simply to give effect to the purpose of the legislation.”

134. I approach the task of considering the challenges made to the steps taken with that context firmly in mind.

135. Mr Grossman accepted, I am satisfied correctly, that although the word “shall” is used in s 12(3) MLAO, it is clear, when that subsection is read with s 12(4), that the magistrate has a discretion to refuse to issue a search warrant where, in the circumstances, a search and seizure would be unreasonable.

136. The manner in which a magistrate must approach the exercise of that discretion is best set out in Philip KH Wong, Kennedy YH Wong & Co v ICAC [2009] 5 HKLRD 379, at paragraph 48, per Stock VP.

Consent to entry and search by occupiers:

137. Much was made by Mr Grossman as to the fact that consent was given by the occupier of each of the premises searched for the searches to take place. As I understood his position, that consent was a complete answer to any complaint that might be made in respect of the search warrants.

138. The argument simply cannot stand. It was not in dispute that at each of the premises searched, the warrant was produced and the search was conducted pursuant to the warrant.

139. In reality, no issue of consent on the part of the occupiers of the premises arose. Permission was not sought from the occupier of the premises. Instead the occupier was notified of the existence of the warrant, by which the police officers were lawfully entitled to enter the premises and search. They could do so with or without agreement of the occupier. It is right that when requested, Ms Chan was allowed to contact a lawyer before the search proceeded. But that was merely a matter of courtesy, and the police would have been perfectly entitled to proceed with the search before that legal advice was obtained.

140. It would only be in circumstances where a warrant was not produced, and the occupier of premises was quite unaware of the existence of the warrant, that a question of consent would be relevant. That was plainly not the case in the present circumstances.

Was the Secretary for Justice or the magistrate misled:

141. The argument that the Secretary for Justice was misled depends upon submissions that the letter of request, and the information, would effect of the following ways:

(i) that Mr de Pasquale asserted in the letter of request that Mr Agrama was accused of misappropriating US$170 million, when in fact at the time the letter of request was received the amount had been reduced to US$19 million, and on the day prior to the issue of the search warrants, was reduced to US$741,024;

(ii) that the information, failed to inform the magistrate that the Italian officers had participated in the execution of search warrants at Mr Agrama’s home and office premises in Los Angeles;

(iii) that the information, failed to inform the magistrate that proceedings had been taken by Mr Agrama in Los Angeles for the return of seized documents, and Mr de Pasquale refused to make himself available for cross-examination in those proceedings;

(iv) that documents which might be subject to legal professional privilege, (LPP), might be encountered during the searches.

142. Some of this information was made available to Ms Sit, in the e-mail correspondence that took place between herself and Mr de Pasquale in the lead up to the application for the search warrants.

143. The argument that the magistrate was misled a further involves a submission that that DSI Leung admittedly failed to inform the magistrate, either orally or in the information, it was proposed that the Italian officers would be present during the search, in order to advise upon relevance of documents. Instead, the information contained the following paragraph:

“9.1 I believe that search warrants, in terms of the attached for warrant should be issued pursuant to section 12(2) of the Ordinance. I hereby apply for the issuance of the search warrants in a authorising myself, with such other assistance and by such force as is necessary and reasonable, to enter the above premises and to search for and seize any such thing is specified in paragraph 7 above.”

144. The search warrants when issued were addressed to DSI Leung, with the authority to search described as set out in paragraph 55 above.

The amount involved in the proceedings:

145. While it is right that the amount alleged to be involved in the offence is being investigated had reduced substantially during the course of the investigation, that reduction, I am satisfied, did not result in the offences ceasing to constitute external serious offences, as that expression is defined in the MLAO. Even if the amount involved was only US$700,000, it is not suggested that the definition could not be met.

146. While it would have been better for Mr de Pasquale to have continued to update the Secretary for Justice on the state of the Italian proceedings, it is not suggested that the Italian proceedings were not brought in good faith, or that the investigation was not bona fide.

147. The obligation on someone seeking assistance is to satisfy the Secretary for Justice that a criminal matter involving an external serious offences commenced in a place outside Hong Kong, and that there are reasonable grounds to believe that a thing relevant to that criminal matter is located in Hong Kong. So long as the matter remained an external serious offence, there was no obligation on Mr de Pasquale to inform the Department of Justice of the developments in Italy, although that would have been preferable.

148. I reject the argument that the reduction in the amount involved in the proceedings as a basis upon which the warrants may be set aside.

The Los Angeles circumstances:

149. While these matters are relevant to the assessment of the evidence as to the steps taken by the Italian officers in Hong Kong, I am satisfied that they are not relevant to the decision to be made by the Secretary for Justice, or the magistrate, in relation to the issuance of the search warrants.

150. The Italian officers were perfectly entitled to take steps in other jurisdictions, and there is nothing in the provisions of the MLAO requiring information of those steps to be disclosed in a Hong Kong application. That steps were being taken in other jurisdictions in order to recover seized documents, or prevent searches, are matters which arise from the laws of those particular jurisdictions and do not impact upon the discretion to be exercised in Hong Kong.

151. In so far as it is a fact in relation to the Los Angeles proceedings, that Mr de Pasquale was not willing to give evidence in the subsequent challenge, by itself, is not a matter that required disclosure. I will consider his refusal to give evidence further when considering whether the Italian officers were entitled to be present at the searches.

The presence of the Italians at the searches:

152. This issue arises only in respect of the magistrate’s decision to issue the search warrants. It is clear from the papers that the Department of Justice were fully aware of the fact that the Italian officers intended to be present at the searches. The Secretary for Justice was not misled in this respect.

153. The case for the respondents is that it was intended that the Italian officers would be present during the search in order to advise the Hong Kong police officers as to the relevance of things found, in order that decisions could be made as to seizure. I propose to consider the submission on the basis that the role of the Italian officers would be so limited.

154. The critical expression in the MLAO is that there may be such “assistance as is necessary and reasonable”. There will be certain circumstances in which it will be obvious that assistance given to police officers in the course of the search will have been necessary and reasonable. The most obvious one is if police officers are physically unable to gain entry to premises for search pursuant to a warrant. Plainly, they must in those circumstances be able to seek the assistance of, say, a locksmith to open a lock.

155. Just as necessary and reasonable assistance may be given, so may necessary and reasonable force used. In appropriate circumstances necessary and reasonable force may involve a forced entry to premises.

156. In so far as the role of the Italian officers was intended to be limited advising on relevance of documents, I accept that their presence during the search for that purpose was both reasonable and necessary.

157. In R v Secretary for State for the Home Department, ex parte Fininvest SpA & Ors [1997] 1 All ER 942, the Republic of Italy had sent a request to the United Kingdom for search warrants in relation to fraud and false accounting investigations into Fininvest SpA. Apparently as a result of specific provisions in the Police and Criminal Evidence Act (UK) six named Italians were permitted to accompany the police constable executing the round. The presence of the Italian officers was not challenged in the proceedings, and Simon Brown LJ made the following comment at p 950:

“Six named Italians were permitted to accompany any police constable executing the warrant. This had been specifically requested for obvious good reason: the documents related to highly complex matters and many were in Italian. The Italians were there to advise where necessary as to which documents fell within the terms of the warrant.”

158. Mr McCoy relied upon a decision of the Northwest Territories Supreme Court, (Canada); Federal Republic of Germany v Ebke (2001) 158 CCC (3d), where the warrant permitted a police officer from the requesting state to be in attendance during the search as an observer or resource person. That observer took a more active role and examine things brought to his attention by the Canadian officers and gave advice on whether or not things should be seized. The court held that in extending his role, that officer had gone beyond the role of observer.

159. First, the decision needs to be seen in terms of the particular legislation. The legislation concerned contained a provision which prevented the requesting state from examining any seized material before an order was made sending it to the requesting state. By examining documents and giving advice on whether or not things should be seized, the court held that the officer had undermined that provision in the legislation. As will be seen from the discussion below, (see paragraphs 206-211) there is no similar provision in the Hong Kong legislation.

160. Second, the decision was criticised in R v Budd, a decision of the Ontario Superior Court of Justice, reported in Westlaw, as 2004 CarswellOnt 3483. There are, McKinnon J said, at 21-22:

“I am unable to agree with the decision in Ebke. If giving directions as to what may be searched for and examining certain items during the course of the search “defeats the entire purpose of these statutory provisions” then Officer Trede should probably not have been permitted to attend as an observer. As I pointed out earlier in these reasons, Article VIII of the Treaty between Canada and the United States specifically contemplates the presence of foreign agents during the course of the search. It must be remembered that the search is in furtherance of crimes alleged to have been committed in a foreign jurisdiction. The foreign agents know the case they are attempting to mount. The fact that they may be permitted to make suggestions to their Canadian counterparts as to what should be seized and what should not be seized to me makes eminent good sense. Obviously, materials should not be retained by foreign agents, nor copied, nor notes taken as to what has been seized, until a hearing has been held pursuant to s 15. But I have no objection to foreign officers actively participating in the search and providing direction to their Canadian counterparts as to what may be relevant or irrelevant. Obviously, the foreign agents must be subject to the supervision of Canadian peace officers and at all times act in accordance with Canadian law and within the four corners of the specific warrants. However, it seems to me that searches conducted under MLACMA[6] should not be a game of “blind man’s buff”. Foreign agents on occasion may be necessary and integral to an orderly search. They should be able to observe the material of interest and advise as to its materiality to the foreign case. Permitting foreign estate agents to be present during the execution of warrants under the Act should not be viewed as an affront to Canadian sovereignty. On the contrary, the practice might be regarded as an enhancement of Canadian sovereignty, signifying a commitment to Canada’s place in the world is a cooperative partner to our Treaties with foreign nations who are resolved to combat international crime, whose perpetrators have no regard for borders and a demonstrated contempt for the sovereignty and laws of individual nations.”

161. In Dunesky v Commonwealth of Australia (1996) 89 A Crim R 372, domestic search warrants were issued to police to assist enquiries made by the Australian Taxation Office, (ATO), into alleged tax offences against the Commonwealth.

162. The search was undertaken in the presence of ATO officers. The relevant provision conferring authority for the search stated that the constables named in the warrant “with such assistance….as is necessary and reasonable” might enter the premises and conduct the search. The applicant challenged the presence of the ATO officers during the search. Lockhart J in the Federal Court of Australia rejected the challenge, saying, 384:

“But the presence of persons other than those authorised to execute the warrant is not fatal to the validity of the execution. I do not accept the argument of counsel for the applicants that on its proper construction s 10 does not authorise persons, other than the police officers named in the warrant, to give assistance beyond assistance in the nature of “locksmith’s assistance”. The authority conferred by s 10 upon constables named in the warrant to enter premises and seize things found therein is to pursue these activities with such assistance….as is necessary and reasonable”. The obtaining of the assistance with entry, search (by implication), and seizure is not limited merely to assistance with entry of the premises. This follows both from the literal construction of s 10 and its obvious intent. The assistance includes assistance in relation to seizure of things, which in turn must carry with it, by implication, inspection of the articles, including documents, to see if they come within the terms of the warrant.

The facts and circumstances that surround this matter are complex and have involved years of investigation by the Australian Taxation Office into the activities of the applicants. In my view it is not only permissible under s 10 of the Crimes Act for ATO officers to accompany the police officers on the search; but it is probably in the interests of both the prosecuting authorities and the applicants that they do so. Who better to assist in the identification of relevant documents (i.e. relevant according to the terms of the warrant) than the ATO officers who are intimately conversant with the subject matter of their audits? It is true that the ATO officers cannot take over the role of the police officers in the conduct of the search and seizure of documents; but plainly they were retained for the purpose of distinguishing between relevant and irrelevant material, that is material which would or would not answer the description of the documents in the warrants themselves. ”

163. In R v Middlesex Guild Hall Crown Court, ex parte Tamosious & Partners (a firm) [2000] 1 WLR 453, the Inland Revenue Department obtained search warrants of the offices of an international legal practice. It was consequently obvious that LPP issues may arise. As a matter of caution, the officers executing the warrant took with them legal counsel to determine legal privilege, if asserted over material seized.

164. The applicants challenged the presence of legal counsel during the search. The relevant provisions in the legislation allowed an officer searching premises to “take with him such other persons as appeared to him to be necessary”.

165. The court held that the limiting words “as may appear necessary” only prohibited the presence of persons who could not be reasonably expect to assist in any of the tasks authorised under the warrant. As to the presence of counsel the court said at 464D:

“Indeed, I would have thought that his presence, in cases such as these, was to be encouraged, so long as it is understood that his presence should not inhibit a solicitor who wishes to assert a genuine claim to a legal professional privilege from making his assertion as speedily as he came before the courts.”

166. The common theme through these decisions is to take a sensible approach to the involvement of persons other than police officers in searches.

167. It is entirely sensible that the Hong Kong police officers should have the assistance in the search of officers who are familiar with the nature of the offence alleged and the factual parameters of the offence. Fraud or misappropriation offences, particularly when committed on an international scale, can involve a wide range of documents. Until a search is undertaken, it is unlikely that investigators will know precisely what documents may be available to assist in establishing the offence. Without the presence of investigators familiar with the offence and circumstances it may be necessary for large numbers of documents to be seized, only subsequently to be returned as irrelevant.

168. Mr McCoy also relied upon Hartnett & Ors v New South Wales, (unreported, 19380/93, New South Wales Supreme Court, 31 March 1999). There however, the legislation required the warrant to name the officer or member of the police force who was to conduct the search. There is no similar requirement in the Hong Kong legislation: see s 12(3) and (4). In fact, s 12(3) specifically does not require the authorised officer to be named in the warrant.

169. In R v Southwark Crown Court & Ors, ex parte Gross [1998] COD 445, a US investigating agent was present at the execution of a search warrant in England. The Divisional Court held that the execution of the warrant was unlawful because the US investigating agent was not named in the warrant, his involvement in the search went beyond that authorised by the relevant Home Office Circular, and he entered the premises before his identity and status was revealed, and the occupier’s permission obtained. Although superficially appearing to support Mr McCoy’s submissions, an examination of the decision demonstrates it is primarily a decision on the specific provisions of the Police and Criminal Evidence Act (UK). The decision turns on the particular terms of that legislation which are not replicated in the Hong Kong legislation.

170. It is right that the Italian officers had requested to be present during the searches. By involving the Italian officers to review the documents found and to advise as to relevance DSI Leung took a sensible precaution which would ensure that only relevant documents were seized. Nothing turns upon the fact that the Italian officers requested to be present. It was open to DSI Leung to refuse that request.

171. I am accordingly satisfied that the presence of the Italian officers at the search, for the purpose of advising on the relevance of the material found in the course of the search that might be seized, was sensible, and desirable, and consequently “necessary and reasonable assistance”.

172. For reasons given in paragraphs 206-211 below, I am satisfied that the regime in Hong Kong is not such that officers of the requesting state are prevented from seeming the material before it is seized. Consequently their presence in the course of the search to advise on relevance is not a matter which can be the subject of complaint.

173. Mr McCoy contended that as the definition of “assistance” in s 2 MLAO included giving evidence, the contention that the Italian officers were prevented by Italian law from giving evidence in Hong Kong proceedings meant that they were disqualified from ever being able to give assistance within the meaning of s 12(3). With respect to Mr McCoy I simply do not understand the argument.

174. Mr. McCoy said that it was a “precondition” to be able to assist the authorised officer, that the person giving assistance should also be able to assist the Hong Kong courts if matters became contentious. Consequently he said that if an “assistant” cannot, by law, testify, then an assistant could not by law qualify to give assistance under s 12(3). The submission did not sit comfortably with Mr. McCoy’s submission but as a matter of law, there was nothing to prevent the Italian officers giving evidence in Hong Kong.

175. I accept that it is desirable that a person giving assistance should be able to give evidence. But there is nothing in the ordinance which disqualifies a person who cannot give evidence from giving assistance or other appropriate criteria are met.

Exposure to LLP documents:

176. The proposed searches were of private homes and office premises and not law offices. In that respect they were no different at all from any other document search that might be undertaken by police officers. There is nothing in the evidence to suggest that there was any special reason to believe that there might be LPP material in the search.

177. It is tolerably clear from the factual circumstances that the allegation made by the Italian prosecutors was that the Hong Kong companies involved in the alleged fraud were merely alter egos of Mr Agrama, and were being used to give an apparent, but arguably unjustified, commercial separation between the transactions in California and the transactions in Italy. In those circumstances, rather than it being likely that there would be LPP material on the premises, it becomes unlikely that such material would exist in those premises.

178. If there was no reasonable cause to believe that the premises were likely to contain privileged material there is no requirement to make disclosure to the magistrate: see Philip KH Wong, Kennedy YH Wong & Co v ICAC at §§ 49 and 94.

179. That there was no reasonable cause to believe that there may be LPP material in the premises to be searched has been subsequently confirmed by the fact the claim for LPP was ultimately entirely withdrawn.

180. The failure to draw to the attention of the magistrate the possibility of the presence of LPP material is not a basis upon which the warrants may be declared unlawful.

The involvement of the Italian officers in the search:

181. For the reasons given above I am satisfied that the role of the Italian officers extended beyond merely inspecting documents found in the course of the search and shown to them by the Hong Kong police officers, and advising the Hong Kong police officers whether or not the document ought to be seized.

182. But I am satisfied also that the Italian officers were lawfully present at the scene of the search in order to give assistance in the course of the search.

183. The decision in Fininvest, while recording that the purpose of the Italian officers being present was to advise on relevance of documents, does not indicate whether in the course of so advising the Italian officers physically located documents.

184. However, in Dunesky, the ATO officers were physically involved in the search as well as advising on relevance: see p 379, (the discussion of the evidence of Mr Fitton), and p 380, (the discussion of the evidence of Mrs Dunesky). It was not disputed that certain of the ATO officers found documents and brought them to the exhibit officer for inclusion: see p 382. In this respect, the involvement of the non-police officers present, appears to be similar to that in the present case.

185. I am satisfied, that in the circumstances of this case, where the Italian officers were lawfully present at the search, and were fully entitled to examine documents and things found for the purpose of relevance, it cannot be said at that the act of physically locating a document or thing in the course of the search, is an act that would justify the setting aside of the warrants. However, just as in Dunesky, it is plain that the Hong Kong police officers did not abdicate their searching responsibility to the Italian officers. The reality of the situation is that they were assisted in their searching responsibility by the Italian officers.

186. It might have been better if the Italian officers had simply sat at a table and made decisions on relevance of any documents or brought to them. They would have been entitled to leaf through a file looking at documents to determine whether or not they were relevant. But it would be an unwarranted act of hair splitting to find that they could look through a file, but not open a drawer and take out a file.

187. I am satisfied that the acts of the Italian officers in assisting the Hong Kong police officers in searching the various premises were not acts which justify declaring the warrants unlawfully executed.

The scope of the warrants:

188. This argument is mounted relying upon analogy with the decision of the Court of Final Appeal in P v ICAC (2007)10 HKCFAR 293. There the court was dealing with the provisions of s 14 Prevention of Bribery Ordinance, Cap 201, which permits the Commissioner, for the purposes of investigation into, or proceedings relating to, an offence under that Ordinance, to obtain from the Court of First Instance an order requiring a person to furnish a statutory declaration in relation to certain matters.

189. In the course of the judgment of Li CJ, at § 31 the following was said:

“Where the court decides to make the order sought authorising a notice under s 14(1)(d), the order should recite that the court is satisfied in relation to the three statutory criteria. The order cannot be a general one, simply authorising the Commissioner to issue a notice under s 14(1)(d) to the subject. Such an order would give carte blanche to the Commissioner to decide the width of the notice. The statutory scheme does not enable the court to grant an authorisation in such general terms. Functioning as a safeguard, the court has to decide whether to make an order authorising the Commissioner to issue a notice to compel a non-suspect to supply the information sought. The order must define the scope of the authorisation granted.”

190. Mr McCoy argues that by the time of the execution of search warrants, January 2007, the Milan court had already ruled that events before 14 July 1999, could not be proceeded with because of the statute of limitations. Consequently, he says that the warrants could not authorise a general search for documents without imposing a time limit on the period of the documents that might be sought.

191. To further substantiate the submission he relies first upon Williams & Ors v Summerfield [1972] 2 QB 512. There, a warrant under s 7 Bankers’ Books Evidence Act, (UK), had been obtained and banking information obtained in relation to certain defendants to criminal proceedings. The warrant was challenged on various grounds including self incrimination. In the course of the judgment Lord Widgery CJ referred to the need to limit the period of disclosure of the bank account to a period which was strictly relevant to the charge. The judge said that the power to obtain information from a bank was one to be exercised with caution and should not be allowed to be used for the purpose of fishing in order to find out whether there is a case.

192. In R v Nottingham Justices ex parte Lynn (1984) 79 Cr App R 238 at 242-243, orders made under the same Act were quashed as being too wide in time.

193. Both of those decisions are decisions which turn on the particular circumstances of the legislation in question. They are decisions in relation to legislation requiring banks to disclose documents. The circumstances and the legislation in question are sufficiently distinct from the present proceedings that these decisions do not assist me. I note that in Fininvest, at p 925, the court noted that the position in that case, a case having a very close factual parallel to the present case, “could hardly be more different from that under consideration in Williams v Summerfield.”

194. It is right that the Italian courts had found that certain prosecutions could not proceed because of the statute of limitations in Italy. But it does not follow from that, that documents generated during that period would not be relevant to a prosecution or investigation of offences after that period. While it might be appropriate to limit a warrant designed to obtain information from a bank to information covering a particular period of time, it would rarely be appropriate to limit a warrant in respect of general premises where offences of the nature being investigated and prosecuted in this case are involved.

195. Other than the two banking cases, no authorities were submitted in which it was demonstrated that in a search warrant in relation to premises individuals or companies related to an offender, the right to search and seize ought to be limited to a particular period of time. Of course, if documents are seized which are irrelevant because of a time issue, appropriate steps can be taken by the subject of the search. There was no suggestion that such an issue arose in this case.

196. The next decision relied upon by Mr McCoy was R v Central Criminal Court & British Railways Board ex parte A J D Holdings Ltd [1992] Crim LR 669. There was a discrepancy between the information as sworn by the officer in the warrant issued by the judge. The information referred to “all records of business details relating to the finances of [the company], namely letters, notes…” whereas the warrant referred simply to “letters and notes” but omitted to identify them as records of financial business details of the company.

197. The court held that was a crucial omission because the warrant purported to give the holder a free hand to seek and seize all documents of the kind described in respect of whether they fell within the scope of the investigation to which the information related.

198. It is not objectionable per se for a request for a search warrant to extend beyond the precise dates of alleged offence. In Fininvest, Simon Brown LJ said, at 952:

“As for the period encompassed by the request, extending as it does beyond the periods of false accounting under investigation, that seems to me plainly justifiable in the present circumstances: self-evidently documents post will dating the closing of accounts are likely to refer back to the accounting period and in any event they may reveal the subsequent movement of assets or shares allegedly employed in the fraud.”

199. That is not the situation in the present case. The authorisation is to search for and seize things found that are believed to be relevant to the prosecution and continuing investigation in relation to the serious external offences. The warrants specifies those serious external offences as fraud, false-accounting, misappropriation and money laundering.

200. There is an important distinction between the right to search, and the power to seize. It would not be sensible to impose limits on the right to search, other than specifying the particular premises, or identifying files on particular premises might be searched. By the use of the names of the companies and individuals the warrants sufficiently identifies files on particular premises that might be examined. Files relating to persons or companies not named in the warrant in, for example, the Prince’s Building office, could not be searched.

201. The power to seize must be limited only to those things which are relevant to the prosecution examination that has given rise to the search warrant. There can be no limitation, other than as set out in the preceding paragraph on the things that might be inspected by a searching police officer in the course of research. By restricting the power to seize things related to the specified serious external offences, the warrant adequately imposes an appropriate restriction.

202. I am satisfied that these warrants are not warrants which can be described as giving carte blanche to the investigators to seize whatever they like. The police officers have been properly empowered to examine all things on the premises which relate to the named parties, to determine whether or not those things are relevant to the investigation of the specified serious external offences.

203. The fact that the warrants covered 19 individuals, 17 companies and 8 banks is simply beside the point. There is no reason why so many individuals companies or banks should not be involved in a complex international fraud. The fact that an alleged criminal offence is complex and involves numerous companies individuals and banks on an international scale does not make a search warrant aimed at pivotal points in that alleged criminal offence over wide.

204. For those reasons I am satisfied that the warrants were not over wide, and were, in the circumstances, appropriately confined in scope.

The steps following the seizure of the documents:

205. The steps taken in respect of the documents after seizure have been set out in paragraphs 116-123 above. Mr Grossman concedes that the police were wrong to permit the Italian offices to make copies of documents during the period they were in the custody of the Commissioner pursuant to s 12(7). Mr McCoy submits that the Italian offices were not entitled to inspect any of the documents/things seized at all until such time as the Secretary for Justice had made a decision under s 12(8), as to whether or not the document/things may be sent to an appropriate authority of a place outside Hong Kong.

206. The provisions of s 12(8), and the steps to be taken after things are seized under the MLAO were considered by Chung J in Re Anson Garments Ltd [2006] 2 HKC 246.

207. The decision involved a request by the United States for assistance in respect of an alleged textile smuggling fraud into the United States. After documents and things were seized they were delivered into the custody of the Commissioner of Customs and Excise, pending a direction from the Secretary for Justice. Whilst in that custody the things seized were reviewed by Hong Kong Customs officers, together with officers of the United States Customs Service to enable United States offices to identify the documents required in their investigation, and whether or not original documents were required. Subsequently, the Secretary for Justice made a direction that certain documents, including some original documents be sent to the United States. The applicants sought judicial review of the decisions.

208. The judge held that the review of the documents by the Hong Kong Customs officers and the United States investigators was merely for the purpose of enabling a proper decision to be made under s 12(8), and that a review of the documents must be undertaken beforehand in order for a proper decision under those provisions to be made.

209. The decision is entirely sensible, and in my view correct. It is right that in some other jurisdictions that the regime is such that officers of the requesting state are not able to see the documents prior to orders permitting the documents to be sent out of the jurisdiction: see e.g. Ebke. But there is nothing in the Hong Kong legislation to lead me to conclude that that ought to be the position in Hong Kong.

210. By taking the documents into the custody of the Commissioner, making arrangements for an appropriate examination of the documents by officers of the requesting state, under the control of the Commissioner, the Secretary for Justice may be properly advised as to which documents will be required, in whether or not copies will suffice or originals will be necessary.

211. It will be inevitable that in the course of a search, even with the assistance of officers of the requesting state to advise as to relevance more documents or things that may ultimately be required, might be seized. That seizure would not be unlawful, but may later be found to have been superfluous to requirements, thereby enabling some documents or seems to be returned to the owner.

212. I am accordingly satisfied that although copies and notes of the seized documents were wrongly made by the Italian offices, nothing that transpired following the seizure of the documents justifies the search being declared unlawful.

Conclusion:

213. For the foregoing reasons, the application for judicial review must be dismissed.

Costs:

214. Nothing was said on the question of costs, which are accordingly reserved.

	(John Saunders)
	Judge of the Court of First Instance
	High Court

Mr G J X McCoy SC, Mr Alexander King SC, leading Mr Steven Kwan and Ms Emma Tsang, instructed by Messrs Haldanes, for the Applicants, in all proceedings

[1] See [2008] 2 HKLRD 137.

[2] See [2008] 5 HKLRD 507

[3] See [2008] 3 HKC 182.

[4] “Corte d’appello, Hong Kong.”

[5] See Mutual Legal Assistance in Criminal Matters (Italy) Order, Cap 525, Sub Leg G.

[6] Mutual Legal Assistance in Criminal Matters Act (Canada)

Please refer to CACV172/2010, CACV173/2010, CACV174/2010 & CACV175/2010 for the relevant appeal(s) to the Court of Appeal.

HCAL 16, 18 and 19/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST

NO. 16 2007

------------------------------

BETWEEN

	CHAN MEI YIU, PADDY	1^st Applicant
	HARMONY GOLD LIMITED	2^nd Applicant
	and
	SECRETARY FOR JUSTICE	1^st Respondent
	COMMISSIONER OF POLICE	2^nd Respondent
	LEUNG KING HUNG DETECTIVE SENIOR INSPECTOR	3^rd Respondent
	A MAGISTRATE SITTING AT EASTERN MAGISTRACY ON16^TH JANUARY 2007	4^th Respondent

------------------------------

AND

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST

NO. 18 2007

------------------------------

BETWEEN

	HSU MAY CHUN, KATHERINE	1^st Applicant
	HARMONY GOLD LIMITED	2^nd Applicant
	and
	SECRETARY FOR JUSTICE	1^st Respondent
	COMMISSIONER OF POLICE	2^nd Respondent
	LEUNG KING HUNG DETECTIVE SENIOR INSPECTOR	3^rd Respondent
	A MAGISTRATE SITTING AT EASTERN MAGISTRACY ON16^TH JANUARY 2007	4^th Respondent

------------------------------

AND

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST

NO. 19 2007

------------------------------

BETWEEN

	HARMONY GOLD LIMITED	1^st Applicant
	CS SECRETARIES LIMITED	2^nd Applicant
	LOONG PO MANAGEMENT LIMITED	3^rd Applicant
	CHAN MEI YIU, PADDY	4^th Applicant
	and
	SECRETARY FOR JUSTICE	1^st Respondent
	COMMISSIONER OF POLICE	2^nd Respondent
	LEUNG KING HUNG DETECTIVE SENIOR INSPECTOR	3^rd Respondent
	A MAGISTRATE SITTING AT EASTERN MAGISTRACY ON16^TH JANUARY 2007	4^th Respondent

------------------------------

(HEARD TOGETHER)

Before : Hon Hartmann J in Chambers

Date of Hearing : 25 September 2007

Date of Ruling : 25 September 2007

------------------------------

R U L I N G

------------------------------

1. The application before me is an unusual one. The applicants seek an order that this court should direct the Secretary for Justice to use his best endeavours to obtain an undertaking from the judicial and/or prosecuting authorities of Italy to embargo certain banking documents which were originally seized in Hong Kong and were subsequently transferred to Italy where they are now being held, I understand, in support of criminal proceedings instituted in that country.

2. The factual background is reasonably complex. Indeed, Mr Justice Saunders, who has had charge of this case but is presently out of the jurisdiction has, I am told, already written three judgments in respect of it. However, for the purposes of the matter before me, the background can be reduced to a short recitation.

3. The Italian authorities applied to the Secretary for Justice under the Mutual Legal Assistance in Criminal Matters Ordinance, Cap.525, for the issue of search warrants and production orders. The application was made, I understand, by way of a letter of request which set out in detail the basis upon which the requests were made.

4. Pursuant to the request, it appears that applications were made to a magistrate for the issue of search warrants to search the premises of certain offices and homes in Hong Kong and production orders aimed at obtaining bank records.

5. The magistrate authorised issue and, to the almost immediate knowledge of the applicants, searches were conducted in certain offices and homes. The searches were in terms of the warrants to be conducted by police officers.

6. The applicants have asserted, however, that, in fact, the searches were, for the main part at least, conducted by members of the Italian prosecuting authorities who accompanied the police. It is said that the searches were, in the result, unlawful. This has been denied by the Hong Kong police.

7. It should be said that the challenge mounted by the applicants goes not only to the manner of the search but also to an assertion that the letter of request itself was invalid, being vitiated by material misrepresentations.

8. The applicants’ challenges were made by way of judicial review. Leave having been granted, the material seized during the course of the searches at the offices and homes to which I have referred was placed under embargo and will remain under embargo until the judicial review process has been finalised or until a further order. Mr Justice Saunders, as I have said, has charge of the judicial review proceedings.

9. It appears, however, that it only recently came to the notice of the applicants that production orders were also issued and that one order in particular was addressed to UBS in Hong Kong; that institution complied with the order and delivered up certain of its records. Those records were taken to Italy by the Italian prosecuting authorities and at the time, it is conceded, there was no legal impediment to the removal.

10. The validity of the production orders, in particular the one concerning UBS, was not challenged as it was not appreciated at the time that they were even inexistence. By the time their existence was realised, certainly in respect of the one concerning UBS, the relevant documents had already been removed from Hong Kong.

11. It is not for me to speculate what would have happened if the applicants had known of the production orders earlier. However, on the basis that they were issued pursuant to the letter of request from the Italian authorities which letter also sought the issue of search warrants, and bearing in mind that the material seized under the search warrants was embargoed, I think it is more probable than not that, if the challenge had been made timeously, the material seized from UBS would also have been placed under embargo.

12. But my tentative observation, and it is no more than that, being essentially a deduction based on common sense, is really only of theoretical value. I say that because, of course, the material seized from UBS is no longer in this jurisdiction. Nothing in the ordinance gives me the power to direct that material removed from Hong Kong must be placed under embargo in the jurisdiction to which it has been removed.

13. I am not asked to attempt to direct the authorities in Italy to embargo the records seized from UBS. I have no extra-territorial jurisdiction in this regard. This is appreciated by the applicants. However, what the applicants seek, in order to outflank their difficulty, is an order from me directing the Secretary for Justice to use his best endeavours to persuade the authorities in Italy to embargo the records.

14. This application, a novel one, is made on the basis that fairness dictates that there must be an embargo, that fairness being underscored in the present case by international comity.

15. I am not prepared to make the order sought. I do not know that this court has any jurisdiction to direct the Secretary for Justice to attempt to persuade foreign authorities to a particular cause of action. Apart from anything else, how is this court to police its order?

16. For the Secretary for Justice, Mr Grossman makes a good point. It is equally open to the applicants, he has said, to communicate with the Italian authorities to seek their cooperation. When issues of fairness and comity are employed, the Secretary for Justice has no greater moral authority than the applicants themselves.

17. It seems to me that, if the documents are now in the possession of the Italian authorities, the proper course to be taken is for the applicants to apply direct to the courts in Italy for an embargo to be placed on those documents. The matter will then be determined according to Italian law.

18. In my judgment, while I am asked to direct the Secretary for Justice on the basis that, in part, comity demands that I do so, it seems to me that I run the risk of breaching comity if I take the course that I am asked to take by the applicants. Whether the documents should be placed under embargo is quite clearly an issue now of Italian law and is therefore to be decided by the courts in Italy. I can well understand those courts looking with disfavour upon an order made by myself that somehow the exercise of their jurisdiction is to be by-passed.

19. The application must therefore be refused.

(M.J. Hartmann)
Judge of the Court of First Instance,
High Court

Mr Alexander King, SC and Mr Steven Kwan, instructed by Messrs Haldanes, for the Applicants

Mr Clive Grossman, SC and Ms Susana Sit, DPGC, instructed by Department of Justice, for the 1^st, 2^nd and 3^rd Respondents

HCAL 16/2007
HCAL 17/2007
HCAL 18/2007
HCAL 19/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST

NO. 16 OF 2007

______________________

BETWEEN

	CHAN MEI YIU, PADDY	1^st Applicant
	HARMONY GOLD LIMITED	2^nd Applicant
	and
	SECRETARY FOR JUSTICE	1^st Respondent
	COMMISSIONER OF POLICE	2^nd Respondent
	LEUNG KING HUNG
	DETECTIVE SENIOR INSPECTOR	3^rd Respondent
	A MAGISTRATE SITTING AT EASTERN
	MAGISTRACY ON 16 JANUARY 2007	4^th Respondent

______________________

HCAL 17/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST

NO. 17 OF 2007

______________________

BETWEEN

	WILTSHIRE TRADING LIMITED	Applicant
	and
	SECRETARY FOR JUSTICE	1^st Respondent
	COMMISSIONER OF POLICE	2^nd Respondent
	LEUNG KING HUNG
	DETECTIVE SENIOR INSPECTOR	3^rd Respondent
	A MAGISTRATE SITTING AT EASTERN
	MAGISTRACY ON 16 JANUARY 2007	4^th Respondent

______________________

HCAL 18/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST

NO. 18 OF 2007

______________________

BETWEEN

	HSU MAY CHUN, KATHERINE	1^st Applicant
	HARMONY GOLD LIMITED	2^nd Applicant
	and
	SECRETARY FOR JUSTICE	1^st Respondent
	COMMISSIONER OF POLICE	2^nd Respondent
	LEUNG KING HUNG
	DETECTIVE SENIOR INSPECTOR	3^rd Respondent
	A MAGISTRATE SITTING AT EASTERN
	MAGISTRACY ON 16 JANUARY 2007	4^th Respondent

______________________

AND

HCAL 19/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST

NO. 19 OF 2007

______________________

BETWEEN

	HARMONY GOLD LIMITED	1^st Applicant
	CS SECRETARIES LIMITED	2^nd Applicant
	LONG PO MANAGMENT LIMITED	3^rd Applicant
	CHNA MEI YIU, PADDY LIMITED	4^th Applicant
	and
	SECRETARY FOR JUSTICE	1^st Respondent
	COMMISSIONER OF POLICE	2^nd Respondent
	LEUNG KING HUNG
	DETECTIVE SENIOR INSPECTOR	3^rd Respondent
	A MAGISTRATE SITTING AT EASTERN
	MAGISTRACY ON 16 JANUARY 2007	4^th Respondent

______________________

(Heard Together)

Before : Hon Saunders J in Chambers

Date of Hearing : 1 August 2007

Date of Decision : 3 August 2007

______________________

D E C I S I O N

______________________

Background:

1. The Applicants in these three judicial review proceedings seek to re-amend the application to widen the challenge beyond its present scope.

2. As originally drafted and filed on 15 February 2007, the application for judicial review sought to challenge the decision of a magistrate, on 16 January 2007, to issue, pursuant to a letter of request received in Hong Kong from the Government of the Italian Republic, under the provisions of the Mutual Legal Assistance in Criminal Proceedings Ordinance, Cap 525, (MLAO), certain search warrants. The primary complaint made by the Applicants was as to the nondisclosure to the magistrate of the prospect of the active involvement of Italian prosecutors and investigators in the search.

The prior amendment:

3. On 16 July 2007, without opposition, the application was amended by adding a reference to similar steps that had been taken by the same Italian authorities, by way of letter of request, in the Republic of Ireland. The steps taken in Ireland were taken in relation to the same primary subjects of investigation who are the primary subject of investigation in the letter of request issued to Hong Kong.

4. The purpose of adding the reference to the Irish proceedings was to buttress an additional contention, also added, without opposition, on 16 July 2007, that the applicants had reason to believe that the letter of request contained misrepresentations as to the nature of the Italian criminal proceedings, and failed to disclose material information as to those proceedings, and that consequently those misrepresentations and the material nondisclosure had improperly been taken into account by the magistrate in issuing the search warrants.

5. Consequently, amongst other issues to be determined, the substantive application for judicial review will involve a determination whether the letter of request from Italy to Hong Kong contained misrepresentations or omissions that may have operated in the mind of the magistrate when he decided on the applications for the search warrants, on the basis of information prepared by reference to the letter of request.

The application to re-amend:

6. Now the Applicants seek to re-amend the application for judicial review by adding to the challenge, two further decisions :

(a) The decision by the Secretary for Justice to accept the request by the Italian Republic to render assistance under the MLAO in respect of the Applicants and their affairs;
(b) The decision by the 2nd and 3rd Respondents to apply under s 12(2) of the MLAO to the 4th Respondent on 16 January 2007.

Consequent upon the addition of the two further decisions to the challenge, further relief is sought by way of order that the Respondents be restrained, and a permanent injunction be granted, restraining them from taking steps to use or in any way give effect to the relevant request for mutual legal assistance by the Government of the Italian Republic in respect of the Applicants and their affairs.

7. The argument for the Applicants is that just as the alleged matters of misrepresentation and material nondisclosure may have wrongly operated on the mind of the magistrate, so may they have wrongly operated on the mind of the Secretary for Justice in making the decisions now sought to be the subject of challenge.

Re-amendment is opposed:

8. Mr Walsh opposes the application on two grounds.

9. First, he says that there has been unreasonable delay without any proper explanation. In conjunction with the delay argument, he says that an amendment now, to expand the scope of the application for judicial review, would be detrimental to good administration and prejudicial to the Respondents.

10. Second, he says that the amendment would transform the judicial review application from a discreet challenge by Hong Kong parties to the execution of search warrants on their premises, to an all-out attempt by parties under investigation in Italy to stop all investigations in relation to their alleged criminal activities. Mr Walsh says that the High Court should exercise its supervisory powers over such proceedings with discipline, and decline to permit the expansion of the scope of the enquiry.

The time frame:

11. The letter of request was issued by Italy on 10 July 2006, and received in Hong Kong shortly thereafter. It was however, not until very late in 2006 or in January 2007, that a decision was made by the Secretary for Justice to act upon the letter. The interim period had been spent, by the prosecutors in Italy and Hong Kong, in clarifying matters raised by the letter of request. The decision by the Secretary for Justice to accept the letter of request was made following that clarification, and the application for the search warrant presumably followed virtually immediately thereafter. The search warrants were issued on 16 January 2007.

12. The search warrants were executed on Thursday 18 January 2007. It was soon apparent to the Applicants, for they were either shown copies of the search warrants, or shortly thereafter their legal advisers received copies of them, that the search warrants had been issued following a letter of request under MLAO. The applications for judicial review were issued promptly, on 15 February 2007.

The requirement to bring proceedings promptly:

13. Order 53 r 4(1) requires that an application for leave to apply for judicial review shall be made promptly and in any event within three months from the date when grounds for the application first arose unless the Court considers that there is a good reason for extending the period within which the application shall be made. In the present case, the first the Applicants would have learned of the existence of the letter of request would have been on or shortly after 18 January 2007.

14. Regard must be had also to s 21K (6) High Court Ordinance, Cap 4, which provides that where the Court of First Instance considers that there has been undue delay in making an application for judicial review, the court may refuse to either grant leave, or the relief sought, if it considers that the granting of the relief sought would be likely to cause substantial hardship to, or substantially prejudice the rights, any person or would be detrimental to good administration. Thus, with any argument based upon delay, it will be necessary to consider any consequential prejudice.

15. There can be no doubt that these principles ought to be applied to any application to amend judicial review proceedings.

16. While the application to challenge the issuance of the search warrants was plainly within time, the application to challenge the decision of the Secretary for Justice to act upon the letter of request, the grounds of challenge having arisen upon the execution of the search warrants on or about 18 January 2007, has not been brought until July 2007.

17. That is not a mere delay of three months, for the three month period provided in O 53 r 4(1) is preceded by a requirement to act promptly. The existence of the three month period does not entitle an applicant to wait until the end of the three month period, for if he does so he will not have acted promptly. The period of delay in my view is a period of at least five months.

The reason for the delay:

18. No explanation for the delay is offered on the papers. Mr Kwan, by way of explanation, said that the question of challenging the original decision of the Secretary for Justice was considered at the time the application for judicial review was made in February, but a view was taken then that a challenge to the decision of the Secretary for Justice to act upon the letter of request was not open at law. He said that a subsequent review of the position had brought to the Applicants’ advisers to a different conclusion.

19. Mr Kwan says that it is necessary to widen the scope of the attack because if the argument based upon misrepresentation and material nondisclosure is successful, it would be wrong to permit information to be obtained by way of the letter of request from independent parties who hold information that is private and confidential to the Applicants. He refers particularly to banks in Hong Kong that may operate bank accounts for the Applicants.

The argument in opposition:

20. Mr Walsh’s argument on prejudice overlaps with his argument that the amendment of the application, broadening as it does its scope, is detrimental to good administration.

21. The Secretary for Justice was in a position by January 2007, to act upon the letter of request. He did so immediately and obtained the search warrants during that month. The warrants were executed and documents seized on 18 January 2007, for use in a trial in Italy that was then under way. Seven months later, little progress has been made on resolving the matter, and the Secretary for Justice has not been able to meet his obligations consequent upon the acceptance of the letter of request to have the search completed in the relevant documents delivered to the Italian authorities. Mr Walsh says that this is plain prejudice which will be further compounded by further delays resulting from the amendment.

22. Mr Walsh says that the widening of the scope of the application for judicial review may result in a renewed application for inspection of the letter of request, yet a further delay he says.

23. Mr Walsh relies upon the decision in Super Lion Enterprises Ltd v Commissioner of Rating and Valuation, HCAL 71/2005, (unreported 6 October 2006), in which Hartmann J. correctly referred to the importance of the requirement that an applicant for judicial review of a public law decision is obliged to challenge the actual substantive decision which reflects the true substance of the case he brings: see para 222. In that case the applicant, being plainly out of time, sought to put himself in time by seeking a review of a decision by the Commissioner, and then challenging the reviewed decision.

24. Mr Walsh relies also upon Lau Kong Yung & Ors v Director of Immigration (1999) 2 HKFRC 300 at 340, where Litton PJ, in trenchant terms, counselled against liberal amendment of the grounds upon which judicial review were sought, after leave had been given.

25. Mr Walsh contends that the effect of the proposed amendment is to transform a judicial review application which is a discreet challenge to the issue and execution of search warrants, to an all-out attempt by parties under investigation in Italy to stop all investigations in relation to their alleged criminal activities. He points out, relying upon the steps taken in California and Ireland, (see judgement in this matter delivered 28 June 2007), that plainly the person behind the litigation being undertaken in these proceedings, is Mr Agrama, the person who is the subject of the criminal proceedings presently underway in Italy and the person who was the primary subject of investigation by way of letters of request to both California USA, and Ireland.

Discussion:

26. In determining whether or not I should exercise my discretion to permit the amendment of the pleadings I have had regard to all of these matters.

27. From the very beginning of this application for judicial review, the issue of material nondisclosure has been a central element of the basis of the Applicants challenge. Without objection, that was extended to include misrepresentation.

28. There are plainly arguable grounds upon which the Applicants can contend that there has been both misrepresentation and material nondisclosure to the magistrate. Precisely the same arguments are available to the applicants to contend that no other steps should be taken that might reveal information concerning their affairs, although those steps might not directly involved the applicants personally. The only way the applicants can challenge those steps, they not being privy to those steps, is to challenge the prior decision of the Secretary for Justice in deciding to act upon the letter of request.

29. Just as it is arguable that material nondisclosure and misrepresentation has acted upon the mind of the magistrate in the issuance of the search warrants, so it is arguable that the material nondisclosure and misrepresentation has acted upon the mind of the Secretary for Justice in authorising action on the letter of request which action may lead, or have led, to further steps indirectly involving the applicants affairs.

30. It is the fact that the very same argument is being mounted, but not a new ground of challenge, that tells against the argument of Mr Walsh. It is quite understandable in my view, that those advising the Applicants in February 2007, would be concentrating on the immediate concern of the search warrants. Realistically it was not until they saw the detail of the letter of request as to the investigation being undertaken, set out in the judgment of 28 June 2007, that they would be able to appreciate the real scope of the letter of request.

31. They have acted sufficiently promptly since the delivery of that judgment in seeking to expand the scope of the judicial review that in my view there cannot be said to be a delay that will cause substantial hardship will substantially prejudice the rights of either the Secretary for Justice or the Government of the Republic of Italy.

32. Any information that is held in the hands of third-party such as banks will still be there, and has not lost to the investigators, should they successfully resist the application for judicial review. It is right that there is a delay in transmitting the information to Italy, but that is an inevitable consequence of the fact of a challenge.

33. I have had careful regard to the argument of Mr Walsh that these proceedings an all-out attempt by parties under investigation in Italy to stop all investigations in relation to their alleged criminal activities. It may well be that if the judicial review is successful, the aspect of the investigation in Hong Kong, in its present form, may not be able to proceed. As a consequence thereof any information contained in Hong Kong which might otherwise assist the prosecutors in Italy would not be available to them.

34. I must weigh on the one hand, the proper interest that society has in bringing criminals to justice, and on the other hand, the requirement that the application of the rule of law in Hong Kong must mean that the legal facilities of Hong Kong should only be available, whether for local purposes or for international legal assistance, when proper grounds are established. The courts of Hong Kong should not countenance the availability of invasive procedures such as search and seizure, whether of a Hong Kong resident, or of other persons were authorities in Hong Kong holding information concerning a Hong Kong resident, authorised on the basis of either misrepresentation or material nondisclosure.

35. The amendments sought do not seek to extend in a vague and ill-defined way the grounds upon which relief is sought, which would be contrary to the clear principle stated by Litton PJ in Lau Kong Yung. The amendments do not seek to extend the grounds for relief at all. The amendments do seek, in two short clear and precise paragraphs, to extend the scope of the judicial review. The amendments do not, in my view, offend against the mischief sensibly recognised by Litton PJ.

36. I entirely agree with Hartmann J. when he said in Super Lion, at para 233:

“ Clearly, in cases involving fundamental human rights this court will be circumspect in too rigorously applying the normal principles in relation to delay.”

The nature of the case in Super Lion was made plain when the learned judge went on to say:

“ However this case does not involve fundamental rights. At issue is no more than the payment over of a sum of money until the determination of court proceedings dictates whether that sum should be return to (the applicant), in part or whole, or kept by the Commissioner.”

Quite to the contrary, this present case involves the fundamental human right, protected by Article 28 of the Basic Law, of Hong Kong residents to be free from arbitrary or unlawful search. That right must plainly extend not only to a resident’s own property or possession, but to information property or possessions held by third parties for or on behalf of a Hong Kong resident

37. Notwithstanding the delay in seeking judicial review against the decisions not sought to be included in the proceedings, I am satisfied that this is a case where it is just to exercise discretion to allow the amendments sought.

Interim relief:

38. Mr Walsh did not oppose the grant of interim relief, which he agreed it would be appropriate, should leave to amend the application for judicial review be granted. There will be an order granting interim relief in the terms sought by the Applicants.

Preservation of evidence:

39. A matter dealt with in the evidence of the solicitor for the Applicants is that of preservation of evidence. It was not addressed at the hearing, but plainly, consequent upon the grant of leave to amend the application and grant of the interim relief, issues as to preservation of evidence will arise.

40. The search warrants were executed on 18 January 2007. On 19 January 2007, the solicitors for the Applicants wrote to the Department of Justice making a number of requests in order to ensure that the seized materials remained within the jurisdiction of Hong Kong, and that there was no breach of legal professional privilege, (LPP).

41. On 22 January 2007, the solicitors for the Applicants sought confirmation from the Department of Justice that:

“ No notes in relation to the documents seized were made by the third parties who were present during the search and seizure operation, either during or after the time when the search warrants were executed.”

42. The response, on 24 January 2007, and made presumably after a proper enquiry, was somewhat disingenuous. It was in these terms:

“ Apart from those who executed and assisted in the execution of the search warrants, as identified above, no other persons assisted in the search and seizure operations. Notes may have been made by those who executed the search warrants.” (The emphasis is mine).

43. On 12 July 2007, the solicitors for the Applicants wrote to the Department Justice request in confirmation that no handwritten notes were taken by the Italian prosecutors or the accountants instructed by them, either during or after the execution of the search warrants. Four days later, on 16 July 2007, this elicited a response in the following terms, clearly demonstrating the disingenuous nature of the earlier response:

“ According to the police, the Italian prosecutor Mr Sergio Spadaro, and the KPMG staff, Ms Gabriella Chericla and Mr Stefano Martinazzo, had made some notes and copies in respect of the seized documents at the Police Headquarters on 19 January 2007. However, on the same day as soon as the police received your letter claiming LPP, the police took the notes and copies from the above Italian offices and shredded them.”

44. I am fully aware of the fact that I have yet to hear from council for the Respondents on this matter. However it is a matter of concern, I put it no higher than that at this stage, that on 24 January 2007, it is said, presumably after enquiry, that notes may have been made, but an admission is made on 16 July 2007, that notes were made.

45. It is a greater matter of concern that, upon the claim for LPP being made, a claim that was made to the Department of Justice, and communicated presumably from there to the Police, (for that is the only way the Police could have learned of the claim), the notes and copies made should have been shredded. Plainly the proper course would have been to secure and seal the notes and copies, thereby preserving the best evidence as to precisely what had been noted and what had been copied.

46. It is plain from Mr Walsh’s submissions that further steps have been taken consequent upon the letter of request. It is reasonable to suppose that those steps may have included enquiries of banks or other institutions which might hold information relating to the Applicants.

47. The enlargement of the scope of the application for judicial review, and the interim relief granted raises concerns as to the preservation of evidence that may have been obtained from third parties. If it should be determined that the steps taken on the letter of request are unlawful, then the Applicants will be entitled to have all seized material returned to them, and any information obtained from third parties returned to those third parties. In respect of both the direct searches, and the indirect searches, neither the Respondents nor the Italian authorities would be entitled to retain any of the information obtained in reliance upon the letter of request.

48. In the event that information relating to the Applicants has been obtained from third parties pursuant to the letter of request, it is now essential that that information be sealed and protected. There will accordingly be an order that, any information obtained concerning the Applicants’ affairs, by way of the letter of request, must be sealed and protected forthwith. In the event of any notes of that information having been made, or copies of that information having been made, those notes and copies must now be sealed and protected forthwith.

49. It will be a matter for the Applicants to consider whether or not there is any jurisdiction in this Court, or if they wish to take any steps, in relation to notes or copies of that information which might have been made and removed from this jurisdiction.

50. As I indicated above, other than having the opportunity to read the affidavit of the Applicants’ solicitor, to which there was no reply, I have not heard from the parties on this particular matter. The orders made in paragraph 48 are accordingly orders made out of necessity as I perceive it, and thus on an interim basis.

51. Leave is reserved to apply at short notice should either party be dissatisfied with that order.

Costs:

52. All questions of costs reserved.

(John Saunders)
Judge of the Court of First Instance
High Court

Mr Alexander King, SC, Mr Stephen Kwan and Ms Patricia Alva, instructed by Messrs Haldanes, for the Applicants

Mr Wayne Walsh, Deputy Principal Government Counsel, and Ms Susanna Sit, Senior Government Counsel, instructed by the Department of Justice, for the 1^st - 3^rd Respondents

HCAL 16/2007
HCAL 17/2007
HCAL 18/2007
HCAL 19/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST
NO. 16,17, 18, 19 OF 2007

(Heard Together)

____________

HCAL 16/2007

BETWEEN

	CHAN MEI YIU, PADDY	1^st Applicant
	HARMONY GOLD LIMITED	2^nd Applicant
	And
	SECRETARY FOR JUSTICE	1^st Respondent
	COMMISSIONER OF POLICE	2^nd Respondent
	LEUNG KING HUNG	3^rd Respondent
	Detective Senior Inspector
	A MAGISTRATE SITTING AT EASTERN MAGISTRACYON 16^th JANUARY 2007	4^th Respondent

____________

HCAL 17/2007

BETWEEN

	WILTSHIRE TRADING LIMITED	Applicant
	And
	SECRETARY FOR JUSTICE	1^st Respondent
	COMMISSIONER OF POLICE	2^nd Respondent
	LEUNG KING HUNG	3^rd Respondent
	Detective Senior Inspector
	A MAGISTRATE SITTING AT EASTERN MAGISTRACY ON 16^th JANUARY 2007	4^th Respondent

____________

HCAL 18/2007

BETWEEN

	HSU MAY CHUN, KATHERINE	1^st Applicant
	HARMONY GOLD LIMITED	2^nd Applicant
	And
	SECRETARY FOR JUSTICE	1^st Respondent
	COMMISSIONER OF POLICE	2^nd Respondent
	LEUNG KING HUNG	3^rd Respondent
	Detective Senior Inspector
	A MAGISTRATE SITTING AT EASTERN MAGISTRACY ON 16^th JANUARY 2007	4^th Respondent

____________

HCAL 19/2007

BETWEEN

	HARMONY GOLD LIMITED	1^st Applicant
	CS SECRETARIES LIMITED	2^nd Applicant
	LOONG PO MANAGMENT LIMITED	3^rd Applicant
	CHAN MEI YIU, PADDY LIMITED	4^th Applicant
	And
	SECRETARY FOR JUSTICE	1^st Respondent
	COMMISSIONER OF POLICE	2^nd Respondent
	LEUNG KING HUNG	3^rd Respondent
	Detective Senior Inspector
	A MAGISTRATE SITTING AT EASTERN MAGISTRACY ON 16^th JANUARY 2007	4^th Respondent

____________

Before: Hon Saunders J in Chambers (Open to Public)

Dates of Hearing: 21 & 22 June 2007

Date of Judgment: 28 June 2007

_______________

J U D G M E N T

_______________

Introduction:

1. These are judicial review proceedings in which the Applicants challenge the decision of a magistrate is sitting at Eastern Magistracy, on 16 January 2007, to issue certain search warrants pursuant to the provisions of the Mutual Legal Assistance in Criminal Matters Ordinance, Cap 525, (the Ordinance).

2. The substantive application for judicial review will involve the determination of the following main issues:

(i) Whether the letter of request from the Republic of Italy to Hong Kong contains misrepresentations or omissions that may have operated in the mind of the magistrate when he decided on the applications for the search warrants, on the basis of informations prepared by reference to the letter of request;

(ii) Whether there was such material non-disclosure in the applications for the search warrants that the magistrate issued them erroneously and not according to law;

(iii) Whether the terms of the search warrants were too wide;

(iv) Whether the execution of the search warrants in each of the four named premises was unlawful;

(v) Whether the documents to which legal professional privilege is claimed had been seized, and if so, whether they should be return.

3. Now, in the course of the judicial review proceedings the Applicants seek the discovery of two documents:

(a) the letter of request from the Public Prosecutor of the Milan Court of the Republic of Italy to the Government of the Special Administrative Region of Hong Kong seeking mutual legal assistance;

(b) the informations laid before the magistrate in support of the application for the search warrants.

The argument for the Applicants is that these documents are relevant to the first two arguments to be made, (para 2(i) and (ii) above), and will go to establish the misrepresentations, omissions and material non-disclosures alleged by the Applicants.

Discovery in judicial review proceedings:

4. The present law in Hong Kong as to discovery in judicial review proceedings is drawn from a decision in 1991. Discovery is not automatic in judicial review proceedings. The party seeking discovery must show that the order sought is necessary either for disposing fairly of the matter, or for saving costs: see Au Shui Yuen Alick v Sir David Ford, Deputy to The Governor & Ors [1991] 1 HKLR 525. The weight of that burden on the applicant was demonstrated in that case, where Kaplan J. held that it was not sufficient simply to show that the documents were relevant or that production was desirable.

5. The concept of discovery in judicial review proceedings has advanced since 1991. I accept Mr McCoy’s submission that the modern approach to discovery in judicial review proceedings in the United Kingdom is more liberal than in the past. The approach now adopted there is described in the headnote to Tweed v Parades Commission for Northern Ireland [2007] 2 WLR 1 HL in these terms:

“…the courts should now adopt a more flexible, less prescriptive approach and judge the need for disclosure on the facts of the individual case; that since the proportionality of a decision restricting a protected Convention right would, on the substantive application, call for careful factual assessment in the context of the relevant margin of appreciation, the court, on a disclosure summons, would take account of those factors when considering whether to make the order sought;” (the emphasis is Mr McCoy’s).

6. The entitlement of an overseas authority to obtain a search warrant in Hong Kong is dependent upon compliance with the legislative scheme as set out in the Ordinance. The issue of a search warrant may impact, as it has here, on the rights of a Hong Kong resident. Consequently, due regard must be had to Article 28 of the Basic Law which protects Hong Kong residents from arbitrary or unlawful search.

7. Before the magistrate can issue the search warrants, he must be satisfied that there are reasonable grounds to issue the warrants. In the present case he must be satisfied that there are reasonable grounds to say that there is a prosecution or a continuing investigation that has commenced in Italy involving external serious offences relating to fraud, false-accounting, misappropriation and money laundering. If in fact the prosecution or the continuing investigation that has commenced in Italy does not involve such external serious offences as are alleged, or the offences being investigated do not fall within the definition of external serious offences, then there may be no jurisdiction upon which the magistrate could issue the search warrants.

8. The Ordinance defines an external serious offence as an offence the maximum penalty for which is death, or imprisonment for not less than 24 months.

9. In the normal run of cases, in the absence of evidence to the contrary, it is likely that there will be nothing to establish that the legislative scheme has not been properly followed. Mr Walsh is quite right when he says that the Applicants cannot seek discovery in the hope that it will produce materials that will afford them with better arguments and will help justify their challenge: Law Sze Yan v Chinese Medicine Practitioners Board of the Chinese Medicine Council of Hong Kong, (unreported, 28 October 2005, HCAL 41/2005). A mere assertion by an applicant that he suspects that there may have been some relevant flaw in the procedure will not be sufficient to entitle him to an order for discovery in relation to the letters of request, or the Information placed before the magistrate. But where there is evidence that tends to indicate that there has been some relevant flaw in the procedure, the court will be more likely to grant an order for discovery of the documents.

10. I have come to the view that Tweed represents an advance on the law on discovery in judicial review cases, and that the approach set out in paragraph 5 above is the more appropriate approach, rather than the imposition of the strict and heavy burden on the applicant required by Au, to establish not only that documents were relevant or desirable, but that they were necessary to dispose fairly of the matter. The flexible approach laid out in Tweed enables the court to balance a refusal of disclosure, a decision which would potentially restrict Basic Law rights, against the risk of any real damage being caused to the proper administration of justice, including the investigation of serious offences, by disclosure.

The reason for discovery in this case:

11. At the centre of the external offences, the subject of the warrants, is the conduct of a man named Farouk (Frank) Agrama. Mr Agrama has been the subject of the search procedures commenced pursuant to letters of request in Los Angeles, California, United States of America, and Dublin, Republic of Ireland. Those search procedures relate to the same set of offences as are the subject of the letter of request to Hong Kong. In both of those jurisdictions Mr Agrama challenged the issue of the search warrants.

12. In Los Angeles, following the exchange of affidavit evidence and written briefs, consequent upon an application by Mr Agrama for the return of “unlawfully seized property”, the Government of the United States withdrew its opposition to the application, and returned all seized materials.

13. I have before me, as part of the evidence, the letter of request for the search warrants issued by the Italian prosecutor to the Californian authorities. As a result of that letter of request, search warrants were issued pursuant to the mutual legal assistance legislation in California. I have also, again as part of the evidence, an affirmation by Roberto Pisano, a licensed attorney in the Republic of Italy. That affirmation was filed in the proceedings commenced by Mr Agrama in Los Angeles. The affirmation sets out what Mr Pisano believes to be certain inconsistencies, misstatements and omissions in an affidavit filed by an FBI agent in the proceedings. It also sets out what Mr Pisano believes to be misrepresentations of witness statements which were referred to in the FBI agent’s affidavit.

14. An examination of the affirmation arguably demonstrates inconsistencies, misstatements and omissions contained in with the letter of request which formed the foundation for the California warrants.

15. I also have before me, again as part of the evidence, the letter of request issued by the Italian prosecutor to the Irish authorities. As a result of that letter of request the Irish authorities commenced search procedures pursuant to Irish legislation. There, the search procedure is the subject of an extensive letter from solicitors for Mr Agrama, addressed to the Chief State Solicitor in Dublin. The letter from the solicitors sets out what the solicitors suggest are a number of matters which are “seriously misleading” resulting in the search being procured by “an abuse of the process envisaged by the European Convention on Mutual Assistance in Criminal Matters”. The letter mirrors, and expands upon the matters raised in the affidavit of Mr Pisano, filed in California. The letter, which was sent on 29 May 2007, is presently being considered by the Chief State Solicitor, and the outcome has not yet been resolved.

16. There is no reason to suggest that the letter of request from the Republic of Italy, to Hong Kong, which stimulated the application to the magistrate for a search warrant, significantly differs from those used in both California and Ireland. Mr Walsh sensibly acknowledges that in the light of the information before the court, that is the California and Irish letters of request, and the responses by way of affidavit and letter raising issues as to those letters of request, it cannot be said that the Applicants, in seeking to see the letter of request in this case on a mere fishing expedition.

17. It is upon the basis that the alleged misrepresentations and material nondisclosures identified in both California and Ireland are likely to have been present in the Hong Kong letter of request, that the Applicants seek disclosure of the letter of request.

Confidentiality:

18. The right to confidentiality in relation to a letter of request arises first from the provisions of the Ordinance. By s 8(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. Under s 8(2)(e), an applicant for assistance is entitled to include a statement setting out his wishes concerning the confidentiality of the request and the reason for those wishes.

19. Mr Walsh says that the letter of request contains the appropriate request for confidentiality. A request for confidentiality is contained in the California letter of request, although no reason is given for confidentiality. There is no request for confidentiality in the Irish letter of request. At Mr Walsh’s suggestion I have read the letter of request in the present case and I am satisfied that it contains an appropriate request to be kept confidential and that appropriate reasons for that request are set out.

20. I am informed by Mr Walsh that following the request by the Applicants for disclosure of the letter of request an enquiry was made to the Italian authorities to see whether or not they objected to disclosure. Mr Walsh says that they did so object. On its face, that may be surprising bearing in mind that the California and Irish letters of request have been disclosed, and that the Irish letter of request did not contain a request for confidentiality. Subsequent to the hearing, at Mr McCoy’s request, and with my encouragement, an affidavit confirming Mr Walsh’s statement from the bar as to the objection by the Italian authorities to the disclosure of the letter of request, has been filed.

Disclosure of a letter of request:

21. Mr Walsh founded his opposition to the disclosure of the letter of request on the basis of a claim for public interest immunity, (PII). In my view however, it is not necessary to go that far to justify opposition to the disclosure.

22. The modern law in England is clear: in relation to disclosure of a letter of request, the starting position is that a letter of request is a confidential document and not disclosable: see R (Evans & Anor) v Director of the Serious Fraud Office [2003] 1 WLR 299. Where the needs of justice, to give appropriate protection to fundamental rights, can be met by giving information as to the nature of the criminal investigations, that will be sufficient, however where justice can only be done by disclosure, disclosure may be ordered.

23. Thus it is necessary for the court to examine the particular circumstances of the case. If the court is of the view that the particular argument to be mounted may be satisfactorily mounted following the giving of information as to the nature of the criminal investigations the subject of the letter of request, then there will be no disclosure. If, on the other hand, the court comes to the view that the mere giving of information, as against disclosure of the letter of request, would not be sufficient to enable justice to be done, then there is more likely to be disclosure of the letter of request.

Should there be disclosure in this case:

24. In the present case Mr Walsh relies upon two affidavits to assert that there has been sufficient information supplied by the Government, to enable the argument as to misrepresentations, omissions and material non-disclosures to be made.

25. The first, is the affidavit of Detected Senior Inspector Leung. It is convenient to set out the extent of the information disclosed.

“The request from Italy

5. The request was made by the Public Prosecutor at the Milan Court of Italy in connection with a prosecution and continuing investigation that had commenced in Italy involving external serious offences relating to fraud, false-accounting, misappropriation and money laundering, against Farouk Agrama (also known as Frank Agrama) (“Agrama”) and Silvio Berlusconi (“Berlusconi’) and their associates.

6. It was alleged that for over two decades, Agrama had been purchasing broadcasting rights from Paramount for the Berlusconi Group which included three national television networks. He conducted his business through his company Harmony Gold USA. Between 1988 and 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 dummy companies had been reselling the broadcasting rights at an over-price to Italian companies and to Mediaset spa (“Mediaset”) a listed company in Italy since 1995. The initial estimate of the amount involved in the criminal matter is USD200 million.

7. The management of Mediaset had been under the control of Berlusconi. Prior to 2000, Berlusconi owned 50% of Mediaset. After 2000, his share had decreased to 35% since he increasingly involved in politics. He had become the prime minister in 2001. Even so, he still exercised influence over the management of Mediaset and manipulated its affairs through his associates who were top executives in the company.

8. Investigations had also revealed that a number of directors of Mediaset were involved. They had received bribes from Agrama to facilitate the inflated sales agreements.

9. Certain funds generated from the criminal activities were found to have channelled into the accounts of the companies under the control of Berlusconi, including the Fininvest Group, Principal Network Ltd and International Media Services Ltd.

10. Other funds had gone into the bank accounts of Agrama’s companies, including Wiltshire Trading Ltd (domiciled in Hong Kong) and Melchers Limited N.V. (domiciled in the Netherlands), maintained at Sanwa Bank in Los Angeles and UBS New York. It was alleged that Agrama had also set up other companies to facilitate the laundering of the criminal proceeds. They included Harmony Gold Ltd (domiciled in Hong Kong), Meadowview Overseas Ltd and Olympus Trading Ltd (domiciled in Ireland). It was further discovered that the above companies had common shareholders and company directors. Paddy Chan Mei Yu (“Paddy Chan”) and Katherine Hsu May Chun (“Katherine Hsu”), who are Hong Kong residents, are the shareholders and directors of these companies.

11. Italian authorities had also discovered that an approximate amount of 150 million Swiss Francs had been credited to the accounts opened at UBS Lugano under the names of Harmony Gold Ltd, Wiltshire Trading Ltd and other companies traceable to Agrama. Substantial deposits came from the account of Melchers Ltd held at Banca del Gottardo in Lugano. Paddy Chan and Katherine Hsu are the authorised signatories of Melchers Ltd’s account.

12. Italian investigations had also revealed that Paddy Chan is the authorised signatory of the accounts of Wiltshire Trading Ltd and Melchers Ltd opened at UBS’s New York Branch.

13. Assistance sought by the request included, inter alia, searching the premises: (i) Flat C, 16/F Hung Fook Court, 169 Tin Hau Temple Road, Bedford Gardens, Hong Kong (residence of Paddy Chan); (ii) Flat C, 16/F Yuan Kung Mansion, Kam Din Terrace, 20 Taikoo Shing Road, Taikoo Shing, Hong Kong (residence of Katherine Hsu); (iii) 12/F Inchape Insurance Tower, 3 Lockhart Road, Wanchai, Hong Kong (registered address of Wiltshire Trading Ltd); and (iv) Room 1523, Prince’s Building, 10 Chater Road, Hong Kong (registered address of Harmony Gold Ltd, CS Secretaries Ltd and Loong Po Management Ltd) and seizing the things as itemized at A below relating to the persons and entities as identified at B below:

A: Things to be seized

(i) company incorporation documents, articles of association, shareholding and capital (including the transfer, sale or purchase of shares) details, beneficial ownership, written resolutions, change of name, directors and secretaries or addresses information;

(ii) correspondence, notes agreements, contracts, letter of engagement, instructions;

(iii) invoices, receipts and payments;

(iv) financial records, including company accounts, cash books, ledgers, profit and loss accounts, balance sheets and statements;

(v) banking records including mandates, cheque books, cheques journals, statements of account for all accounts held, cheque stubs and paid cheques, money transfer instructions and any correspondence with banks;

(vi) powers of attorney;

(vii) bank drafts, loan certificates of deposits, and guarantees;

(viii) documents relating to Trusts (including trust deeds and appointment of trustees) set up for the benefit of the company or associated persons;

(ix) investment certificates, share certificates, certificate of title and ownership;

(x) minutes of meetings, file notes, working papers, reports, diary notes, telephone attendance notes, internal memoranda;

(xi) documents relating to service provided, including valuation services, acquisition, sale or possession of film rights;

(xii) contact addresses and telephone numbers;

(xiii) documents relating to any external storage facility; and

(xiv) documents relating to any management agency, fiduciary or formation agent used by the individual or company.

B: Persons and entities identified

Persons

Farouk Agrama (also known as Frank Agrama)
Colleen Morris
Vilma Thomas
Silvio Berlusconi
Pier Silvio Berlusconi
Marina Berlusconi
Daniele Lorenzano
Carlo Bernasconi
Roberto Pace
Gabriella Ballabio
Giovanni Stabilini
Aldo Spagnoli
Guido Babieri
Luca Dermitzel
Oscar Garzotto
Bruce Gordon
Peter Mustaky Cary
Gary Marenzi
Joe Lucas

Companies connected with Farouk Agrama

Harmony Gold HK Ltd
Harmony Gold USA
Wiltshire Trading Ltd
Melchers N.V. Ltd
Meadowview Overseas Ltd
Olympus Trading Ltd
The Agrama Trust

Companies connected with Silvio Berlusconi

Fininvest
Silvio Berlusconi Finanziaria
Societé Financiére d`Investissement
Principal Network Ltd
International Media Services Ltd
Waotu Investment Ltd

Other companies

Mediaset
Mediatrade
RTI
Paramount

Banks

Sanwa Bank
Bank of The West
UBS Lugano
UBS New York
UBS Hong Kong
Banca del Gottardo
Cedars Bank
National Irish Banks

14. It was also requested that the Italian authorities that were involved in the prosecution and investigation of the criminal matter in Italy be allowed to assist the Hong Kong authorities in the execution of the search warrants.”

26. The second, is the affidavit of Susana Sit, Senior Government Counsel, who is attached to the Mutual Legal Assistance Unit of the International Law Division of the Department of Justice. Ms Sit says:

“The request

3 The request relates to the prosecution of offences referred to by Detective Senior Inspector Leung King Hung, (“DSIP Leung”), in his affirmation filed on 23^rd May 2007 allegedly committed between the period of 1995 to 1999 and the continuing investigation of the offences committed subsequently, against Farouk Agrama (also known as Frank Agrama), Silvio Berlusconi and their associates. The offences relating to fraud, false-accounting, misappropriation and money laundering punishable with more than twenty four months imprisonment and qualify as serious external offences under section 2 (1) of the Ordinance.”

27. In assessing whether or not disclosure should be ordered I have particular regard to the following passage from the speech of Lord Carswell in Tweed, at p 18, para 39:

“The duty of candour has been fulfilled by an adduction of summaries of the police report, authorised officers’ reports and other documents, and the appellant’s counsel did not suggest that there had been any deficiency in candour in putting that evidence before the court. He submitted, however, that it is not always possible to obtain the full flavour of the content of such documents from the summary, however carefully and faithfully compiled, and that there may be nuances of meaning or nuggets of information or expressions of opinion which do not fully emerge in a summary. I consider that there is force in this view and that in order to assess the difficult issues of proportionality in this case the court should have access as far as possible to the original documents from which the commission received information and advice.”

Mr McCoy placed great weight on the passage I have emphasised.

28. Courts in the past appear to have been somewhat reluctant to inspect documents, sought by a government to be withheld from production, unless absolutely necessary. A better view is that the court should inspect the letter of request if a case is made out that the documents may be necessary: see Wallace Smith Trust Co Ltd (In Liq) v Deloitte Haskins & Sells (a firm) [1997] 1 WLR 257 at 267 per Neill LJ:

“The judge has a discretion whether or not to inspect the documents. But if the party seeking discovery shows that the production of the documents may be necessary for the fair disposal of the action and order should normally only be refused after the court has examined the documents and considered them in the light of the material already in the applicant’s possession.”

29. I have accordingly examined the letter of request and its supplementary information. The letter of request itself, (translated from the original Italian), is dated 10 July 2006, and runs to 15 pages. There thereafter followed certain e-mail requests from the Department of Justice in Hong Kong to the Italian prosecutor seeking clarification of certain matters. These resulted responses in which matters were clarified.

30. I have had careful regard to the nature of the argument to be mounted, and the summaries of the information upon which the search warrants were sought. I have considered extent of the information disclosed in the two affidavits filed for the Respondents, and weighed that detail against the full contents of the letter of request, including the supplementary information. In so doing I have had regard, on the one hand, to the inherently confidential nature of a letter of request, and on the other hand, the difficulty of relying upon a summary as set out in the submission made to Lord Carswell, in which he found there to be force.

31. The most significant factor to which the court should have regard, in my view, is the risk that the disclosure of the letter of request might prejudice other lines of enquiry still to be pursued, and the argument that disclosure would reveal the current line of enquiry to the target of the investigation. That risk must be balanced against the need to do justice to the argument of an applicant, with due regard to his Basic Law rights.

32. Having regard to all these matters I have come to the conclusion that there should be no disclosure of the letter of request in this particular case. Having reviewed the letter of request and the supplementary information, I have concluded that an exercise of redaction is not possible, while at the same time maintaining the proper sense of the documents. I am of the view that if there is comprehensive disclosure of the letter of request and the supplementary information, there is a real danger that targets of the investigation may learn information that would potentially be to the detriment of the proper course of the investigation.

33. I am satisfied that, having regard to the terms of the argument to be made by Mr McCoy as to misrepresentation, omission and material nondisclosure, the existence in his hand of the California and Irish letters of request, together with the information contained in the two affidavits, are sufficient to enable justice to be done in this particular case. The extent of the information contained in the affidavits and the material generally available to the Applicants are such that they are not, in the absence of the letter of request itself, “deprived of the means of the proper presentation” of their case: see Glasgow Corporation v Central Land Board [1956] SC (HL) 1 at 18, per Lord Radcliffe.

34. Mr McCoy submits that only by putting the letter of request to Hong Kong alongside the California and Irish letters of request could one ascertain the existence of similar misrepresentations or omissions. That is plainly arguable. But the argument works equally to the contrary. In the absence of the letter of request, and having regard to the extent of the information available, is still well arguable on the part of the Applicants that the evidential burden on them to establish that there have been misrepresentations, omissions, or material non-disclosure, has been met. It will then be for Mr Walsh, if he wishes to displace that burden, to decide whether he should put the letter of request before the court to answer the inference that arises from the evidence.

35. The application for discovery of the letter of request and its supplementary documents is refused.

Public Interest Immunity:

36. It is accordingly not necessary for me to consider in detail Mr Walsh’s argument that a letter of request attracts PII. It is appropriate that I should briefly set out my views in that respect.

37. The traditional view is that a claim for PII may be made on a class or contents basis. Mr Walsh put his claim on both basis.

38. Mr Walsh relied upon R v Horseferry Road Magistrates’ Court, ex parte Bennett (No 2) [1994] 1 All ER 289 at 292 g-h, to support the class claim. I have no doubt at all that that very broad statement is insufficient to substantiate a class claim that letters of request in the mutual legal assistance legislation attracts PII. That is particularly so having regard to the fact that in numerous English decisions subsequent to that decision, particularly dealing with letters of request in mutual legal assistance situations, no claim whatsoever has been made is that the letters of request covered by PII. I refer particularly to R (Evans & Anor) v Director of the Serious Fraud Office [2003] 1 WLR 299; R (Abacha & Anor) v Secretary of State for the Home Department [2001] EWHC Admin 787 and R v Secretary of State for the Home Department ex p Zadari (unreported, 11 March 1998 CO/0345/98). I have no doubt at all that if a PII claim could have been made in relation to the letters of request in those cases, there would have been such a claim.

39. Under normal circumstances a PII claim based upon contents requires a certificate from the appropriate authority. There was no such certificate in this case. I accept Mr McCoy’s submission that the letter of request may properly be described as a routine and formal communication in international cooperation in law enforcement, which while attracting a degree of confidentiality, does not fall within the category of high communications between states or governmental documents dealing with matters of high security which might normally demand PII.

40. The most recent statement in Hong Kong on PII is contained in the judgement of Hartmann J in Chu Woan Chyi v Director of Immigration [2006] 4 HKLRD 280. There the learned judge applied the traditional distinction of contents and class claims in relation to PII.

41. Mr McCoy argued that since December 1996, the distinction between class and contents claims for PII has been abandoned in the United Kingdom, and a single test of whether disclosure would cause real damage to the public interest, has been adopted: see Matthews and Malek, Disclosure (Sweet & Maxwell) 2007, 11.85. He contended that that should be the law in Hong Kong.

42. It is not necessary in these proceedings for me to reach a conclusion on the point. It is sufficient if I say that I find the argument attractive.

The Informations in support of the search warrants:

43. Mr McCoy accepted that I am bound by the decision in Apple Daily Ltd v Commissioner of the ICAC [2000] 1 HKLRD 647 CA, that the actual affidavits or affirmations used to support applications for search warrants constitute a class of documents to which PII attaches. Other than signalling an argument that the decision should not now be followed, first since none of the speeches of their Lordships in Inland Revenue Commissioners v Rossminster Ltd [1980] AC 952, referred to a class claim, and second that the Hong Kong Court of Appeal in Re a Firm of Solicitors [1991] LRC (Const) 764, did not approach the matter in terms of a class claim, he took the matter no further.

44. I accept that I am bound by Apple Daily. The application to disclosure of the informations in support of the search warrants is refused.

Costs:

45. All questions of costs reserved.

(John Saunders)
Judge of the Court of First Instance
High Court

Mr G J X McCoy SC, Mr Alexander King SC and Mr P Y Lo, instructed by Messrs Haldanes, for the Applicants

Mr Wayne Walsh, Deputy Principal Government Counsel, and Ms Susanna Sit, Senior Government Counsel, for the 1^st-3^rd Respondents

HARMONY GOLD LTD AND OTHERS v. SECRETARY FOR JUSTICE AND OTHERS

Related cases with same parties

Files (6)

(a)	The decision by the Secretary for Justice to accept the request by the Italian Republic to render assistance under the MLAO in respect of the Applicants and their affairs;
(b)	The decision by the 2nd and 3rd Respondents to apply under s 12(2) of the MLAO to the 4th Respondent on 16 January 2007.