Cheung Ka Ho Cyril v Securities and Futures Commission [2020] 1 HKLRD 859

Philips Dykes SC (leading Jeffrey Tam) appeared for the applicants in the Court of First Instance in Cheung Ka Ho Cyril v Securities and Futures Commission [2020] 1 HKLRD 859.

X1-5 were investigated for possible breaches of the Securities and Futures Ordinance (Cap.571) (the SFO). Xs applied for judicial review of various search warrants issued by Magistrates (Warrants) under s.191(1) of the SFO authorising the Securities and Futures Commission (SFC) to search their premises and decisions of the SFC arising out of the execution of the Warrants to: (i) seize and retain Xs’ digital devices (including mobile phones, tablets and/or computers); and (ii) issue notices under s.183(1) of the SFO requiring Xs to provide the passwords to their e-mail accounts and/or digital devices (the Decisions). At issue was whether: (i) the Decisions were ultra vires the SFO or the Warrants, unlawful and/or unconstitutional for disproportionately interfering with the right to privacy under art.30 of the Basic Law (BL30) and/or art.14 of the Hong Kong Bill of Rights; and (ii) whether the Warrants were unlawful and invalid for want of specificity. Under Part VIII of the SFO, s.179(1) provides that, in specified circumstances, an authorised person may give a direction to a person to produce “any record and document” specified.

Held, granting leave to apply for judicial review but dismissing the substantive applications on the merits, that:

Whether decisions to seize and retain digital devices ultra vires, unlawful or unconstitutional

(1) The decisions to seize the digital devices were not ultra vires the SFO or the Warrants. On the true construction in the context of Part VIII of the SFO, the words “record” and “document” in ss.179(1), 183(1) and 191(1) were given very wide meanings and were sufficiently wide to cover the digital devices seized. Information and data nowadays were created, transmitted and stored by digital devices in almost all aspects of daily and commercial activities. For the SFC to effectively discharge its investigative functions into dealings or transactions in the securities and futures markets, it was obviously essential that the SFC had the power to seize and retain digital devices containing relevant evidence. (See paras.39-42, 48.)

(2) The seizures of the digital devices were authorised by the Warrants given the SFC did have reasonable cause to believe that the digital devices contained, or were likely to contain, relevant information and they might be required to be produced pursuant to Part VIII of the SFO. There was no error of law in this matter. (See para.50.)

(3) The interference with Xs’ right to privacy occasioned by the SFC’s seizures of the digital devices satisfied the four-step proportionality test and was lawful and constitutional (Hysan Development Co Ltd v Town Planning Board (2016) 19 HKCFAR 372 applied): (See paras.53, 58-59.)

(a) The seizures of the digital devices occurred during the SFC’s investigations and were rationally connected to the advancement of that legitimate aim; (See para.54.)

(b) In the particular circumstances, the SFC’s officers had no reasonable or practicable alternative but to seize the digital devices, and the attendant interference with Xs’ privacy was no more than reasonably necessary; (See para.55.)

(c) As for the element of “fair balance”, the SFC had been amenable to using keyword searches to identify relevant materials in the digital devices and/or viewing the contents with Xs to minimise the chance of personal or other irrelevant information being seen by its officers. Any dispute as to relevance could be brought to the court for determination, with the disputed materials being sealed pending decision. Also pertinent was that the seizures of the digital devices were sanctioned by warrants issued by judicial officers, after careful and independent scrutiny of the sufficiency of the bases for the applications and the scope or width of the Warrants balancing all relevant conflicting interests. (See paras.56-57.)

(4) The challenge to the decisions to retain the digital devices also failed. Given the powers of the SFC under s.193(3) of the SFO to retain any record or document removed under s.193(1) where specified, including where the digital devices might be required for criminal proceedings or proceedings under the SFO, there could be no valid complaint about the continued retention of the digital devices since the decisions to seize them were lawful in the first place. (See paras.60-61.)

Whether s.183(1) notices ultra vires, unlawful or unconstitutional

(5) The s.183(1) notices issued to Xs were not ultra vires, unlawful or unconstitutional. Inter alia, the SFC was empowered under s.183(1) to require Xs to provide means of access to e-mail accounts and digital devices which contained, or were likely to contain, information relevant to its investigations even though such accounts and devices would likely also contain irrelevant personal or private material. The SFC had offered safeguards to protect Xs’ privacy which were a practical and reasonable compromise of the conflicting interests of the SFC and Xs (Reynolds v Commissioner of Police of the Metropolis [1985] QB 881, Apple Daily Ltd v Commissioner of the Independent Commission Against Corruption (No 2) [2000] 1 HKLRD 647 applied). (See paras.65-68, 72.)

(6) As for Xs’ argument that the s.183(1) notices requiring Xs to provide such means of access to large amounts of irrelevant materials was a disproportionate restriction of the right to privacy and unlawful, the four-step proportionality analysis above applied. The SFC was amenable to judicial oversight concerning any dispute on the issue of relevance. The s.183(1) notices were also issued by the SFC in furtherance of the execution of the search warrants issued by judicial officers (Hysan Development Co Ltd v Town Planning Board (2016) 19 HKCFAR 372 applied; CRH Plc, Irish Cement Ltd v Competition and Consumer Protection Commission [2017] IESC 34, Vinci Construction v France (Applications No 63629/10 and 60567/10) considered). (See para.69.)

Whether Warrants unlawful or invalid for want of specificity

(7) The Warrants were not unlawful or invalid for want of specificity. As a matter of principle, what was required to be set out in a search warrant depended on the true construction of the terms of the empowering statute. A distinction was drawn between: (i) “general” warrants, for which the relevant offence(s) should be stated; and (ii) other warrants which authorised named persons to enter and search named premises and where the power of seizure and removal was limited and controlled by the enabling statute, for which there was no requirement to state the relevant offence(s) unless required by the enabling statute (R v Inland Revenue Commissioners, ex p Rossminster Ltd [1980] AC 952, Apple Daily Ltd v Commissioner of the Independent Commission Against Corruption (No 2) [2000] 1 HKLRD 647, Philip KH Wong, Kennedy YH Wong & Co v Commissioner of the Independent Commission Against Corruption (No 2) [2009] 5 HKLRD 379 applied). (See paras.78, 80, 94.)

(8) The Warrants satisfied the requirements under s.191(1), which did not require the warrant to state the relevant offence. The power to issue a warrant under s.191(1) did not depend on a magistrate being satisfied that some offence had been committed, but only that there were reasonable grounds to suspect that there was, or was likely to be, on specified premises “any record or document which may be required to be produced” under Part VIII of the SFO. In addition, the warrant was not required to particularise the records or documents to be searched for, seized and removed. In any event, the Warrants here did specify the grounds on which records and documents might have to be produced; and sufficiently describe the classes or categories of documents covered. (See paras.89-91.)

(The above headnote is taken from HKLRD)

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