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Disproportionality in Asset Recovery: Recent Cases in the UK and Hong Kong

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The Palgrave Handbook of Criminal and Terrorism Financing Law

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Abstract

Proceeds of crime laws are designed to interfere with persons’ property rights and interests for good reasons, but human rights laws prohibit interferences that are disproportionate. Courts in the UK and Hong Kong are starting to develop a body of law to provide guidance in this area. While the UK courts are more advanced than the Hong Kong courts, the guidance that has emerged is still preliminary and judges are far from unanimous on both methodological and substantive points. The chapter argues that judges should adopt a two-step methodological approach that applies the broad and natural meaning of the legislative scheme at the first step and invokes proportionality only at the second stage to address disproportionate outcomes on a case-by-case basis. It further argues that courts should adopt an individualised approach to proportionality based on the application of three principles. Disproportionality in restraint or confiscation cases will normally be seen if the legal measure in question is unable to serve its objective, exceeds its objective in a systemic and detrimental manner, or has effects that are grossly out of proportion to its objective. Courts will be able to achieve a greater degree of coherence if these three principles are properly adapted and followed.

The author thanks Colin King, Peter Alldridge, Clive Walker, Jimmy Gurule and Christopher Michaelson for their helpful comments. The author was counsel for the respondent in HKSAR v Tsang Wai Lun Wayland (2014) 17 HKCFAR 319, discussed in this chapter.

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Notes

  1. 1.

    R v Waya [2012] UKSC 51, [2013] 1 AC 294 [16].

  2. 2.

    Serious Crime Act 2015 (c 9), Sch. 4 para 19, amending s 6(5) of the Proceeds of Crime Act 2002 (c 29), in force from 1 June 2015, see Serious Crime Act 2015 (Commencement No 1) Regulations 2015, reg. 3.

  3. 3.

    A1P1 provides that ‘Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law. The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties’. Article 105 of the Basic Law provides that ‘The Hong Kong Special Administrative Region shall, in accordance with law, protect the right of individuals and legal persons to the acquisition, use, disposal and inheritance of property and their right to compensation for lawful deprivation of their property. Such compensation shall correspond to the real value of the property concerned at the time and shall be freely convertible and paid without undue delay. The ownership of enterprises and the investments from outside the Region shall be protected by law’. In Hysan Development Co Ltd v Town Planning Board (2016) 19 HKCFAR 372, FACV21/2015, the Court of Final Appeal outlined its approach to proportionality where planning restrictions laid down by the Town Planning Board engaged private property rights protected by art. 105.

  4. 4.

    R v May [2008] UKHL 28, [2008] AC 1028; Jennings v Crown Prosecution Service [2008] UKHL 29, [2008] 1 AC 1046; R v Green [2008] UKHL 30, [2008] AC 1053.

  5. 5.

    Aharon Barak, Proportionality: Constitutional Rights and Their Limitations (Cambridge University Press 2012) 146–147.

  6. 6.

    de Freitas v Permanent Secretary of Ministry of Agriculture, Fisheries, Lands and Housing [1998] UKPC 30, [1999] 1 AC 69 [80] (Lord Clyde). Both UK and Hong Kong courts (see Hysan Development (n 3) [135]) have accepted a fourth step in the proportionality analysis that weighs the societal benefits of the encroachment and the detrimental impact on rights to determine if a reasonable balance has been struck.

  7. 7.

    See Eric Allen Engle, ‘The History of the General Principle of Proportionality’ (2012) 10(1) Dartmouth Law Journal 1; Lady Justice Mary Arden, ‘Proportionality: The Way Ahead?’ [2013] 7 Public Law 498; Nicola Lacey, ‘The Metaphor of Proportionality’ (2016) 43(1) Journal of Law and Society 27.

  8. 8.

    Bank Mellat v Her Majesty’s Treasury (No 2) [2013] UKSC 39, [2014] AC 700 [70], citing R v Oakes [1986] 1 SCR 103, [1986] CanLII 46 (SCC).

  9. 9.

    HKSAR v Lam Kwong Wai (2006) 9 HKCFAR 574, FACC4/2005; Hong Kong Bill of Rights Ordinance (Cap 383).

  10. 10.

    In Green (n 4) Lord Bingham noted that ‘challenges to the proportionality of the confiscation regime (as in Phillips v United Kingdom [2001] ECHR 437, [2001] 11 BHRC 280; and R v Rezvi [2002] UKHL 1, [2003] 1 AC 1099) have not succeeded’: [16].

  11. 11.

    Canada (Attorney General) v Bedford [2013] SCC 72, [2013] 3 SCR 1101.

  12. 12.

    Section 7 of the Canadian Charter of Rights and Freedoms provides that ‘Everyone has the right to life, liberty and security of the person and the right not to be deprived thereof except in accordance with the principles of fundamental justice’.

  13. 13.

    Bedford (n 11) [98].

  14. 14.

    Ibid. [101].

  15. 15.

    Ibid. [112] (emphasis in the original).

  16. 16.

    Ibid. [120].

  17. 17.

    Ibid.

  18. 18.

    Ibid. [122].

  19. 19.

    The test would also be different for a confiscation or forfeiture power directed at the instruments of crime, a power that would probably aim more at crime prevention and deterrence.

  20. 20.

    Proceeds of Crime Act 2002, c 29 s 41(3)(a) (POCA); Rules of the High Court (Cap 4, sub leg A), O 117, r 5(1).

  21. 21.

    POCA (n 20) ss 72 and 73; Organized and Serious Crimes Ordinance (Cap 455), s 29 (OSCO).

  22. 22.

    POCA (n 20) s 49(2); OSCO (n 21) s 17(3).

  23. 23.

    Waya (n 1) [21], quoting from para 4 of the notes to POCA (n 20), and para 22.

  24. 24.

    Waya (n 1) [17]–[18].

  25. 25.

    Ibid. [36]–[37].

  26. 26.

    Paulet v United Kingdom (2015) 61 EHRR 39 [65].

  27. 27.

    POCA (n 20) s 7(2); OSCO (n 21) s 11(3).

  28. 28.

    POCA (n 20).

  29. 29.

    Ibid. ss 6–9.

  30. 30.

    May (n 4) [15] and [48]; Jennings (n 4) [13] and [14].

  31. 31.

    May (n 4) [48].

  32. 32.

    Ibid.

  33. 33.

    Waya (n 1) [108].

  34. 34.

    Peter Alldridge, ‘Proceeds of Crime Law Since 2003—Two Key Areas’ [2014] Criminal Law Review 171, 177.

  35. 35.

    Human Rights Act 1998, s 3(1); Lam Kwong Wai (n 9) [71]–[73].

  36. 36.

    Waya (n 1) [15].

  37. 37.

    R v Allpress [2009] EWCA Crim 8, [2009] 2 Cr App Rep (S) 58.

  38. 38.

    Ibid. [153].

  39. 39.

    Janet Ulph, ‘Confiscation Orders, Human Rights, and Penal Measures’ (2010) 126(2) Law Quarterly Review 251, 259. But Ulph goes on to argue that the approach is ‘defensible when one considers common law principles’.

  40. 40.

    Waya (n 1) [53], [55], [56], [58] and [70].

  41. 41.

    Ibid. [92], [106] and [109].

  42. 42.

    Paulet (n 26) [65].

  43. 43.

    R v Ahmad [2014] UKSC 36, [2015] 1 AC 299; R v Harvey [2015] UKSC 73, [2016] 2 WLR 37.

  44. 44.

    Ahmad (n 43) [62].

  45. 45.

    Ibid. [64].

  46. 46.

    Ibid. [86].

  47. 47.

    Ibid. [96].

  48. 48.

    Ibid. [97].

  49. 49.

    Ibid.

  50. 50.

    Harvey (n 43) [30].

  51. 51.

    Ibid. [26].

  52. 52.

    Ibid. [31].

  53. 53.

    Ibid. [69].

  54. 54.

    Ibid. [71].

  55. 55.

    Drug Trafficking (Recovery of Proceeds) Ordinance (Cap 405); OSCO (n 21) (Cap 455).

  56. 56.

    See A1P1 (n 3).

  57. 57.

    See Lam Kwong Wai (n 9); HKSAR v Hung Chan Wa (2006) 9 HKCFAR 614, FACC1/2006.

  58. 58.

    Securities and Futures Commission v C, unreported, HCMP727/2008, 22 October 2008, CFI.

  59. 59.

    Ibid. [103].

  60. 60.

    Ibid. [111].

  61. 61.

    Ibid. [100].

  62. 62.

    Ibid. [112].

  63. 63.

    Ibid. [114].

  64. 64.

    Ibid. [105]–[110].

  65. 65.

    Securities and Futures Commission v C [2009] 4 HKLRD 315 (CA), CACV 319/2008.

  66. 66.

    Interush Ltd v The Commissioner of Police [2015] 4 HKLRD 706 (CFI), HCAL167/2014.

  67. 67.

    OSCO (n 21) ss 25 and 25A. On the meaning of ‘having reasonable grounds to believe’, see HKSAR v Pang Hung Fai (2014) 17 HKCFAR 778, FACC8/2013; HKSAR v Yeung Ka Sing, Carson (2016) 19 HKCFAR 279, FACC5/2015.

  68. 68.

    OSCO (n 21) s 25A(2)(a).

  69. 69.

    Interush Ltd (n 66) [52].

  70. 70.

    Basic Law (n 3) art 105.

  71. 71.

    Chief Officer, Customs & Excise, Immigration & Nationality Service v Garnet Investments Ltd, unreported judgment 19/2011, 1 August 2011, Guernsey Court of Appeal, leave to appeal to the Privy Council refused 20 November 2012.

  72. 72.

    Ibid. [100].

  73. 73.

    HKSAR v Tsang Wai Lun Wayland (2014) 17 HKCFAR 319, FACC4-5-6/2013.

  74. 74.

    Ibid. [83].

  75. 75.

    Ibid. [67].

  76. 76.

    Ibid. [68].

  77. 77.

    Ibid. [44].

  78. 78.

    Ibid. [69(f)].

  79. 79.

    See Allpress (n 37) [151]–[154]; R v Sharma [2006] EWCA Crim 16, [2006] 2 Cr App Rep (S) 416, approved of in May (n 4) [34]; R v Frost [2009] EWCA Crim 1737, [2010] 1 Cr App Rep (S) 73; R v Clark [2011] EWCA Crim 2516, [2011] 2 Cr App Rep (S) 55; R v Warwick [2013] NICA 13.

  80. 80.

    Tsang Wai Lun Wayland (n 73) [79].

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  1. Faculty of Law, The University of Hong Kong, Hong Kong, China

    Simon N. M. Young

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  1. University of Sussex, Falmer, United Kingdom

    Colin King

  2. University of Leeds, Leeds, United Kingdom

    Clive Walker

  3. Notre Dame Law School, Notre Dame, IN, USA

    Jimmy Gurulé

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Young, S.N.M. (2018). Disproportionality in Asset Recovery: Recent Cases in the UK and Hong Kong. In: King, C., Walker, C., Gurulé, J. (eds) The Palgrave Handbook of Criminal and Terrorism Financing Law. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-64498-1_20

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