Republic v Kwok Hou Ng [2019] KIHC 69; Miscellaneous Application 64 of 2019 (16 August 2019)

IN THE HIGH COURT OF KIRIBATI 2019

MISCELLANEOUS APPLICATION NOS. 9 OF 2019 AND 64 OF 2019
(ARISING FROM HIGH COURT CRIMINAL CASE NO. 30 OF 2018)

[THE REPUBLIC APPLICANT
[
BETWEEN [AND
[
[KWOK HOU NG RESPONDENT

Before: The Hon Chief Justice Sir John Muria

24 June 2019

Ms Taoing Taoaba for Applicant
Ms Pauline Beiatau for Respondent

JUDGMENT

Muria, CJ: There are two applications before this Court and which will be dealt with together. The first application, Miscellaneous Application 64/19, is by the Republic (Applicant/Respondent) seeking an order to extend the Order made by the Court on 7 June 2018 which ordered the detention of the Telegraphic Transfer (TT) of $878,900.00 and cash deposit of $600,000.00 into Kwok-Hou Ng (respondent) business account No. 571808 in the name: Fair Price at the ANZ Bank (Kiribati). For ease of reference, I shall treat the Republic as “the applicant” throughout this judgment.

2. The other application, Miscellaneous Application 9/19, is by the applicant/respondent, Kwok-Hou Ng, to discharge or lift the Order made on
7 June 2018 and to have the money ($878,900.00 and $600,000.00) held in the ANZ Bank (Kiribati) paid to Kwok Hou Ng. For ease of reference, I shall treat
Kwok Hou Ng as “the respondent” throughout this judgment.

Order of 7 June 2018

3. Upon application by the Republic for an Order of detention of the respondent’s money in the ANZ Bank (Kiribati) the Court made the following order on 7 June 2018:

“The telegraphic transfer of $878,900.76 and the cash deposit of $600,000.00 which are currently seized and kept with the ANZ Bank (Kiribati) for being reasonably believed to invoice the suspicious transactions, are to be continued to be detained with the ANZ Bank (Kiribati) until further orders are made”.

4. The basis for seeking the order of 7 June 2018 was set out in the affidavit of Senior Police Constable Bunaua Abaua, sworn to on 7 June 2018. A subsequent order was also sought by the Republic to freeze another ANZ Bank Account of the respondent held at Kiritimati Island ANZ Bank Branch, A/c No: 855955 in the name of Fair Price. The order sought when the respondent was about to make a TT in the sum of $199,759.17 from the respondent’s account in Kiritimati Island to an account in Brisbane, Australia.

5. Should the order of 7 June 2018 be further extended?

The reason given for seeking extension of the order is basically to allow police further investigation into the activities of the respondent regarding the use of the money in question. According to the affidavit of Bunaua Abaua, following the Order of 7 June 2018, contacts were made to the Pacific Transnational Crime Centre in Samoa and the Australian Federal Police (AFP) in Sydney. Enquiries were made as to the authenticity of the recipient company of the funds in Australia.

6. Following the investigation by the AFP, it is said that the recipient company in Australia, Nak Tech Trading, was only registered as a company just two days after the reported suspicious transactions in ANZ Bank (Kiribati), This Court has not been shown any evidence of the existence of Nak Tech Trading and its purported Registration in Australia. One would have expected the prosecution to produce evidence to this effect to support their assertion that investigation is still going and the need to continue detaining the respondent’s funds in the bank. That has not been done, and so the Court can only assume that what was stated in the affidavit were mere assertion.

7. The Republic relied on section 117(3) of the Proceeds of Crime Act 2003 (“POC Act”) to further extend the Order made on 7 June 2018. Sections 116 and 117 authorise seizure and detention of suspicious currency. Those two sections provide as follows:

“116. An authorized officer may seize and detain any currency that is brought into or taken out of Kiribati if:

(a) the amount is not less than the equivalent of $5,000 (or a higher amount prescribed by regulation for this paragraph); and

(b) there are reasonable grounds for suspecting that it is:

• (i) derived from a serious offence; or
• (ii) intended by any person for use in the commission of a serious offence.
  

117.(1) Currency detained under section 116 may not be detained for more than 24 hours after it is seized.

(2) However, the Court may order its continued detention for a period not exceeding 3 months from the day it is seized, upon being satisfied that:

(a) there are reasonable grounds for the suspicion mentioned in section 107(1)(b); and

(b) its continued detention is justified while:

• (i) Its origin or derivation is further investigated; or
• (ii) Consideration is given to the Institution (in Kiribati or elsewhere) of criminal proceedings against a person for an offence with which the currency is connected.
  

(3) The court may subsequently order the continued detention of the currency if satisfied of the matters mentioned in subsections (2)(a) and (b), but the total period of detention may not exceed 2 years from the date of the first order made under subsection (2)”.

8. The Court, however, has power under section 118 to order release of the detained currency in whole or in part if the continued detention is no longer justified. Section 118 states as follows:

“(1) Currency detained under section 117 may be released in whole or in part to the person for whom it was brought into, or taken out of, Kiribati:

(a) By order of a court that its continued detention is no longer justified, upon application by or for that person and after considering any views of the Attorney-General to the contrary; or

(b) By an authorised officer, if the officer is satisfied that its continued detention is no longer justified.

(2) However, currency detained under section 117 shall not be released if:

(a) an application is made for:

(i) a confiscation order against the whole or any part of the currency; or

(ii) a restraining order against it pending determination of its liability to confiscation; or

(iii) The registration of a foreign confiscation order or foreign restraining order against it; or

(b) proceedings are underway in Kiribati or elsewhere against a person for an offence with which the currency is connected;

until the proceedings relating to the relevant application, or the proceedings for the offence, have been concluded.

9. The onus is on the Republic to justify the continued detention of the currency. If no reasonable grounds is shown in the present case to justify continuing detention of the currency, and as the respondent has applied for its release, the Court is entitled to order the discharge of the Order and release the detained currency to the respondent.

10. Speaking of similar provisions in the Canadian Criminal Procedure and Practice regarding search and seizure of property, the Supreme Court of the British Columbia stated in R –v- Mann (2012) BCSC 1247 that these provisions intended to provide “a predictable, fair, efficient and orderly procedure for detention, retention, return and forfeiture of seized items, consistent with the interest of justice”.

11. In the present case, the Republic applied for and was granted the detention Order on 7 June 2018 which was further extended on 27 March 2019. The Court accepts that in a case such as this, investigation is carried out both within and outside the country and can present a challenge to investigating officers. But there will come a time when the detention of the applicant’s money can no longer be allowed to continue on end. This is why the law puts time limits to the detention of suspected currency.

12. It must also be pointed out in a case such as this, that there are constitutional parametres to observe when detaining a person’s assets pending investigation or trial. These parametres are enshrined in the Constitution of Kiribati to protect persons’ rights to their property, as well as to prevent the misuse of power by the State. It is the undoubted duty of the State to control and prevent crime and to curb criminal activities, but that must be done within legally permissible limits as recognized in the Australian case R –v- N [2015]
QSC 9.

13. In the present case, the Republic has to satisfy the Court that the order made on 7 June 2018 and extended on 27 March 2019 ought to be extended further. On the other hand, the respondent, having applied for the discharge of the Order and release of the detained currency, bears the burden of establishing that the continued detention of the currency is no longer justified. The respondent must also demonstrate by evidence that the suspicious currency has no connection with any unlawful conduct on the part of the respondent.

Whether a further detention of the currency justified

14. There is no question in this case that the respondent’s money has been lawfully detained. By virtue of the order of this Court made on 7 June 2018 and further extended on 27 March 2019, that detention was lawful. This is in contrast with the case of Republic –v- Jingui James Lu (26 July 2019) High Court of Kiribati Civil Case No. 29 of 2019 where no order has ever been made for the continued detention of the applicant’s money after the initial 24 hours of its detention as required by section 117(2) and (3) of POC Act 2003.

15. In Jingui James Lu, the Court ordered the applicant’s money be released since the continued detention of the money was unlawful since after the first 24 hours of its detention. In the present case, the Republic only needs to justify to the Court that the order for the detention of the currency ought to be further extended.

16. Following the extension granted on 27 March 2019, the Republic has now filed charges against the respondent. The Attorney General filed the charges against the respondent in the High Court on 27 June 2019.

17. The Republic brought two (2) charges against the respondent under the Proceeds of Crime Act 2003. He faces two counts of possession of property suspected of being proceeds of crime contrary to section 13(1) of the Proceeds of Crime Act 2003.

18. This case is not concerned with the criminal charges brought against the respondent. The criminal charges will be dealt with under criminal proceedings. We are concerned only with the detention of the currency in the present case.

19. In support of the Republic’s application for further extension of the detention of the respondent’s money, Ms Beiatau also relied on the affidavit of Tekurabo Aomoro who was employed in the Ministry of Finance as an auditor and also assisting in the investigation into the present case. He deposed to his involvement in analyzing the respondent’s financial statements as contained in his tax returns for the years 2017 and 2018. Tekurabo Aomoro stated that the work on analyzing the respondent’s financial statements for the two years are yet to be completed.

20. In this regard, I note relevantly paragraphs 5 to 11 of the affidavit of Tekurabo Aomoro, the contents of which are as follows:

“5. Regarding this case which involves one businessman,
Mr Kwok Hou Ng, I and my team are currently analyzing all bank statements of this businessman. The analysis involves comparing of his financial statements he had provided to us for his tax return.

6. Analysing financial records really need time to do. I and team started analyzing these documents since early May 2019 for the periods of 2018 and 2017. From our analysis although we have not yet finished analyzing these documents for the two years, we noticed a lot of suspicious transactions undertaken by Hou.
   
7. The amount of money sent to overseas account were done in very limited and short period of time. For instance, there was one account which involves big amount of money which usually not less than $90,000 to the same person. This it was done almost a week with great amount of money.
   
8. As a tax officer, we expected that these lots of money was for ordering of goods however, we found out that we could not find anything to justify these TT.
   
9. During our analysis we also work with custom documents. The documents again show us that there were no supplies sent to Kiribati from the person named in the account. The point is Hou’s TT has nothing to say what goods or things these monies were sent for.
   
10. Also the financial information gathered from the bank in the two years do not match with the financial information Hou sent us in the same years.
    
11. After finding some of these suspicious transactions, we want to anlayse Hou’s further financial documents in the years before 2017 and 2018. I wish to pray to this Honourable Court to give us more time to do this analysis.
    

21. The above depositions made in the affidavit of Tekurabo Aomoro show the classical reasons to support seeking orders for the continued detention of seized money by police up to a maximum period of two years. It is essentially to help police carry out their investigation and the law permits it up to a maximum period of two years as provided for in section 117(3) of the POC Act.

22. The conduct of the respondent, deposed to in Aomoro’s affidavit, of transacting in large sums of money between very short periods with no supporting documents to an account overseas do raise questions which demand answers from the respondent. Such conduct on the part of the respondent may well justify an order for the continued detention of the respondent’s seized money. See The Director of Assets Recovery Agency and Others –v- Jeffrey David Green and Others [2005] EWHC 3168 (Admin).

23. The respondent, on the other hand, has applied to have the Order of
7 June 2018 as extended, discharged and to have his money released to him. In the light of the evidence before the Court, especially those from
Tekurabo Aomoro and Bunaua Abaua, the burden is on the respondent to justify the release of his money by showing that the conditions justifying the continued detention of his money by the police no longer exists. Put another way, he has to have answers to the questions raised by his suspicious conduct regarding his financial transactions.

24. In his affidavit of 10 June 2019, the respondent deposed to in paragraphs 8 to 12 as follows:

“8. I have tried to assist the police in its investigation on what they wanted from me, yet nothing had been done from their side or from the Republic.

9. The detaining of my money with the Bank had caused a lot of problems to my business as it is now really difficult for me to meet my supplier’s request for payment.
   
10. Not only that but the ANZ Bank have closed my account and refused to reopen it until this case is settled.
    
11. I believe that one year period given to the Republic to collect evidence on my case is sufficient for them. Having failed to come up with sufficient evidence I am now applying for the money detained to be released to me.
    
12. I have a big business in Tarawa and as I told the court before all those monies were proceeds from that business. I believe no one can deny that my business is big enough to have been able to derive such a profit which the Republic is now calling suspicious”.
    

25. I think the Court can accept that the detention of the respondent’s money has caused adverse financial problems to him. The case of Commissioner of Police –v- Burgess [2015] NZHC recognizes that restraining order placed over a person’s property may cause inconvenience and disadvantage to those having an interest in the property.

26. Acknowledging the effect of a restraining order over a seized property, His Honour Andrews J, in Commissioner of Police –v- Burgess, however went on to state as follows:

“I accept that a restraining order can be highly prejudicial to those affected by it. That effect is no doubt the reason why the making and extension of restraining orders is subject to judicial oversight; as in this case, the restraining orders have been subject to judicial scrutiny on each occasion they have been extended for a further one year period”.

27. It is also significant to note that the respondent stated in his affidavit that he found it difficult to meet payments for goods ordered from his suppliers. However, no details have been given of the suppliers nor are there any details of the goods ordered. The affidavit evidence of Tekurabo Aomoro points these omissions out. Such omissions do lend, in my view, further support to the suspicious conduct of the respondent as raised in the affidavit of
Tekurabo Aomoro.

28. I have considered the affidavit evidence of the respondent and I form the view that it is far from sufficient to show any justification for the release of his money at this stage. On the other hand, the affidavit evidence of
Tekurabo Aomoro and Bunaua Abaua provide a strong basis for the further continued detention of the respondent’s money.

29. Further, criminal charges have now been filed against the respondent which adds support to the need to have the restraining order continued. This is also permitted by section 118(2)(b) of the POC Act 2003. The case of Commissioner of Police –v- Malcolm [2013] NZHC 132 supports the proposition that a further extension of a restraining order in a case such as the present one, may be necessary until the merits of the case is heard.

30. In the circumstances of the present case, I am satisfied that there is justification for a further extension of the order made on 7 June 2018 for the continued detention of the respondent’s money kept at the ANZ Bank (Kiribati). The Republic’s application is granted. The extension of the order made on
7 June 2018 is granted until the merits of the criminal charges brought against the respondent are heard and determined.

31. The respondent’s application for discharge of the order of 7 June 2018 and the release of the respondent’s money is dismissed.

ORDER: 1. The Order of the Court dated 7 June 2018 is to continue until the criminal charges against the respondent, Kwok Hou Ng is heard and disposed of.

2. 2. The respondent’s application to discharge the Order of
   7 June 2018 and release the respondent’s detained money is dismissed.
   

Dated the 16^th day of August 2019

SIR JOHN MURIA
Chief Justice