Court of Appeal allows appeal in a money laundering case and discharges a restraint order

Wayne Walsh SC leading Fergus Tam, instructed by Haldanes, acted for the successful appellants.

On 13 November 2019, the Secretary for Justice obtained a restraint order against the appellants.

On 8 January 2025, the Court of Appeal (Kwan VP, Zervos JA, Barnes J) allowed the appellants’ appeal and discharged the restraint order.

As to Ground 1 regarding “clean money”, Zervos JA held that the particulars of the specified offence concerned a different criminal offence from the one that formed the basis of the restraint order. The basis of the restraint order was limited to the evasion of the tax liability on dividend payments for the income tax years of 2011 and 2012. However, that was different from the specified offence (in Order 117, rule 4(2)(b)(i) of the Rules of the High Court (Cap. 4A)) laid against the 1st appellant in the restraint order application, which was for money laundering between 2008 and 2013.

As to Ground 2 regarding “absence of benefit”, Zervos JA held that the purported predicate offence (i.e. dividend payments) had nothing to do with the money laundering offence specified in the charge. Further, it cannot be shown that the 1st appellant derived a benefit from the purported predicate offence, because the proceeds of crime were the tax evaded, which had been paid.

Ground 3 on the value of tax evaded only arises if, contrary to Ground 2, the 1st appellant obtained a benefit from the specified offence.

The appellants submitted that where funds are paid through bank accounts in a tax evasion scheme, the “benefit” obtained is not the “cost of committing the crime” (in the present case, the total value of the funds passing through the bank accounts) but the amount of tax which ought to have been paid on those funds. Zervos JA held that the tainted payment or other reward is the portion of the money that represents the tax liability to the relevant authorities in South Korea.

The judgments of J Chan J ([2022] HKCFI 929 and [2023] HKCFI 122) are not open to public. The judgment of the Court of Appeal granting leave to appeal is [2023] HKCA 1021, [2023] 4 HKLRD 778 and on the substantive appeal is [2025] HKCA 65.