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HCMP 1084/2016
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IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF FIRST INSTANCE
MISCELLANEOUS PROCEEDINGS NO. 1084 OF 2016

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IN THE MATTER of the application

of Mr Jonathan Michael Caplan Q.C.
to be approved admitted and called to
practise as a Barrister of the High
Court of the Hong Kong Special
Administrative Region

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and
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IN THE MATTER of the Legal

Practitioners Ordinance, Cap. 159.
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Before : Hon Poon JA in Court

(Sitting as an additional Judge of the Court of First Instance)

Date of Hearing : 10 June 2016

Dates of Written Submissions : 16 June 2016, 27 June 2016, 15 July 2016

and 20 July 2016

Date of Judgment : 5 August 2016

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JUDGMENT
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Introduction

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In DCCC 698/2015, Mr Martin Joseph Matthews is charged

with one count of conspiracy to deal with property known or believed to

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represent proceeds of an indictable offence, contrary to section 25(1) and

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(3) of the Organized and Serious Crimes Ordinance, Cap 455 (OSCO)
and sections 159A and 159C of the Crimes Ordinance, Cap 200 (the

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with 20 days reserved.

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SC and Mr Derek Chan, both of whom have substantial experience in

money laundering cases. But he wishes to engage Mr Jonathan Caplan,

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QC, an eminent silk and specialist in money laundering cases, to lead his
legal team at trial. Mr Caplan is no stranger to this jurisdiction, having
previously appeared in some of the major money laundering cases in

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Hong Kong. Very recently, he appeared for the prosecution in HKSAR v

Yeung Ka Sing, Carson, FACC 5 & 6/2015, in which the Court of Final
handed down its judgment on 11 July 2016.
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Mr Caplan therefore seeks admission as a barrister of the

High Court of Hong Kong pursuant to section 27 of the Legal

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and appearing on behalf of Mr Matthews at the trial of DCCC 698/2015,

and rendering advice in conferences in Hong Kong. His application is

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Secretary for Justice.

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Mr Matthews is currently represented by Mr Peter Duncan,

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however opposed by both the Hong Kong Bar Association and the
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Charge). The trial is scheduled to commence on 19 September 2016

Practitioners Ordinance, Cap 159 for the purposes of advising, preparing

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At the hearing before me, Mr Derek Chan appeared for Mr

Caplan, Ms Po Wing Kay for the Hong Kong Bar Association and Mr
Jonathan Kwan for the Secretary for Justice.

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The prosecution case in DCCC 698/2015

The particulars of the Charge allege that between 8 August

2011 and 6 November 2013, Mr Matthews in Hong Kong conspired

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believe that property, namely, a total sum of HKI$696,057,117.34, in

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In the Junior Counsels Certificate dated 29 March 2016 in

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support of the application, Mr Chan outlined the prosecution case against

Mr Matthews as follows:
(4)
At the material time Mr Matthews was the sole
director of a Hong Kong company called Interush Ltd.
Interush Ltd is the Hong Kong arm of a wider Interush Group
of companies which operated a similar business model in
USA, Taiwan, Hong Kong and Singapore (Interush
Group).
(5)
At the material time the business of Interush Group
(including Interush Ltd) included the development, marketing
and support of several cloud based online applications. The
software applications included various web based
communication and business tools. These applications were
combined into a suite call IRIS suite and were sold as a
package.

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of indictable offence, to deal with the said property.

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together with persons unknown, knowing or having reasonable grounds to

whole or in part directly or indirectly represented any persons proceeds

(6)
In order to subscribed for and thereby use the IRIS
suite, a user first needed to register as an affiliate, and a oneoff joining fee of HK$390 had to be paid. Thereafter an
affiliate would need to pay a monthly fee of HK$800 per
month for use of the IRIS Suite for that month.
(7)
Each member, after having subscribed to a set of IRIS
Suite, would then be entitled to earn commission bonuses
subject to a complex formula. The broad idea of the formula
is that old affiliates (1st tier) are entitled to bonuses (calculated

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on a per month basis) upon continuing subscription by new

affiliates (2nd tier) recruited by the old affiliate members. The
new affiliate (2nd tier) are also entitled to commission
bonuses from further new affiliates (3rd tier) recruited by them
and who continuously subscribed to the IRIS Suite services.
The old 1st tier affiliates would be entitled to bonuses arising
from the continuing subscription of 2nd & 3rd tier affiliates and
so on, up to a maximum of 7 tiers. The maximum amount of
bonuses that a single affiliate can earn per month is capped at
HK$234,600.
(8)
In short, the commission bonuses amount to a multilevel marketing scheme whereby existing subscribers to the
IRIS suite were encouraged by financial incentive to actively
market the IRIS suite to others. The Prosecution stated in its
Summary of Facts that the amount particularized in the charge
($696,057,117.34) represents the total amount of subscription
($800 per month one IRIS suite) and joining fees (one-off
$390) from around 49,000 members received by Interush Ltd
over the charged period of slightly over two years.
(9)
The prosecution allege that the IRIS suite and Interush
Ltds incentive based marketing scheme was actively
promoted in the Mainland. Multi-level marketing schemes are
completely prohibited in the Mainland except where specific
and limited licenses had been granted by the Central
Government. It is also alleged that those who joined from the
Mainland were motivated by the opportunity for bonuses
rather than the use of the IRIS suite.
(10) The prosecution evidence also reveals that several
former IRIS suite subscribers, when attempting to recruit
others in the Mainland, were alleged to have made false
representations about the scale and type of bonuses to which
new affiliates may be entitled. There will be a factual dispute
at trial as to what was said and by whom, but it is not expected
that these relatively minor factual disputes about
representations made to some prospective members out of
49,000 odd members will have any substantial impact on the
legality of the business as a whole.
(11) To prove the illegality of the multi-level marketing
scheme in the Mainland as a whole, the prosecution seeks to

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rely on the expert opinion of Professional GU Minkang of the

Law Department of the City University of Hong Kong, who
opined that the activities of Interush Ltd breached Mainland
criminal law prohibiting multi-level marketing schemes.

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prosecution is unable to identify the underlying conduct that generated

the proceeds in question the prosecution evidence itself more than
in the Mainland. This leads me to his principal argument in support of
the application.

Mr Chan submitted that the scope of the law in the Mainland

relating to pyramid selling is wider in scope than the Hong Kong statue,

without the requisite licence are completely prohibited; whereas under the

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selling activities are not prohibited.

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Mr Chan referred to the fact that Mr Matthews was first

arrested on suspicion of contravention of the PSPO. That allegation was

however not pursued when the Charge was laid against Mr Matthews.
On 11 May 2015, Messrs Haldanes, solicitors acting for Mr Matthews,

Briefly, under the Mainland law, all multi-level marketing activities

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Mr Chans principal argument

PSPO, legitimate multi-level marketing schemes involving genuine

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Mr Chan emphasized that it is not a case where the

namely, the Pyramid Schemes Prohibition Ordinance, Cap 617 (PSPO).

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sufficiently established the underlying business activity, which took place

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sought particularization of the Charge. On 28 May 2015, the prosecution

replied :

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the underlying indictable offence in the [Charge]

involved illegal pyramid selling activities of Interush in the
Mainland.

Mr Chan further referred to the fact that at present, the

prosecution has not alleged (other than at the initial arrest stage) that the
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pyramid activities, that is, the PSPO, or would so violate had the relevant

were actual services provided by Interush to its members and the

members genuinely received the product that they paid for. Mr Chan
consistently refrained from alleging that the activities of Interush
contravened the PSPO in Hong Kong.
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In the circumstances, Mr Chan submitted that the

the Charge. It gives rise to an important issue, viz :

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Mr Chan submitted that the Issue engages a different aspect

of the money laundering offence that courts have touched upon but never
analyzed in detail. In this connection, he referred to section 25(4) of

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Can a person be guilty of dealing with proceeds of

indictable offence contrary to section 25(1) of OSCO on
basis that the underlying activity which generated
proceeds contravened foreign criminal law but not
corresponding Hong Kong provisions? (the Issue)

prosecution is deliberately attempting to use the wider Mainland

submitted that this probably explained why the prosecution has

on 14 March 2016 where the prosecution confirmed to the court that there

prohibition against all multi-level marketing activities to form the basis of

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business activities of Intersuh violated the law in Hong Kong relating to

conduct occurred in Hong Kong. He also referred to the pre-trial review

OSCO and three authorities, that is, Lok Kar Wing Kevin & Ors v HKSAR

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[1999] 4 HKC 796, HKSAR v Tam Hung, CACC 127/2010, unreported,

27 July 2011 and HKSAR v Chan Wai Ming, CACC 208/2012,

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Mr Chan further submitted that the Issue also raises a

section 25(1) of OSCO could then be used to import Mainland criminal

law into Hong Kong by capturing the dealing with of proceeds in Hong
prosecutions position, if upheld, would have profound consequences on
whether Mainland criminal law can indirectly be enforced in Hong
84 of the Basic Law.

The ultimate test for admission of overseas counsel is that of

public interest. It is a multi-faceted question to be determined by the

specific circumstances of the particular application before the court. The
summary in Re Perry QC [2016] 2 HKLRD 647, per McWalters JA at
[24]. I shall respectfully adopt his Lordships very useful and succinct
summary without repetition here. Applying the principles here, I am not

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persuaded by Mr Chans argument.

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principles guiding the court in applying the test are well settled : see the

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Kong through section 25(1) of OSCO in contravention of Articles 18 and

Kong of activities that the Mainland law characterizes as criminal. The

Discussion

significant constitution dimension because if the prosecution is correct,

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unreported, 6 August 2013, which he said are inconsistent.

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Assuming that the prosecution is going to prosecute the

Charge in the way as outlined by Mr Chan, the Issue is to answered by

section 25(4) of OSCO, which reads :

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In this section, references to an indictable offence include

a reference to conduct which would constitute an indictable
offence if it had occurred in Hong Kong.

As recently explained by the Court of Appeal in HKSAR v

Yang Sigai [2015] 5 HKLRD 230 (of which I was a member), per Pang J
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[Section 25(4) of OSCO] points out that what constitutes an

indictable offence is to be determined by reference to Hong
Kong law. This is very easy to understand. Law enforcement
in Hong Kong should not be subject to the standards adopted
by foreign countries/territories in defining violation of the
law; that is a matter of principle

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For my part, that is a complete answer to the Issue.

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Mr Chans reference to the three authorities which he

described as inconsistent does not assist him. Without going into the
details of the cases, even assuming that they are inconsistent as

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contended, I think Mr Duncan leading Mr Chan will have no difficulty in

providing valuable assistance to the trial judge in the District Court to
resolve the inconsistencies meaningfully, especially in light of HKSAR v

Since our courts will apply Hong Kong law and Hong Kong

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law only when section 25(4) of the OSCO is engaged, as is the case for
the Charge, the so called constitutional importance postulated by Mr
Chan simply does not arise.

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Yang Sigai.

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(as Pang JA then was) at [74] :

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With Mr Chans principal argument dismantled, the

circumstances of the present application point overwhelmingly to

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be. They include the need to maintain a strong and independent local

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have already been engaged; the fact that the application is made in respect

clearly not in the public interest to allow the application.

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Ms Po asked for indemnity costs on the basis that as the

No applicant could reasonably view the application as having a

reasonable prospect of success, she submitted.

Having considered the

would suffice. I therefore order the applicant to pay the Hong Kong Bar
Association and the Secretary for Justice their costs on a party and party

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For the above reasons, I dismiss the application with costs.

basis if not agreed.

Dispositions

matter in the round, I disagree with Ms Po. I think a normal costs order
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application is wholly lacking in merits it should never have been made.

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Matthews to engage Mr Caplan on an advisory basis if he so wishes. It is

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of the law; the fact that very experienced local senior and junior counsel
of a District Court trial; and the fact that it is always open to Mr

disallowing admission of overseas counsel, however eminent he might

Bar; the need to further develop the expertise of the local Bar in this area

(Jeremy Poon)
Justice of Appeal

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Mr Chan C. L., Derek, instructed by Haldanes, for the applicant

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Ms Po Wing Kay, instructed by Kwok, Ng & Chan, for the Hong Kong
Bar Association
Mr Jonathan Kwan, instructed by Department of Justice, for Secretary for
Justice

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