Onshine Securities Ltd. v. The Stock Exchange of Hong Kong Ltd.
Read the full judgment text of CACV 195/1993 on BabelCite. This Court of Appeal judgment was delivered on 7 June 1994 before Power VP, Mortimer JA, Godfrey JA.
Administrative law – judicial review – disciplinary proceedings of domestic body – Stock Exchange of Hong Kong – alternative remedy – right of appeal to Disciplinary Appeals Committee – whether exceptional circumstances justify immediate court intervention – self-regulation – apparent bias – refusal of legal representation – breach of natural justice – adjournment pending related civil proceedings. Onshine Securities Limited, a member of the Stock Exchange, was found guilty by the Disciplinary Committee on four charges under Rule 601 of the Exchange Rules relating to the conduct of three runners including Yeung Shu Hung who misappropriated shares from customers – held: that the Disciplinary Committee acted unfairly in refusing legal representation and in other respects contrary to natural justice – assumed for purposes of judgment. Whether exceptional circumstances existed to justify immediate judicial review despite right of appeal to Disciplinary Appeals Committee (D.A.C.) – held: no, exceptional circumstances required. Whether disciplinary structure tainted by apparent bias because members of Compliance, Disciplinary and D.A.C. committees all sat on the Stock Exchange Council – held: no apparent bias established. Whether Disciplinary Committee erred in refusing to adjourn pending HCA 4343/91 – held: no, Stock Exchange entitled to proceed swiftly in public interest. Onshine did not exhaust its alternative domestic remedy by appealing to the D.A.C. before seeking judicial review; the court will not second-guess the appellate tribunal in the absence of exceptional circumstances requiring immediate intervention, following Calvin v Carr and ex parte Calveley. Where a domestic body's appellate procedure may or may not ensure justice, the aggrieved party should generally wait and see what the appellate tribunal decides; if it quashes the lower decision, that is an end of the matter; if it affirms, judicial review may then be sought on the basis that the procedure as a whole was unfair. Appeal allowed; Onshine's application for judicial review refused.
Legal issues: Whether exceptional circumstances justified immediate judicial review despite an available alternative domestic remedy · Whether the Stock Exchange disciplinary structure was tainted by apparent bias · Whether the Disciplinary Committee acted unfairly in refusing to adjourn the disciplinary proceedings
Outcome: Appeal allowed; the decision of Mayo J. granting judicial review is set aside and Onshine's application for judicial review is refused
Cited by 3 cases
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CACV000195/1993 IN THE COURT OF APPEAL 1993. No.195 HEADNOTE Onshine was found guilty by the Disciplinary Committee of the Stock Exchange of offences against the Stock Exchange Rules. It did not seek redress from the Disciplinary appeals Committee but sought Judicial Review on the grounds that it had, inter alia, been denied legal representation and that the hearing had contravened the Rules of Natural Justice. The hearing judge granted the application being satisfied that exceptional circumstances existed. Held: The court acted upon the basis that there was impropriety at the hearing that where in the case of a domestic body like the Stock Exchange the appellate procedure may, or may not, ensure justice for the party. aggrieved. Generally speaking the court should not be asked to second guess the appellate tribunal's decision. In the absence of exceptional circumstances requiring immediate intervention by the court the aggrieved party should be told to wait and see what happens before the appellate tribunal. IN THE COURT OF APPEAL 1993, No.195 ________________________________
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________________________________ Coram: Hon. Power, V.-P., Mortimer and Godfrey, JJ.A. Dates of hearing: 1, 2, 3 and 7 June 1994 Date of judgement: 7 June 1994 _________________ J U D G M E N T _________________ Power, V.-P.: 1. This is the judgment of the Court. 2. Onshine Securities Limited ("Onshine") the applicant, is a firm of stock brokers against whom the Stock Exchange of Hong Kong Limited ("the Stock Exchange") brought the following disciplinary proceedings:
IN RESPECT OF THE ABOVE, THE COMPLIANCE DIVISION PREFERS THE FOLLOWING CHARGES AGAINST ONSHINE SECURITIES LIMITED IN THAT IT FAILED TO COMPLY WITH RULE 601:-
Particulars
3. Onshine denied any wrongdoing. It claimed that five individuals, who were referred to as "runners", three of whom were the persons named in the complaint, had approached it saying that they could introduce customers. They were, operating through a company called Sino Fair Investment Ltd., to introduce interested parties to Onshine with a view to their purchasing shares. Onshine agreed to pay part of the commission payable on any shares purchased to Sino Fair. The profits would thereafter be apportioned among the five runners. The five traded both in their own names and in the names of the persons they introduced. The matter came to light when Mr. Yeung Shu Hung ("Yeung") misappropriated shares purchased by six of the persons whom he had introduced. In writ HCA 4343/91 issued on 11th June 1991 four of the six commenced legal action against Onshine for recovery of their losses. This action was heard in March 1994 by Liu J. who gave judgment against Onshine. This decision is, we are told, to be appealed. Onshine contended in that action, and still maintain, that Yeung was not an employee and that they are therefore not liable. 4. After receiving the complaint, Onshine sought to have the charges adjourned until after the outcome of HCA 4343/91. Initially the Stock Exchange had agreed to an adjournment and had vacated the hearing date. However, the Exchange was, as time passed, not satisfied as to the progress of the case and insisted that the hearing of the disciplinary proceedings commence on 17th March 1993. The Secretary of the Disciplinary Committee refused Onshine's application to be legally represented and it was represented at the hearing by a Mrs. Li, one of its directors. The Committee was chaired by Mr. Anthony Neoh, Q.C. At the completion of the hearing the Stock Exchange sent Onshine the following letter.
5. On 21st April 1993 Onshine pre-empted further action by the Disciplinary Committee by filing a Notice of Application for leave to apply for Judicial Review. Paragraph 1 alleges that "The said Disciplinary Committee failed to act in accordance with the rules of natural justice or alternatively acted contrary to the Bill of Rights Ordinance." 6. The following matters were relied upon:
Relying upon the foregoing Onshine asked that the decision be quashed and further proceedings stayed upon the basis that the principal issue in the disciplinary proceedings was currently before the High Court as part of the subject matter in HCA No.4343/91. 7. The application was heard by Mayo, J. who handed down his judgment on 11th October 1993 quashing the decision of the Disciplinary Committee and deferring a hearing of the disciplinary charges until the outcome of HCA 4343/93. It is from that decision that the Stock Exchange now appeals. The Stock Exchange Disciplinary Procedures Rules, had they been followed, would, Onshine having indicated that it required the case to be referred to the Disciplinary Appeals Committee ("the D.A.C."), have required the Disciplinary Committee to "produce a reasoned decision in writing setting out its findings of fact and the reasons for its verdict and any penalty imposed ..." (Part II Rule 4.16) The member is within 14 days of the receipt of the "reasoned decision" required to lodge "a statement of the grounds of referral and particulars of any fresh evidence he or she wishes to adduce, to the Secretary to the Disciplinary Appeals Committee". (Part II Rule 5.1.1). It is further provided that if "fresh evidence has been produced" before the D.A.C. it being satisfied that it should be allowed "will remit the matter to the Disciplinary Committee for reconsideration of the verdict and the penalty in the light of the fresh evidence." (Part II Rule 5.5). 8. The D.A.C. is required by the rules "to hear matters referred by the member charged". (Part I Rule 6.1). We note that there is no definition section limiting the meaning of the word "matters". There is further nothing limiting the meaning of the word "reconsideration" in Part II Rule 5.5. We note also that Rule 208 of the Stock Exchange of Hong Kong Limited Rules provides that the powers of each committee of the Stock Exchange are "subject always to the overriding right and power of the Council (of the Stock Exchange) to review, vary or supplement its decisions ..." It would appear that the Council has power to put right any injustice shown to have been done to any members by one of its committees. 9. Mayo, J. stated, rightly in our view, having made reference to the what was said by Lord Scarman in Ex Parte Preston [1985] 1 A.C. 835 at p.852 the scope for Judicial Review was limited when there was an alternative remedy available and that the "question which has to be decided was whether the circumstances of this case were such as to amount to "special circumstances" such as to justify a departure from the Rule". We would, for ourselves, prefer to use the term "exceptional circumstances" as did Glidewell L.J. in R. v. Chief Constable of the Merseyside Police, ex parte Calveley [1986] 1 Q.B. 424 at 440:
10. The matters which Mayo J. appears to have taken into account when coming to his conclusion that such circumstances existed were:
None of these seem to us to be exceptional circumstances whether taken separately or together which would require the immediate intervention of the court in the interests of justice which is the principle to be applied. 11. The Stock Exchange appeals the decision of Mayo J. contending that he was wrong to hold:
12. Onshine in a Respondent's Notice seeks to rely upon reasons, other than those relied on by the judge, which establish improper refusal of legal representation. It submits also that the judge was wrong to hold as he did that the disciplinary structure under the rules is not tainted by bias. Simply put the argument is that, as all of the members of the Compliance Committee, which brings the charge, of the Disciplinary Committee, which hears the charge, and of the D.A.C., to which appeal lies, are members of the Stock Exchange Council, apparent bias permeates and inherently flaws the hearing and appellate structure at each level. 13. It further seeks to rely upon a number of matters which occurred in the course of the hearing before the Disciplinary Committee which it submits were manifestly unfair and were breaches of the rules of natural justice. These matters are, it is submitted, a consequence of and subsidiary to the principal complaint of a wrongful refusal to grant legal representation. 14. We deal first with the finding of the judge that it was wrong to refuse the adjournment. We disagree. We bear in mind when so doing the words of Lord Denning M.R. in Maynard v. Osmond [1977] 1 Q.B. 240 at p.254:
The Stock Exchange has a duty which it owes both to its members and to the public to act swiftly to correct transgressions by its members and flaws in its system of operation. We are mindful that no dishonesty on the part of Onshine is suggested and that the principal issue is whether the action of a runner, in the position of Yeung, binds a broker so as to make him liable to an investor who deals with the runner. This is nonetheless an issue of considerable importance that, in the public interest, requires the earliest possible resolution. The Stock Exchange were, we are satisfied, having given considerable indulgence, quite right to insist that the matter proceed before the Disciplinary Committee. The refusal to adjourn was not a matter to which the judge should have given any weight. 15. Before turning to deal with the other three matters upon which Mayo J. relied we turn to consider the submission of apparent bias raised in the Respondent's Notice. We have no hesitation in rejecting this submission. A professional body such as the Stock Exchange must act through its appointed committees. Self regulation is best and necessarily done by its own members. The fact that the members of particular committees are also elected members of the Council falls far short of any appearance of bias. There is no suggestion of personal bias or the appearance of personal bias, indeed the Disciplinary Rules guard against this. 16. We turn now to deal both with the other matters upon which the judge relied and with the matters, other than bias, raised in the Respondent's Notice. These can all be shortly put as follows:
17. We assume for the purposes of this judgment (without deciding) that Onshine can establish that it was wrong to refuse to allow it legal representation, that there were breaches of natural justice and that these matters would warrant a decision that the finding of guilt made by the Disciplinary Committee ought to be quashed. 18. We have no doubt that, if there were no adequate alternative remedy open to Onshine, the court would in these circumstances be entitled and bound to intervene, now, by way of judicial review, to quash the decision. 19. But, says the Stock Exchange, Onshine does have an adequate alternative remedy and therefore the court ought not to intervene by way of a judicial review unless and until Onshine has exhausted that remedy and it can be seen that it has still not received fair treatment. 20. We accept this submission. The authorities in our judgment establish that (save in exceptional circumstances of which, as we have said, none seem to us to be present here) the court will not interfere in the affairs of a body like the Stock Exchange to protect those subject to disciplinary proceedings against unfair treatment if they have a right of appeal to a domestic appellate tribunal which has a jurisdiction wide enough to ensure, in the end, the achievement of a just result. 21. In the present case, Onshine has a right of appeal to the D.A.C. of the Exchange. It is common ground that the D.A.C. will be entitled to quash the decision of the Disciplinary Committee if it is satisfied that the member was indeed unfairly treated by the Disciplinary Committee. 22. Is this enough? Onshine says that it is not. It argues that if for some reason there is a danger that the D.A.C. may decide that it cannot quash the decision on the ground of Onshine's unfair treatment by the Disciplinary Committee, it is entitled now to have the decision quashed by the court. In our judgment, this argument is misconceived. Clearly, if it were impossible, under its rules of procedure, for the D.A.C. to quash the decision of the Disciplinary Committee for this reason, the avenue of appeal to the D.A.C. would not only not afford Onshine an adequate remedy for the wrong done to it; it would afford it no remedy at all. 23. But here Onshine can only say, not that is impossible for the D.A.C. to redress its grievances; only that there is a danger that it might not. In our judgment, this will not do. 24. As Lloyd L.J. pointed out in R v Panel on Take-overs [1989] 1 All ER 509 at 531:
It is important to bear this justification in mind when assessing whether there are extraordinary circumstances which require the court's immediate intervention before the available remedies have been exhausted. It is neither advisable nor possible to define "extraordinary circumstances" but if the appeal available is adequate to deal with all the alleged flaws in the original proceedings this will weigh heavily against the granting of leave. However, this cannot be decisive. For example, the applicant may show that immediate intervention is required because the appeal procedure is flawed by delay or some other extraneous matter. Similarly, if the court's immediate intervention will result in abating the litigation, this will also be an important - perhaps decisive - consideration. We have in mind cases where the tribunal had no jurisdiction to entertain the proceedings or where the proceedings were based on an obvious and fundamental error of law. In such circumstances it would not be possible to start the same proceedings again and justice and convenience may require that the decision is struck down immediately. It follows that we reject Mr. Tong's eleventh-hour submissions to the effect that exceptional circumstances are not the sole test. 25. We would state the relevant principle (which we deduce substantially from Calvin v. Carr [1980] AC 575) and R. v. Chief Constable of the Merseyside Police, ex parte Calveley [1986] 1 QB 424 as follows: 26. Where in the case of a domestic body like the Stock Exchange the appellate procedure may, or may not, ensure justice for the party aggrieved by the lower tribunal's decision, then, generally speaking, the court should not be asked to second-guess the appellate tribunal's decision. In the absence of exceptional circumstances requiring immediate intervention by the court, the aggrieved party should be told to wait and see what happens before the appellate tribunal. If that tribunal can, and does, quash the decision of the lower tribunal, that will be an end of the matter. If the appellate tribunal affirms the decision of the lower tribunal, the aggrieved party can then apply for a judicial review; but he will succeed only if, taking the procedure (original and appellate) as a whole, it can be seen that the aggrieved party has still not been fairly treated. 27. It is on this principle that the judge below ought to have proceeded. If he did consider whether the case was one which required the immediate intervention of the court he plainly reached a wrong result and, therefore this court is entitled, and bound, to interfere, and to refuse Onshine the relief it has sought. When so saying we bear in mind the principle upon which the Court of Appeal acts when interfering with the exercise of a judge's discretion which was well put by Stephenson L.J. in Alltrans Express Ltd. v. CVA Holdings Ltd. (1984) 1 W.L.R. 394 at 400:
We therefore allow the appeal.
Representation: Mr. Michael Bunting (Messrs. Linklaters & Paines) for the Appellant/Defendant. Mr. Ronny K.W. Tong Q.C. and Mr. Johnny Mok (Messrs. Fung & Liu) for the Respondent/Plaintiff. |
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