Securities and Futures Commission v. Cheong Kai Tjieh Augustine and Another

HCA 2269/2012

[2018] HKCFI 437

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2269 OF 2012

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D E C I S I O N

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1.On 13 March 2017 the Market Misconduct Tribunal (“Tribunal”) produced its report into the dealings in the securities of Titan Petrochemicals Group Limited, a company listed on the Stock Exchange of Hong Kong Limited. The Tribunal found that there had been market misconduct in the nature of insider dealing by the defendants and made orders for specified sums to be paid to the Government with, although the order of the Tribunal dated 13 March 2017 does not say so, those sums being used to compensate investors.

2.On 23 June 2017, the Securities and Futures Commission (“Commission”) and the solicitors for the defendants sent to the Companies Court a consent summons for an order which contained a mechanism for the payment of compensation to investors.  The form of the order sought in the consent summons was substantially in the form of the order that I am going to make and which is appended these reasons.  As can be seen from the order, para 1 dealt with the mechanism for the payment of sums to the administrator who is required to deal with the process of compensating investors, and para 1 provided for interests to be payable on the principal.

3.For reasons explained in my decision in Securities and Futures Commission v Sun Min [2017] 4 HKLRD 211, in my view it is not appropriate for the court simply to make a consent order without having had explained to it the background to the application thus allowing the court to be satisfied that it is appropriate, even if the order is not controversial as between the parties for it to be made.  In my view, this should normally be dealt with in court rather than on paper.  For this reason I directed that the summons be listed for hearing.  Unfortunately, and for reasons which are not entirely clear, the matter did not come on before me until 22 February 2018 and as a result, the defendants, who are no longer legally represented, have taken issue with the Commission’s contention that the form of the order which was agreed in June 2017 and requires interest to be paid at the judgment rate until the date of the payment of the relevant sums—the relevant date being the payment to the administrator of certain sums which are held currently in court.

4.The position of the defendants was explained to me by Mr Cheong, the 1^st defendant.  I accept that, at the time at which the defendants authorised their solicitors to agree to the consent summons, they probably did not have in mind the consequence of the order being that interest would continue to accrue on the principal sums until the date that the court approved the transfer of money to the administrator and the transfers were actually made.  They are, therefore, concerned that the interest that it is now payable is rather more than that which would have been payable if an order had been made and implemented by the end of June 2017.

5.Mr Cheong did raise a technical issue before me, namely, whether or not section 49 of the High Court Ordinance, Cap 4, applies at all to the order made on 13 March 2017, although he accepted that the consent summons necessarily provided that the judgment rate of interest would be paid for at least the period specified in the summons.  It seems to me quite clear that section 49 does apply to the order.  This is dealt with in the commentary to the Hong Kong Civil Procedure 2018: see paras 42/1/6 and 42/1/11.  It seems to me clear that the statutory rate of interest on a judgment applies to a registered order of the Tribunal from the date on which the order contained in the report handed down by the Tribunal is made.

6.It is clearly desirable that applications of this sort are dealt with promptly as they will not normally be controversial.  As I have already indicated, it seems to me that it is not appropriate or necessarily efficient for the applications to be dealt with in writing, although it is desirable that the parties agree the terms of the order that is sought from the court and that an application for a short expedited hearing is made in order that the mechanism for implementing the orders of the Tribunal can be made promptly and, if they involve the payment of money, that interest does not continue to run for an unnecessarily extended period. 

7.I will therefore make an order in the terms of the revised draft handed up by Mr Dawes which updates the interest calculation until 22 February 2018. Interest will, however, continue to accrue until the actual date of transfer, although I anticipate that the Commission will be able to have the order perfected and the payment out of court made very promptly.

Mr Victor Dawes SC and Mr Roger Phang, instructed by the Securities and Futures Commission, the plaintiff

The 1^st defendant appeared in person

The 2^nd defendant appeared in person