Andrew Edward Left v. Securities and Futures Commission and Another

CACV 228/2016

[2019] HKCA 569

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 228 OF 2016

(On appeal pursuant to s 266 of the Securities and Futures Ordinance,

Cap 571 from determinations of the Market Misconduct Tribunal)

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J U D G M E N T

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Hon Kwan VP (giving the judgment of the court):

1.On 25 February 2019, we dismissed the appeal of Mr Left who was found by the Market Misconduct Tribunal culpable of market misconduct in having contravened section 277(1) of the Securities and Futures Ordinance, Cap 571.  Two of the grounds of appeal are that the Tribunal erred in failing to apply the correct test for recklessness and that the Tribunal erred with the test of negligence.

2.Mr Left seeks leave to appeal to the Court of Final Appeal.  His notice of motion filed on 25 March 2019 set out these questions as questions of great general public importance:

“(1)   What is the test for recklessness in section 277 of the Securities and Futures Ordinance (Cap 571) (“SFO”) and how does it apply to the making of market commentary and stock analysis which inherently involves a risk of being incorrect?

(2)   What is the true meaning of the test for recklessness in Sin Kam Wah v HKSAR (2005) 8 HKCFAR 192 and whether and how does it apply to situations which inherently involve risks? If the test applies, does the issue of unreasonableness there-within concern the circumstances, knowledge, or taking of risk?

(3)   What is the test for negligence in section 277 of the SFO and how does it apply to the sharing of market commentary and stock analysis by a public investor and unlicensed individual who has based, and has disclosed that he has based, his commentary and analysis entirely on public information?

(4)   How are the restrictions on freedom of speech by section 277 of the SFO to be assessed in the light [of] the constitutionally protected fundament right?”

3.He also relies on the “or otherwise” limb and it is stated in the notice of motion that the intended appeal should be submitted to the Court of Final Appeal for these reasons:

“(1) The Court of Appeal has erred in construing and upholding the Report of the Market Misconduct Tribunal dated 26 August 2016 as finding that the Applicant was aware of the unreasonableness of taking the risk that his market commentary and stock analysis may be incorrect.

(2)   The Court of Appeal has erred in failing to differentiate between and in applying the same standard to market commentary and stock analysis by persons who have been or should be licensed and regulated for making such commentary and analysis vis-à-vis commentary and analysis by public investors and unlicensed individuals.”

4.Mr Laurence Li submitted for Mr Left that leave to appeal should be granted because the questions involve novel legal issues in that there has not been any case on section 277 or its criminal equivalent being section 298[1]. He contended that the statutory provisions are in very wide terms and apply to the general public, so the tests for the mens rea in these provisions are extremely important to the investing public.  He emphasised that Hong Kong is an international financial centre and our jurisprudence is likely to be studied internationally.  The questions he framed concern a basic legal and regulatory policy choice between “trusting the market to digest and decide for itself publicly available information”, and “protecting it even at the risk of some chilling effect”.  Freedom of speech is at the core of this appeal, and technology brings this in even sharper focus.

5.Mr Li did not mention in his submissions what the correct tests should be for recklessness and negligence in section 277(1).  We assume his arguments remain the same as those advanced in the Tribunal and in the Court of Appeal.

6.We are not persuaded that this is an appropriate case to grant leave to appeal.  We are not satisfied that the arguments advanced regarding the tests for recklessness and negligence in section 277(1) are reasonably arguable.  In light of the findings of fact of the Tribunal (the Court of Appeal had earlier refused leave to appeal in respect of the challenges on findings of fact), it appears to us that the finding that Mr Left had engaged in market misconduct would remain the same, even under the “indifference to the truth” test advocated by Mr Li.  We do not think the well-established concepts of recklessness and negligence would require amplification in this instance.

7.Mr Li acknowledged the practice of the Court of Appeal to leave it to the Appeal Committee of the Court of Final Appeal to decide whether leave to appeal should be granted on the “or otherwise” limb.  He has not made submissions on this and we do not propose to deal with this limb.

8.We dismiss the notice of motion of Mr Left.  We order him to pay the costs of the 1^st respondent in this application.

9.We have considered the statement of costs submitted by the 1^st respondent for summary assessment.  The amount claimed in the sum of $226,652 seems to us excessive for an application of this nature, having regard to the continual involvement of the legal team in the matter from the start.  We reduce it to $126,752 as reasonable costs to be paid by Mr Left.

Mr Laurence Li, instructed by Timothy Loh LLP, for the Appellant

Mr Peter Duncan SC and Mr Cao Yuan Shan, instructed by the Securities and Futures Commission, for the 1^st Respondent