Securities and Futures Commission v. Cheng Wai Tak and Others

HCMP 1575/2019

[2024] HKCFI 961

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1575 OF 2019

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BETWEEN

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DECISION

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A. INTRODUCTION

1.Before the Court is the application by the Petitioner, the Securities and Futures Commissions (“SFC”), pursuant to paragraph 5 of its summons dated 31 May 2022 (“SFC’s Summons”), for leave to the parties to adduce expert evidence from one expert in accounting and securities and assets realization on two specific questions set out in Schedule 1 of the SFC’s Summons (“Questions”), and consequential directions.

2.During the course of the oral submissions of Ms Rachel Lam SC (counsel for the SFC)[1] before this Court on 21 March 2024, and in response to the Court’s questions regarding the formulation and scope of the Questions, Ms Lam accepted that the Questions ought to be amended and reformulated, so that they are more in line with the SFC’s pleaded case.

3.The Questions with the SFC’s proposed amendments are as follows (“Amended Questions”):

Amended Question 1

Whether, in the course of considering decisions that involved the disposal of a substantial shareholding in to be made which would have an impact on a listed company, it is customary for the board of directors of the said listed company to obtain professional advice on the (a) options for disposing of a substantial shareholding in a listed company and (b) implications of disposing of the substantial shareholding in a listed company, included but not limited to advice from legal and/or accounting advisers.

Amended Question 2

On the assumption that the 1^st Respondent was at the material time, i.e. between 22 December 2016 and 30 April 2017, under a contractual obligation to pay HK$263,148,871 as Compensation (as defined in the Amended Petition)  and it was open to him to (a) dispose of the Consideration Shares (as defined in the Amended Petition)  in part or in full, whether in one lot or via multiple sales, to raise funds to pay for the Compensation; and/or (b) come to an agreement with the 7^th Respondent (the "Company") for it to conduct a share buy-back in part or in full at the issue price of HK$1.79 per share or otherwise, with the consideration being set off against the Compensation payable, what were the feasible methods and/or channels through which the 1^st Respondent could have used to dispose of the Compensation Shares in full or in part; and in respect of each method and/or channel; with respect to each of the three methods and/or channels of (i)  disposing of the Consideration Shares on the open market, (ii)  selling the Consideration Shares through an off-market block, and (iii)  buy-back of the Consideration Shares from the 1^st Respondent

(a)  the advantages and disadvantages to the Company, including but not limited to the impact on public shareholders of the Company;

(b)  steps that can be taken by the Company and/or the 1^st Respondent to mitigate any disadvantages; and

(c)  an estimate of the amount of funds that could have been raised through this method and/or channel during the period between 20 December 2016 and 30 April 2017.

4.The application is opposed by the 1^st Respondent, as well as the 2^nd to 6^th Respondents, who contend that no leave to adduce expert evidence should be granted, whether on the basis of the Questions as originally formulated, or the Amended Questions.

B.   BACKGROUND

5.Perfect Optronics Limited (the 7^th Respondent)  (“Company”)  was incorporated in the Cayman Islands and its shares became listed on the GEM board of the Hong Kong Stock Exchange since 7 February 2014. 

6.The Company together with its subsidiaries (“Group”)  are principally engaged in the trading of display components for electronics and the development and sale of optics products and related electronic components.

7.The 1^st Respondent is the founder of the Group and has been the Chairman, CEO and executive director of the Company since 13 June 2013. 

8.At the material times, the 2^nd Respondent and the 3^rd Respondent have been executive directors of the Company, and the 4^th to 6^th Respondents have been independent non-executive directors of the Company.

9.On 22 January 2015, the 1^st Respondent and Rightone Resources Limited (“Rightone”), a wholly owned subsidiary of the Company, entered into an agreement (“Acquisition Agreement”)  under which Rightone was to acquire (“Acquisition”)  from the 1^st Respondent all the issued shares in his wholly-owned company, Perfect Shiny Technology Limited (“Perfect Shiny”).  Perfect Shiny in turn owned 50.14% of a Taiwanese entity Shinyoptics Corporation (“Shinyoptics”)  and 100% of Perfect Shiny Technology (HK)  Limited (“Target Group”)  .

10.Under Clause 3.1 of the Acquisition Agreement, the consideration was stated to be HK$323,000,000, and was to be paid in the following manner:

(1)  As to HK$293,000,000, by Rightone procuring the Company to allot and issue shares (“Consideration Shares”), credited as fully paid, to the 1^st Respondent;

(2)  As to HK$20,000,000, by issuing and delivery of a promissory note by Rightone in favour of the 1^st Respondent;

(3)  As to HK$10,000,000 in cash.

11.Under Clause 8.1 of the Acquisition Agreement:

(1)  the 1^st Respondent agreed to guarantee that the sum of the audited consolidated profit attributable to equity holders of Perfect Shiny for the two financial years ending 31 December 2015 and 31 December 2016 according to the audited consolidated financial statements of the Target Group (“Profit”)  shall not be less than HK$34,000,000 (“Profit Guarantee”); and

(2)  the 1^st Respondent undertook to Rightone that if the Profit fell short of the Profit Guarantee, he would, upon demand by Rightone, pay to Rightone, in cash, the amount that equalled to the amount of the shortfall multiplied by 9.513 (“Compensation”), subject to a maximum of HK$323,000,000.

12.Clause 7.8 of the Acquisition Agreement further provided that in the event that the 1^st Respondent could not settle the Compensation in cash, the Company could permit the 1^st Respondent to dispose of some Consideration Shares, or buy back some Consideration Shares from the 1^st Respondent, for him to raise funds to pay the Compensation.

13.The Acquisition Agreement was approved by the board of the Company (“Board”)  on 22 January 2015, and the transaction was completed on 30 April 2015.

14.Subsequently, between April and November 2016, the 1^st Respondent held negotiations with a potential investor, Cheng Chi Wai Benny, the sole director of Insight Capital IV (BVI)  Limited (“Insight Capital”), regarding an opportunity for the Company to dispose of Shinyoptics to Insight Capital.

15.On around 19 December 2016, the 1^st Respondent was informed that the Group was expected to record a disposal gain on the disposal of Shinyoptics of approximately HK$26,000,000.

16.On 22 December 2016, the Board[2] resolved that the proposed disposal was fair and reasonable and as in the interests of the Company and the shareholders as a whole.  On the same day, Perfect Shiny entered into a sale and purchase agreement with Insight Capital (“Disposal Agreement”)  to dispose of Shinyoptics for a consideration of HK$48,000,000 (“Disposal”).

17.As a result of the gain from the Disposal Agreement, the Profit was increased by HK$26,480,720 to HK$31,767,499.  It is the SFC’s case that as the Disposal happened before 31 December 2016, the amount of the Compensation was reduced by HK$26,480,720 x 9.513 = HK$251,911,089 (“Compensation Shortfall”).

18.The Compensation was fully paid by the 1^st Respondent on 22 March 2017.

19.The SFC’s pleaded case against the 1^st to 6^th Respondents  is, in gist, that in approving the entry into of the Disposal Agreement shortly before 31 December 2016 and in failing to consider or properly consider postponing the Disposal Agreement,the 1^st to 6^th Respondents breached their duties, including to exercise reasonable care and diligence and/or to act in good faith in the best interests of the Company.

20.One of matters relied upon by the SFC is that undue weight was placed on the alleged inability of the 1^st Respondent to pay the Compensation in full. In so doing, the 2^nd to 6^th Respondents  failed to consider or properly consider and/or too readily dismissed 3 options of the 1^st Respondent realizing the Consideration Shares to raise funds to pay the Compensation, namely (i)  sale in the open market, (ii)  off-market sale and (iii)  buy-back by the Company(“3 Options”).

21.In their Amended Points of Defence, the 2^nd to 6^th Respondents put the SFC to strict proof that the 3 Options could be implemented at the material times. Further, the 1^st to 6^th Respondents pleaded that the following two options suffer from, inter alia, the following downsides:

(1)  In relation to the option of selling in the open market - The disposal of a large amount of the Company’s shares in the market would create an unacceptable downward pressure on the trading price of the Company shares.

(2)  In relation to the option of the Company buying back the Consideration Shares from the 1^st Respondent - The trading price for Company’s shares was at the material time lower than the issue price of the shares (i.e. HK$1.79 per share), and thus any buy-back at the issue price would not be in the interests of the Company.

22.SFC further pleaded that the perceived downsides raised by the 1^st to 6^th Respondents can be mitigated by, inter alia:

(1)  In relation to the option of selling in the open market - Allowing for a longer time frame for disposal, and/or seeking assistance from market intermediaries and/or independent financial advisers to advise on the timing, manner and target price of the sale depending on the prevailing market conditions.

(2)  In relation to the an off-market sale - Seeking assistance from market intermediaries to advise on the expected price range and timing for execution and assist with negotiations with potential investors, and sale in smaller lots and/or at a discount if necessary.

(3)  In relation to the option of the Company buying back the Consideration Shares from the 1^st Respondent - Seeking independent professional financial advice, and attempting to agree with the 1^st Respondent to pay with additional cash or shares to compensate Rightone for any price difference if the trading price of the Company’s shares fell below HK$1.79 per share.

23.The SFC further pleaded that the 3 Options, namely sale in the open market, off-market sale and buy-back by the Company, would raise gross proceeds exceeding HK$148 million, HK$121 million and HK$148 million respectively, and expressly reserved the right to obtain expert evidence.

24.Further or alternatively, the SFC pleaded that:

(1)  the 1^st to 6^th Respondents should have considered seeking or sought independent legal and/or professional financial advice in connection with the Disposal Agreement, including advice on options for and implications of disposal of the Consideration Shares, and/or means of mitigating potential downsides; and

(2)  when making any decisions that involved the disposal of a substantial shareholding in a listed company similar to the Company, independent professional financial advice should be obtained.

The above averments are denied by the 1^st to 6^th Respondents.

25.The SFC seeks at Prayer 2 of the Points of Claim a compensation order that the 1^st to 6^th Respondents compensate an amount equivalent to the Compensation Shortfall to the Company.  The 1^st to 6^th Respondents deny this, by reason (inter alia)  that even if the Consideration Shares can be disposed by the 3 Options, the Company may not be able to recover the full amount of the Compensation Shortfall.

C.   APPLICABLE LEGAL PRINCIPLES

26.The parties are in agreement that the proper approach the Court should adopt  in considering whether to grant leave for the admission of expert evidence is that set out in the Court of Appeal’s decision in Shenzhen Futaihong Precision Industry Company Ltd v BYD Company Ltd [2019] 2 HKC 175.

27.In Lei Shing Hong Credit Ltd v Accufast Ltd [2021] HKCFI 853, Keith Yeung J (applying the approach in Shenzhen Futaihong) summarised the 3 substantive conditions for admissibility of expert evidence as follows (see §22):

(1)  The substantive conditions for admissibility are:

(a)  The subject matter of the opinion must fall within an area in which expert evidence may properly be given (the “Subject Matter Condition”);

(b)  The witness must be qualified as an expert to give the evidence of the type in question (the “Expertise Condition”); and

(c)  His evidence must be relevant to the issues being litigated (the “Relevance Condition”).

(2)  The Subject Matter Condition may be divided into two parts:

(a)  whether the subject matter of the opinion is such that a person without instruction or experience in the area of knowledge or human experience would be able to form a sound judgment on the matter without the assistance of witnesses possessing special knowledge or experience in the area, and

(b)  whether the subject matter of the opinion forms part of a body of knowledge or experience which is sufficiently organized or recognised to be accepted as a reliable body of knowledge or experience, a special acquaintance with which by the witness would render his opinion of assistance to the court.

(3)  In respect of the Relevance Condition, evidence meeting the Subject Matter Condition can still be excluded by the Court if the Court takes the view that calling it will not be helpful to the Court in resolving any issue in the case justly. Such evidence will not be helpful where the issue to be decided is one on which the Court is able to come to a fully informed decision without hearing such evidence, e.g. if the question can be determined on factual evidence and inferences to be drawn therefrom.

(4)  The Court will not give directions for expert evidence to be adduced (carrying with it the incidence of substantial costs being incurred on its preparation and court time spent on the same)  simply on the basis that the court cannot rule out a possibility of such evidence being relevant and helpful in the sense as discussed above. If the applicant for expert directions fails to persuade the court on relevance and necessity of such evidence, the application should be dismissed.

(5)  Where the area in which expert evidence is sought to be adduced is unconventional or more controversial, the party seeking expert directions should consider having the intended expert report at hand to explain to the court the nature of such evidence and to demonstrate the necessity for having such evidence.

28.In deciding whether the requirement under the Subject Matter Condition as set out in paragraph 27(2)(b)  above is satisfied, Barma J (as he then was)  held in Re Ocean Time Development Ltd [2008] 2 HKLRD 393 at §13 that such requirement can only be satisfied if there was:

“a recognised expertise governed by recognised standards and rules of conduct capable of influencing the court’s decision on any of the issues which it has to decide…..”

D.   AMENDED QUESTION 1

29.This Court is of the view that the Amended Question 1 plainly does not satisfy any of the substantive conditions for admissibility of expert evidence, is not relevant to the pleaded issues, and expert evidence on such question is not necessary for the Court to properly adjudicate on the issues in dispute between the parties.

30.First, the Subject Matter Condition is not satisfied.

31.The SFC has not demonstrated that the alleged “custom” referred to in the Amended Question 1 is derived from or is governed by any recognised standards and rules of conduct capable of influencing the Court’s decision on any of the issues which it has to decide (see paragraph 28 above).  The Court will thus have no objective benchmark to assess whether the alleged “custom” exists.

32.Nor has the SFC shown how this proposed question forms part of a body of knowledge or experience which is sufficiently organized or recognised to be accepted as a reliable body of knowledge or experience (see paragraph 27(2)(b)  above).

33.Second, the Expertise Condition is not satisfied.

34.Although the SFC stated at paragraph 5(a)  of the SFC’s Summons that its proposed expert is Mr John Robert Lees (“Mr Lees”), the SFC has not adduced any evidence as to Mr Lees’ qualifications and expertise.

35.Even if the Court take judicial notice that Mr Lees is an accountant by profession and has expertise in forensic accounting, the SFC has not demonstrated how Mr Lees is qualified to give evidence on the existence of the alleged “custom” relating to how boards of listed companies conduct their affairs, and what experience he has to enable him to provide expert assistance to the Court on the question.

36.In any event, as submitted by Mr Paul Shieh SC (counsel for the 1^st Respondent)[3], although paragraph 5 of the SFC’s Summons identifies the area of expertise to be “accounting and securities and assets realization”, experts in this area do not necessarily have direct knowledge as to how boards of directors of listed companies handle share disposals, let alone the existence of the alleged “custom”.

37.Third, the Relevance Condition is also not satisfied.

38.In considering whether the proposed expert evidence is relevant to the issues in dispute, the Court has to examine the pleadings: Haveaux Xavier Marie-Ghislain v Hong Kong Express Airways Limited [2023] HKCFI 3073 at §36.

39.However, it is not SFC’s pleaded case that it is customary for the board of directors of a listed company to seek professional advice whenever a decision has to be made involving disposal of a substantial shareholding of a listed company, and that the 2^nd to 6^th Respondents departed from any such custom.  The alleged “custom” described in the Amended Question 1 does not feature in the pleadings at all.

40.Ms Lam SC submits that it is implicit from the SFC’s plea that “when making any decisions that involved the disposal of a substantial shareholding in a listed company like the Company, a listed company should obtain independent professional financial advice, including but not limited to advice from legal and/or accounting advisors….”[4] (emphasis added), the SFC’s case is that there is a “general practice” for such advice to be sought.

41.I cannot agree with Ms Lam SC’s submission. An allegation of “custom” or “trade practice” ought to be properly pleaded so that the 1^st to 6^th Respondents can properly respond to it: Degreeasia Ltd v Paules Lee Siu Yuk (unreported, HCA 1686/2006, 25 June 2010)  at §75. 

42.Hence, the question as to whether the alleged “custom” exists simply does not arise from the pleaded issues and is thus irrelevant for the purpose of determining the disputes between the parties. 

43.In any event, the question which the Court has to decide at trial is whether the 2^nd to 6^th Respondents should, in the proper discharge of their duties as directors, have sought professional advice in the specific circumstances of this particular case, which is clearly fact sensitive, and would depend on (inter alia)  the complexity and value of the transaction in question, the extent of impact of the transaction on the Company, and the experience and attributes of the 2^nd to 6^th Respondents themselves.  Such question is one which the Court, with the use of commercial common sense, can itself determine without the need for expert evidence.  

44.I am thus of the view that expert evidence on the Amended Question 1 is not necessary and will not be helpful to the Court.

45.For the above reasons, leave to adduce expert evidence on the Amended Question 1 is thus refused.

E.   AMENDED QUESTION 2

46.This Court is of the view that the Amended Question 2 does satisfy the substantive conditions for admissibility of expert evidence, is relevant to the pleaded issues and is necessary for the Court to properly adjudicate on the issues in dispute between the parties.

47.First, the Subject Matter Condition is satisfied.

48.The Amended Question 2 concern (i)  the feasibility, advantages and disadvantages of the 3 Options for the disposal of the Consideration Shares by the 1^st Respondent at the material time in order to raise funds to pay the Compensation Shortfall; (ii)  steps that could be taken by the Company or the 1^st Respondent to mitigate the disadvantages; and (iii)  an estimate of the amount of funds that could have been raised through each of the 3 Options during the period between 20 December 2016 and 30 April 2017.  

49.The aforesaid issues do, in my view, fall within the scope of the expertise of someone in the field of “securities and assets realization”, being an area of expertise sufficiently organized or recognised to be accepted as a reliable body of knowledge or experience.  

50.Whether the Consideration Shares in this case could have been disposed of by the 1^st Respondent using any of the 3 Options to raise funds to pay the Compensation Shortfall, the advantages and disadvantages of each method of disposal, and the amount of funds that could have been generated through each method in light of the market conditions prevailing at the material time are not, in my view, issues which the Court can itself properly and fairly determine without the assistance of expert evidence.

51.Second, the Expertise Condition is satisfied.

52.Given the absence of any evidence before the Court on the specific experience and expertise of Mr Lees, I will not comment on whether Mr Lees himself would be qualified to opine on the issues under the Amended Question 2.

53.However, I am satisfied that there are practitioners in the field of “securities and assets realization” who would have experience and expertise in (inter alia)  the realization or disposal of listed company shares to raise funds in different market conditions, and thus would be qualified to give expert evidence on the Amended Question 2.

54.Third, the Relevance Condition is also satisfied.

55.The Amended Question 2 arises from the pleaded issues.  Notably, the SFC’s pleas concerning the failure by the 2^nd to 6^th Respondents to consider or properly consider the 3 Options by which the 1^st Respondent could have disposed of the Consideration Shares to raise funds to pay the Compensation Shortfall were introduced by way of amendment to the Petition.[5]  The SFC sought leave to introduce such amendments in paragraph 1 of the SFC’s Summons, which application was not opposed to by the 1^st to 6^th Respondents.

56.As mentioned in paragraphs 21 to 23 above: (i)  the 2^nd to 6^th Respondents have put the SFC to strict proof that the 3 Options could be implemented at the material times; (ii)  the 1^st to 6^th Respondents have pleaded specific downsides of implementing the options of an open market sale and buy-back from the 1^st Respondent; and (iii)  the SFC has further pleaded means to mitigate the downsides of each of the 3 Options, as well as the approximate funds that could be raised by the 3 Options.

57.Hence, the Court will have to determine the aforesaid disputed issues at trial.  The feasibly, advantages and disadvantages of the possible methods of disposal of the Consideration Shares pleaded by the SFC, and the amount that could be raised by each method at the material time taking into account the prevailing market conditions are not matters in respect of which the Court can properly form a view without the assistance of expert evidence.

58.The 1^st to 6^th Respondents dispute the relevance of the Amended Question 2. Their contentions can be broadly summarized as follows:

(1)  The issues which the Court has to decide at trial are whether, in forming the view that a disposal or buyback of the Consideration Shares would not be beneficial to the Company, and in deciding to approve the Disposal Agreement, the 2^nd to 6^th Respondents breached their duties to (i)  act bona fide in the best interests of the Company, and (ii)  exercise reasonable care and diligence taking into account their own experience and knowledge.

(2)  It is thus not helpful to discuss “advantages” and “disadvantages” of each of the 3 Options in the abstract. Under scrutiny is the Board’s evaluation of the overall situation in the circumstances which existed at the time. The 2^nd to 6^th Respondents have pleaded other concerns and commercial considerations which influenced their decision to approve the Disposal Agreement. 

(3)  The courts would not second-guess the correctness of bona fide commercial decisions of a board of directors: see for example, Wong Luen Hang v Chan Yuk Lung, CACV 112/2012 (unreported, 30 October 2013)  at §26; Fountain II Ltd v Ping An Securities Group (Holdings)  Ltd [2020] 1 HKLRD 429 at §§41-42. Ultimately, the approval of the Disposal Agreement was a commercial decision with which the Court will not interfere unless there is shown to be some breach of duty. 

(4)  The Court is thus not concerned with what, in the opinion of an expert, the 2^nd to 6^th Respondents could or should have done at the material time.

59.The question of whether there has been any breach of duties on the part of the 1^st to 6^th Respondents is a matter to be determined at trial, during which the Court will no doubt closely examine the propriety of their conduct in light of the circumstances which existed at the material time. Hence, this Court will not and should not prejudge the issues, including as to whether the decisions made by the Board in relation to the Disposal Agreement were indeed bona fide commercial decisions.   

60.In assessing the pleaded breaches of duty, the Court will consider (inter alia)   (i)whether the 2^nd to 6^th Respondents honestly believed that the Disposal Agreement was in the Company’s best interests, and (ii)  whether a reasonably diligent person having the knowledge, skill and experience of the 2^nd to 6^th Respondents would have approved the Disposal Agreement in the specific circumstances existing at the material time (see Re Freeman FinTech Corp Ltd [2018] 1 HKLRD 320 at §§41-42).  

61.As submitted by Ms Lam SC, to which this Court agrees, the above assessment involves an objective element (e.g. what a reasonably diligent person having the knowledge, skill and experience of the 2^nd to 6^th Respondents would have done), and expert evidence on the issues raised in the Amended Question 2 (which arise directly from the parties’ pleadings)  will provide objective base materials to assist the Court in assessing the reasonableness of the 2^nd to 6^th Respondents’ conduct, and whether there was any breach of duty.  

62.Further, specifically as regards the Amended Question 2(c), although the SFC’s claim for a compensation order is for the Compensation Shortfall (i.e. a fixed amount, as opposed to compensation to be assessed), as explained by Ms Lam SC, the estimated amount of funds that could have been raised by each of the 3 Options is relevant to show whether the 1^st Respondent would have had sufficient financial capability to pay the Compensation Shortfall, taking into account the assets he held at the time[6]. The 1^st Respondent’s financial capability is one of disputed issues as can be seen from the pleadings.

63.For the above reasons, leave to adduce expert evidence on the Amended Question 2 is allowed.

F.    DISPOSITION AND COSTS

64.The following orders are made:

(1)  Leave is granted to each of (i)  the Petitioner, (ii)  the 1^st Respondent, and (iii)  the 2^nd to 6^th Respondents (“Parties”)  to adduce expert evidence from one expert in securities and assets realization on the Amended Question 2.

(2)  The Parties are to inform the Court and each other the identity of their respective experts within 28 days from the date hereof.

(3)  The Parties are to file with the Court and exchange with each other their respective expert reports within 70 days thereafter.

(4)  The Parties’ respective experts shall meet on a without prejudice basis within 28 days thereafter for the purpose of preparing a joint statement (“Joint Statement”)  indicating those parts of their evidence on which they are, and those on which they are not, in agreement.

(5)  The Parties shall file with the Court the Joint Statement within 56 days after the without prejudice meeting referred to in sub-paragraph (4)  above.

65.As to costs of this application (under paragraph 5 of the SFC’s Summons):

(1)  The SFC is only partially successful in the application, as leave to adduce expert evidence on the Amended Question 1 is refused.

(2)  Absent the amendments agreed to by the SFC’s counsel at the hearing on 21 March 2024, this Court would not have granted leave for the SFC to adduce expert evidence on Question 2 as originally formulated, which (i)  was not confined to the 3 Options, and (ii)  did not specify the time period during which the Consideration Shares were to be disposed of.

(3)  By reason of the above, the 1^st Respondent and the 2^nd and 6^th Respondents were justified in opposing Question 1 and also Question 2 (as originally formulated), and to instruct counsel to do so at the hearing on 21 March 2024.

(4)  Given that the 1^st Respondent and the 2^nd and 6^th Respondents continued to oppose the Amended Question 2 at the hearing on 21 March 2024 and failed in their opposition, and also given that the bases for their opposition went beyond the original defects in the formulation of the question referred to in sub-paragraph (2)  above (which this Court rejected), this should also be reflected in the costs order to be made. 

(5)  In the premises, I am of the view that the proper and fair costs order would be for the SFC to pay 70% of the costs of each of (i)  the 1^st Respondent and (ii)  the 2^nd to 6^th Respondents of and occasioned by paragraph 5 of the SFC’s Summons, with certificate for two counsel for the 1^st Respondent in respect of the hearing on 21 March 2024, to be taxed if not agreed.

Ms Rachel Lam SC leading Ms Jasmine Cheung, instructed by the Securities and Futures Commission, for the Petitioner

Mr Paul Shieh SC leading Mr Martin Ho, instructed by To, Lam & Co, for the 1^st Respondent

Mr Patrick Siu, instructed by Woo Kwan Lee & Lo, for the 2^nd to 6^th Respondents

Attendance of the 7^th Respondent was excused