Read the full judgment text of HCAL 000039/1998 on BabelCite. This High Court CFI judgment was delivered on 9 February 1999 before The Hon. Mr. Justice Keith.
Constitutional and administrative law – judicial review – Stock Exchange of Hong Kong – corporate membership – blackball balloting system – procedural fairness – duty to give reasons – advance notice of concerns – anonymity of dissenting members – ultra vires – Application for corporate membership supported by 22 of 27 Council members but defeated by minimum four black balls triggering $2m forfeiture – whether blackball system under Art. 14 of Stock Exchange's Articles of Association is unlawful – Source of duty of fairness: Stock Exchange exercises an important public function within a statutory regime under the Stock Exchanges Unification Ordinance (Cap. 361) and is subject to SFC oversight – First issue: whether the court or the decision-maker determines what fairness requires – Held: it is for the court as a matter of law, following de Smith, Woolf & Jowell and the line in Elders IXL and Guinness, although underlying value judgments of the decision-maker remain reviewable only on Wednesbury grounds – Second issue: whether the system is unlawful for failure to give advance notice of members' concerns – Held: yes; concerns of members minded to vote against admission, and the gist of any underlying information (without source identification), must be relayed to the applicant with sufficient particularity to allow a response – Confidentiality of sources and unverifiability of information do not justify withholding the gist – Third issue: whether anonymity of blackballing members is unlawful – Held: anonymity from the applicant is acceptable and was conceded, although internal identification of dissenters will follow from the advance-notice ruling – Fourth issue: whether Art. 14(g), which dispenses with reasons, is lawful – Held: no; a blackballed application is an aberrant decision requiring reasons, applying Oriental Daily Publisher, Cunningham, Institute of Dental Surgery and Matson – Argument that the appropriate test is ultra vires the Stock Exchange's rule-making power under s.34(1) of the Unification Ordinance rejected, since Art. 14 is the source of the system and the fairness question is for the court – SFC's approval of the Articles does not displace the court's role – Application allowed in part – parties to agree the declaration with liberty to restore – costs to the Applicant.
Legal issues: Whether the court, or the decision-maker, determines what fairness requires · Whether the balloting system is unlawful for failing to give advance notice of concerns · Whether the balloting system is unlawful for preserving anonymity of dissenting Council members from the applicant · Whether the balloting system is unlawful for not requiring reasons for refusal
Outcome: Application for judicial review allowed in part; the blackball system was declared unlawful insofar as it failed to require advance notice of Council members' concerns to applicants for corporate membership and failed to require the Council to give reasons for refusing such applications, while the anonymity of dissenting members vis-à-vis the applicant was upheld.