New World Development Co Ltd and Others v. The Stock Exchange of Hong Kong Ltd

HCAL 79/2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST
NO.79 OF 2003

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Coram: Hon Hartmann J in Court

Dates of Hearing: 3 - 5 February 2004

Date of Handing Down Judgment: 3 May 2004

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J U D G M E N T

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Introduction

1.The applicants in this matter are the subject of disciplinary proceedings instituted pursuant to the terms of a code (known as the Listing Rules) made by the respondent for the orderly running of the Hong Kong Stock Exchange.

2.On 25 June 2003, the Chairman of the Disciplinary Committee formed to determine whether the applicants had committed a breach of the Listing Rules issued a set of directions as to how the hearing before the committee would be conducted. The directions were based on (and, as I see it, adhered to) an existing set of procedural rules called the Disciplinary Procedures. As such, the directions included a limitation on the extent to which the applicant's lawyers would be able to act on behalf of their clients at the hearing.

3.The applicants contend that, in so far as the Chairman's directions deny them 'effective' legal representation, they are inconsistent with the Bill of Rights, the Basic Law and offend common law principles of procedural fairness. The applicants seek a declaration to this effect. They further seek an order of certiorari to bring up and quash the offending directions and an order of mandamus to compel the committee to allow them 'full and unencumbered legal representation'.

4.The applicants contend that the limitation on their right to legal representation offends art.10 of the Bill of Rights, Cap.383, in that their right to a fair hearing by a competent, independent and impartial tribunal must include the right to be legally represented before that tribunal. In so far as the applicants consider it relevant, art.10 reads :

" All persons shall be equal before the courts and tribunals. In the determination of any criminal charge against him, or of his rights and obligations in a suit at law, everyone shall be entitled to a fair and public hearing by a competent, independent and impartial tribunal established by law."

5.Of more direct relevance to the applicants' complaint is art.35 of the Basic Law which reads :

" Hong Kong residents shall have the right to confidential legal advice, access to the courts, choice of lawyers for timely protection of their lawful rights and interests or for representation in the courts, and to judicial remedies.

Hong Kong residents shall have the right to institute legal proceedings in the courts against the acts of the executive authorities and their personnel."

Within the context of these proceedings what is guaranteed by art.35 is the right to 'choice of lawyers ... for representation in the courts'.

6.As will be seen later in this judgment, the Disciplinary Procedures which the Chairman followed in making his directions, while they allow a party appearing before the Disciplinary Committee to be accompanied by a lawyer and to take advice from that lawyer, limit the degree to which the lawyer may act on that party's behalf. For example, oral submissions, whether as to law or fact, must be made by the party himself.

7.The substantive issue, therefore, if judicial review is found to be an appropriate way of proceeding at this time, is whether, in the circumstances of this case, the limitation on (as opposed to denial of) legal representation either offends the common law rules of fairness or the suggested guarantee of representation contained in art.10 of the Bill of Rights and/or art.35 of the Basic Law.

Background

8.The first applicant ('New World') is a public company incorporated in Hong Kong. The remaining applicants are its executive directors. New World's shares are traded on the Hong Kong Stock Exchange.

9.The respondent is a company incorporated in Hong Kong. Pursuant to s.19 of the Securities and Futures Ordinance, Cap.571, the respondent has been given the right to operate a stock exchange. It operates the only stock exchange in Hong Kong.

10.In order to trade their shares on the Hong Kong Stock Exchange, public companies must agree to be bound by the Listing Rules. In addition, their executive directors must give undertakings to use their best endeavours to ensure that their companies comply with the Rules. The applicants have in these ways bound themselves to the respondent. The nexus is contractual.

11.The respondent has formulated the Listing Rules in order to ensure the fair and orderly operation of the Stock Exchange. The power to do so derives from the Securities and Futures Ordinance. By way of illustration :

(a) S.21 imposes upon the respondent the obligation to ensure, as far as reasonably practical, that it operates 'an orderly informed and fair market', and, to this end, s.21(4) obliges the respondent 'to formulate and implement appropriate procedures for ensuring that its exchange participants comply with the rules of the company.'

(b) S.23 empowers the respondent to make rules for the 'proper regulation of its exchange participants and holders of trading rights'.

(c) More particularly, s.23(2)(d) gives the respondent power to make rules for -

"the imposition on any person of obligations to observe specified standards of conduct or to perform, or refrain from performing, specified acts reasonably imposed in connection with the listing or continued listing of securities."

12.In terms of s.24 of the Ordinance, however, no rules (or amendments to them) shall have effect until they have been approved by the Securities and Futures Commission ('the SFC'). The SFC is a body corporate established by statute. In terms of s.5 of the Ordinance, its functions include the supervision, monitoring and regulation of the respondent's activities in operating the Stock Exchange.

13.The responsibility of managing the Stock Exchange is vested in a committee known as the Listing Committee. Its members are not employees of the Stock Exchange. They are independent, being drawn from market practitioners and other experts in the securities and futures industry.

14.The day to day administration of the Exchange, however, is delegated to a body of Stock Exchange employees who constitute what is called the Listing Division. The Listing Division is responsible for the enforcement of the Listing Rules. As such, its members investigate suspected breaches of the Rules and take on the task of prosecuting any consequent disciplinary proceedings. Although the relevant rules make no provision for the hiring of outside counsel to prosecute disciplinary proceedings, it appears that persons within the Listing Division who prosecute these matters are often (if not invariably) legally qualified.

15.Allegations of a breach of the Listing Rules are determined at first instance by a Disciplinary Committee. The chairman and members of the Committee are drawn from the Listing Committee.

16.A Disciplinary Committee, its members being drawn from the Listing Committee, is therefore an expert body independent of the respondent. As such it must be taken to be well placed to assess whether there has been any breach of the Listing Rules, its impact and what is required to deter future breaches so that the integrity of the market and confidence in it is maintained.

17.Similarly, it is to be recognised that persons, such as the applicants, who are subject to disciplinary proceedings have freely subscribed to the relevant rules of procedure. Nor are they lay persons, ignorant of business matters or the market.

The history of these particular proceedings

18.In October 2002, the Listing Division submitted a report to the Listing Committee ('the October report') alleging that the applicants had breached the Listing Rules. The allegations contained in the October report arose in the context of the following history :

(i) On the afternoon of 15 March 2001, New World publicly announced its interim results for the six months ended 31 December 2000.

(ii) That morning, however, before the announcement, articles had appeared in the press suggesting that New World may have leaked information concerning the interim results to a select group of financial analysts. Further articles to the same effect appeared the day after the announcement of the interim results.

(iii) In May 2002, the Listing Division wrote to New World saying that, as a result of investigations, it was minded to commence disciplinary proceedings. First, it was alleged that New World had breached its listing agreement in that a member of its corporate communications department had leaked information concerning the interim results to certain analysts ahead of the public announcement. Second, it was alleged that the executive directors (the second to fifth applicants) had breached their undertakings to put in place adequate control procedures to prevent such leaks. The Listing Division indicated that it was minded to seek a public censure of all the applicants.

(iv) It should also be said that at a later stage (in December 2002), the Listing Division sought an additional sanction; namely, that New World should appoint independent accountants, those accountants to conduct a review of New World's internal procedures in order to make recommendations for the tightening of procedures in order to prevent leakage of unpublished price-sensitive information, there to be consequent liaison with the Listing Division as to implementation of any recommendations.

(v) The applicants responded to the Listing Division's letter of May 2002 in an attempt to dissuade the Listing Division from its intended course.

(vi) In September 2002, however, the Listing Division informed the applicants that a decision had been made to take formal action against them.

19.The October report made it plain that the alleged breach of the Listing Rules by the applicants was not merely technical. The following summary from the report is self-explanatory :

"8.1	Prior to the publication of its interim accounts for the first half financial year 2001, the actual net profit of [New World] was a matter of speculation in the market. On 9th March 2001, Goldman Sachs published a forecast of $730 million for [New World's] interim net profits and on 12th March 2001, Vickers Ballas published a forecast of $628 million.
8.2	The Division's findings are that in the afternoon of 13th March 2001, the interim accounts of [New World] were ready and it came to Mr Kwok's [an employee in its Corporate Communications Department] knowledge that the actual net profit figure was about $300 million. Mr Kwok then telephoned several analysts and disclosed to them the net profit figure. The analysts immediately circulated the information imparted to them by Mr Kwok although it was not until 15th March 2001 when the Board of [New World] approved and published the interim accounts.
8.3	At the time of the disclosure of the information by Mr Kwok, the interim profit figure of the company was material information which might reasonably be expected to affect [New World's] activities and the price of [New World's] securities and which would place persons to whom the information was being divulged in a privileged dealing position. In the event, from 9th to 15th March, 2001 inclusive, the price of [New World's] securities fell by approximately 24 per cent and on 14th March 2001, a total of 33.5 million of shares were traded on the Exchange, representing approximately 1.60 percent of the then issued share capital of the company and approximately 4.40 times the average trading volume of the shares over the 10 days period prior to and including 14th March 2001."

20.The October report made reference to interviews conducted by the SFC with a number of financial analysts and also employees of New World. In their interviews, some of the analysts said that they had received premature guidance concerning New World's interim figures. However, New World's employees, in their interviews, while they accepted that there had been conversations with the analysts prior to the announcement of the interim results, denied that unpublished price-sensitive information had been imparted. In short, on the face of the records of interview, there was a fundamental conflict of fact as to the nature of the information given to the analysts.

21.The applicants were of the view that in any event the evidence relied upon by the Listing Division was, to quote from the second affirmation of Mr Leung Chi Kin, Group General Manager of New World, 'unreliable and legally inadmissible'. This was so, it was submitted, because it had been gathered by SFC officers pursuant to certain far-reaching powers bestowed upon them under the Securities and Futures Commission Ordinance, Cap.24. Those powers, however, were to be exercised for limited purposes which did not extend to disciplinary proceedings under the Listing Rules.

22.Subsequent to its receipt of the October report, the Listing Committee formed a Disciplinary Committee to decide the case, its Chairman being a senior solicitor.

Sanctions that may be imposed

23.The Listing Committee, sitting as a disciplinary tribunal, may impose a number of sanctions. It may :

"(1) issue a private reprimand;

(2) issue a public statement which involves criticism;

(3) issue a public censure;

(4) report the offender's conduct to the [SFC] or another regulatory authority (for example the Financial Secretary, the Commissioner of Banking or any professional body) or to an overseas regulatory authority;

(5) ban a professional adviser or a named individual employed by a professional adviser from representing a specified party in relation to a stipulated matter or matters coming before the Listing Division or the Listing Committee for a stated period;

(6) require a breach to be rectified or other remedial action to be taken within a stipulated period including, if appropriate, the appointment of an independent adviser to minority shareholders;

(7) in the case of wilful or persistent failure by a director of a listed issuer to discharge his responsibilities under the Exchange Listing Rules, state publicly that in the Exchange's opinion the retention of office by the director is prejudicial to the interests of investors;

(8) in the event a director remains in office following a public statement pursuant to (7) above, suspend or cancel the listing of the issuer's securities or any class of its securities;

(9) in the case of wilful or persistent failure by a listed issuer to discharge its responsibilities under the Exchange Listing Rules, order that the facilities of the market be denied for a specified period to that issuer and prohibit dealers and financial advisers from acting or continuing to act for that issuer;

(10) take, or refrain from taking, such other action as it thinks fit, including making public any action taken pursuant to paragraphs (4), (5), (6), (8) or (9) above."

The Disciplinary Procedures

24.The Disciplinary Procedures (adopted by the Listing Committee in July 1996 pursuant to Rule 2A.15 of the Listing Rules) set out the nature and function of disciplinary proceedings. Para.2.7 states that :

"The function of the Listing Committee in disciplinary proceedings is to decide whether there is a breach of the Listing Rules in light of the facts before it and to determine the appropriate sanction to be imposed in case of a finding that breaches of the Listing Rules have occurred. The Listing Committee shall have regard to all relevant circumstances, including the facts as contained in the written submissions, the documentary evidence appended to the submissions, and any oral evidence and submissions made before the Listing Committee at the hearing."

25.The proceedings are meant to be essentially informal. In this regard para.6.1 of the Disciplinary Procedures reads :

"The Listing Committee is a lay and informal tribunal, and it is the intention of the Listing Committee to keep the first instance hearing informal."

Para.6.2 underscores the informal nature of proceedings :

"Rules of Evidence do not apply. The Listing Committee may receive any material, written or otherwise, and attach such weight as it thinks appropriate to these materials, notwithstanding that such material may not be admissible in civil or criminal proceedings."

26.A defining characteristic of the Disciplinary Procedures is the requirement to reduce to writing all representations in respect of the issues in dispute thereby avoiding the risk of drawn out hearings. In this regard, Para.2.5 reads :

"The hearing is primarily by way of written submissions exchanged in accordance with the procedural time-table. Whilst the procedures allow for limited oral submissions to be made at the hearing, all submissions should, so far as possible, be contained in the written submissions which are delivered to the Listing Committee in advance of the hearing through the Secretary to the Listing Committee (the 'Secretary'). This gives the other parties to the hearing fair notice of the case and ensures that the hearing is kept as brief as possible. Given the nature of the tribunal, the Listing Committee discourages lengthy oral submissions and in so far as they are deemed necessary at all, oral submissions should be limited to matters not contained in the written submissions."

27.The Disciplinary Procedures allow for the presence of legal advisers but within a limited ambit. Para.5.1 states that a party who is the subject of disciplinary proceedings at first instance may be accompanied by a legal adviser. However, it continues :

" Whilst a Party may confer with his/her legal adviser at any stage during the first instance hearing, all submission should be made by the Party(ies) and all questions addressed to a Party by the Chairman and/or any members of the Listing Committee present at the first instance hearing must be answered directly by that Party and not through his/her legal adviser."

28.Although para.5.1 directs that a party himself, and not his legal representative, must directly answer questions put to him by the Disciplinary Committee and must make his own submissions, it is silent on the question of the examination and cross-examination of witnesses by a party's lawyer. I see nothing in the paragraph which prohibits it and it would seem therefore that, in appropriate circumstances, the drafters of the Procedures have recognised that it may be appropriate.

Submissions as to legal representation

29.The applicants sought leave for their legal representatives to represent them without any restriction; in other words as fully as if the hearing was taking place in a court of law of the classic kind. There were three reasons why they did so. First, the complexity of legal issues as to the admissibility of evidence; second, the fundamental conflicts of fact and, third, the seriousness of the allegations taken together with the weight of possible sanctions if the allegations were found proved. In his second affirmation, Mr Leung Chi Kin summarised the applicants' position by contending that -

"... as a result of the complexity of the legal arguments, the material disputes of fact and issue of credibility and reliability of the witnesses, the seriousness of the allegations, and the sought consequences of public censure and intrusive mandatory reviews, this is an appropriate case necessitating the full and unencumbered representation of the Applicants by counsel for the making of submissions (including legal submissions) and the examining and cross-examining of witnesses of fact without restriction as to manner or ambit."

30.The Listing Division (responsible for prosecuting the matter) did not oppose any application for the examination and cross-examination of witnesses by the applicants' legal representatives. In this regard, in written submissions to the Chairman of the Disciplinary Committee, it said the following :

"It is submitted by the Company [New World] and its Executive Directors ... that in light of the existence of a substantial dispute of a material fact, the Division must call the makers of the statements to give oral evidence at the disciplinary hearing and the parties concerned be given the opportunity to cross examine by counsel.

Ultimately, it is for the Listing Committee to decide whether to hear oral testimony from witnesses or to allow examination of witnesses by counsel. However, it is the Division's current intention to seek to call [the names of potential witnesses are given]. If the Listing Committee decides that it is appropriate for witnesses to be called, the Division considers that, in the exceptional circumstances of the case, it would be appropriate for there to be examination and cross-examination of all witnesses by counsel, although again this is a matter for the Listing Committee." [my emphasis]

31.The Listing Division, however, made no representations as to full and unlimited representation of the applicants by their legal representatives, such representation being prohibited in terms of the Disciplinary Procedures.

32.On 23 May 2003, the parties; that is, the Listing Division and the applicants, were given the provisional directions of the Chairman of the Disciplinary Committee. An opportunity was given to them to make submissions.

The Chairman's directions

33.On 25 June 2003, in light of those submissions, the Chairman gave the Committee's final directions. In a covering letter, the Chairman emphasised that the Disciplinary Committee was a lay committee and that strict rules of evidence did not apply. The purpose of the directions, he said, was to ensure the fair, efficient and effective conduct of the proceedings. The directions may be summarised as follows :

(i) The factual issues in dispute were to be identified by the parties and defined.

(ii) The parties were at liberty to call witnesses subject to prior disclosure of their intended evidence by way of their witness statements or a summary of those statements.

(iii) Cross-examination of witnesses by the parties would be restricted to the factual issues in dispute and matters contained within the prior disclosure of their intended evidence. [There was no direction as to who may cross-examine.]

(iv) Submissions by the parties would, in the words of the Chairman : "otherwise be presented in accordance with the usual practice provided for in the Disciplinary Procedures (a brief opportunity to consult with legal advisers, upon the conclusion of any oral evidence and prior to presentation of closing submissions, will be allowed)."

(v) While the parties could be accompanied by legal advisers, those advisers would not again in the words of the Chairman : "be permitted to address the Committee (whether in respect of oral submissions, the examination of witnesses of fact or otherwise)."

34.The Chairman's directions do not in stated terms prohibit the examination and cross-examination of witnesses by legal representatives. That issue has been left open and, it seems to me, must be a matter for future directions if they are sought. What is not in any way ambiguous, however, is that oral submissions to the Disciplinary Committee may not be made by legal representatives nor may questions addressed to a party by the Committee be answered by the party's lawyer. Legal representation is to that degree restricted. The lawfulness of that restriction is the central issue in these proceedings.

The relief sought

35.The directions of 25 June 2003 constitute the decision which is challenged by the applicants. In respect of that decision, the applicants seek the following :

"1. A declaration that insofar as the Decision purports to deny legal representation, or proper and effective legal representation, to the Applicants at the hearing of the Disciplinary Proceedings against the Applicants, the Decision in null, void or otherwise of no legal effect on the ground that it is calculated to deprive (or in the circumstances is bound to deprive) the Applicants of a fair hearing and the right to fair legal representation, in breach of the Basic Law and the Hong Kong Bill of Rights Ordinance, Cap.383, as well as the fundamental rules of natural justice.

2. An order of certiorari to quash the Decision.

3. An order of mandamus to compel the Disciplinary Committee to allow the Applicants full and unencumbered legal representation, by legal representatives of the Applicants' own choice, at the Disciplinary Proceedings against the Applicants, including in particular the recognition of the entitlement of the Applicants' legal advisers, as of right, to address the Disciplinary Committee (including the making of both oral and written submissions) and to examine witnesses of fact at all hearings conducted by the Disciplinary Committee against the Applicants in the Disciplinary Proceedings."

Is judicial review the appropriate remedy?

36.It is accepted that the Stock Exchange, in the exercise of its disciplinary responsibilities, may, in limited circumstances, be the subject of judicial review.

37.In Stock Exchange of Hong Kong Ltd v. Onshine Securities Ltd [1994] 1 HKC 319, the Court of Appeal said that, where there is an adequate alternative remedy available, judicial review should only be granted in exceptional circumstances. In this regard, the Court said (at 328) :

" 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.

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.

We accept this submission. The authorities in our judgment establish that (save in exceptional circumstance 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."

38.As to what constitutes an exceptional circumstance, the Court of Appeal said that this was not susceptible to exhaustive definition. 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."

39.In its dicta, the Court of appeal was essentially reflecting the general rule that judicial review is a collateral challenge and where statutory or domestic procedures are in place for dealing with the issues in question by way of appeal or review, advantage must first be taken of those procedures. See, for example, R v. Inland Revenue Commissioners, ex parte Preston [1985] AC 835, per Lord Scarman at 852 :

" My fourth proposition is that a remedy by way of judicial review is not to be made available where an alternative remedy exists. This is a proposition of great importance. Judicial review is a collateral challenge: it is not an appeal. Where Parliament has provided by statute appeal procedures, as in the taxing statutes, it will only be very rarely that the courts will allow the collateral process of judicial review to be used to attack an appealable decision ..."

40.Mr Griffiths SC, leading counsel for the applicants, has submitted that the Listing Rules and the Disciplinary Procedures provide no remedy or, in so far as they do make provision for an appeal procedure, provide an entirely inadequate one. He has further submitted that exceptional circumstances, as contemplated by the Court of Appeal in Onshine Securities, exist to justify this Court exercising its supervisory jurisdiction at this time. For the respondent, Mr Scott SC has said that adequate alternative remedies are available and should first be pursued. He has rejected the contention that exceptional circumstances exist to warrant this Court's intervention.

41.I can deal with this issue reasonably succinctly. I believe there is merit in the contention by Mr Griffiths that the Listing Rules and Disciplinary Procedures do not provide an alternative remedy in respect of interlocutory directions as to procedure, certainly not an adequate one. I say this in light of the fact that limited legal representation is not merely at the discretion of a disciplinary committee, whether sitting at first instance or on appeal, but has been 'codified' by being laid down in the Disciplinary Procedures. However, I do not need to come to a determination on the alternative remedy issue because, accepting that the existence of an alternative remedy goes only to discretion, I am of the view that in the present case exceptional circumstances warrant the exercise of this Court's supervisory jurisdiction. I have come to this conclusion for a number of reasons.

42.First, and of paramount consideration, the applicants' complaint goes to the essential lawfulness of the disciplinary proceedings to which they are subject. If the applicants are correct and the failure to afford them the right of unlimited representation offends art.35 of the Basic Law or the rules of natural justice then the proceedings as a whole are vitiated. In short, their challenge goes to the issue of jurisdiction. In Onshine Securities, the Court of Appeal placed within the definition of exceptional circumstances cases in which a tribunal has no jurisdiction or, to put it another way, is acting ultra vires, or where the proceedings before it are based on a fundamental error of law. In my view, both examples (in so far as the assertions are made by the applicants) apply in the present case.

43.Second, I believe that the interests of justice dictate that the court should intervene at this stage. The intervention will not only result in abating litigation within the disciplinary process but, in the broader public interest, will set parameters for the future guidance of the Listing Committee and persons appearing before it as to the impact of art.35 of the Basic Law upon its disciplinary procedures. In my judgment, the question that often has to be asked, and should be asked here, is not simply whether there is an appeal procedure in place but whether the issue in question can sensibly be determined by that procedure. If the appeal procedure is not apt to deal with the question raised then it seems to me that there is nothing to prevent his Court exercising its jurisdiction. In the present case, as I have said, the issue in question goes to the validity of the disciplinary proceedings in light of fundamental rights guaranteed Hong Kong's primary document of constitution. While I do not suggest that hearings pursuant to the Listing Rules and Disciplinary Procedures are incompetent to deal with that issue, I am satisfied that it is not an issue best suited to the particular expertise of the Listing Committee. The more apt procedure, the more sensible one, and the one that best meets the interests of justice, is that the issue be determined by this Court.

44.In the exercise of my discretion, I am therefore satisfied that exceptional circumstances, as defined by the Court of Appeal in Onshine Securities, do exist in the present case and that judicial review is the most effective, expeditious and convenient course for determining the issues in this case.

The application of art.35 : is the Disciplinary Committee a 'court'?

45.Art.35 of the Basic Law does not guarantee Hong Kong residents the right to legal representation before all bodies which may exercise powers determinative of their rights. Art.35 only guarantees the right to legal representation 'in the courts'. Accordingly, if the applicants are entitled to legal representation before the Disciplinary Committee pursuant to art.35, they must demonstrate that it is a 'court' within the meaning of that article.

46.The jurisprudence on this point is limited. Indeed, only one authority directly on point was cited, that of the Court of Appeal in Dr. Ip Kay Lo, Vincent v. The Medical Council of Hong Kong [2003] 3 HKC 579. In that judgment, Cheung JA said the following :

" 6. The Basic Law is an instrument which sets out fundamental principles rather than detailed provisions like an ordinary statute. One would not expect the Basic Law to give a detailed definition of courts and tribunals. The use of tribunals are so prevalent in Hong Kong that it will need a strong case to justify the exclusion of tribunals from coming under the general word 'courts'.

7. Further, the Basic Law being a constitutional document should be given a purposive interpretation. The purposive approach will provide the flesh to these principles. Article 35 is clearly an article which is concerned with the legal rights of a Hong Kong resident ...

8. In my view the word 'courts' should extend to the tribunals performing judicial functions. A judicial decision is made according to the rules and not policies (see Wade & Forsyth on Administrative Law (8th Ed) p 40). Such a decision has to be made judicially because it affects the rights of a person as authoritatively reaffirmed in Ridge v Baldwin [1964] AC 40.

9. Without deciding more than it is necessary, my view is that the word 'courts' extend to statutory tribunals like the inquiry of the Council which is established by s 21 of the Medical Registration Ordinance (Cap 161) (the Ordinance) with the procedures being governed by the Medical Practitioners (Registration and Disciplinary Procedure) (the Regulation)."

47.Cheung JA was careful not to lay down a comprehensive definition of what constitutes a court in terms of art.35, restricting the ambit of his findings to no more than was necessary to determine whether the Medical Council, a body formed under statute and given wide-ranging disciplinary powers in terms of that statute, including the power to suspend or remove registered medical practitioners from practice, was a court in terms of the article. He restricted his findings in this way because he had not had the benefit of full argument on the subject. Indeed, it appears that no authorities relevant to the question were brought to his attention.

48.I note too that the other two members of the court, Yuen JA and Burrell J, did not themselves deal with the issue in any way although Burrell J, without finding the need to add anything, said that he concurred with Cheung JA's judgment.

49.I am satisfied that I am bound by this judgment. A lack of cited authority does not per se make it per incuriam nor were the findings obiter. But I am bound, of course, only to the limited extent intended in the judgment.

50.In terms of art.35, therefore, a court is not restricted to courts of law (or judicature) which form part of the established judicial system of Hong Kong and to which the public at large is subject. A court may include tribunals (by whatever name they are known) which perform judicial functions in respect of a limited class of persons.

51.As to what constitutes the performance of a judicial function, Cheung JA relied on the definition contained in the academic text, Administrative Law (8th Ed) by Wade and Forsyth, in which the authors say the following (at page 40) :

" A judicial decision is made according to rules. An administrative decision is made according to administrative policy. A judge attempts to find what is the correct solution according to legal rules and principles. An administrator attempts to find what is the most expedient and desirable solution in the public interest. It is true, of course, that many decisions of the courts can be said to be made on grounds of legal policy and that the courts sometimes have to choose between alternative solutions with little else than the public interest to guide them. There will always be grey areas. Nevertheless the mental exercises of judge and administrator are fundamentally different. The judge's approach is objective, guided by his idea of the law. The administrator's approach is empirical, guided by expediency."

52.But the fact that a tribunal, empowered to determine the rights to individuals, is required to exercise a judicial function by finding facts and objectively applying a given set of rules to them cannot, in my view, be exhaustive in defining that tribunal as a court in terms of art.35. Cheung JA did not go that far while authorities on the subject of what does or does not constitute a 'court' are to the effect that there is no confined definition.

53.As Lord Edmund-Davies said in Attorney-General v. BBC [1981] AC 303, at 351F :

" At the end of the day it has unfortunately to be said that there emerges no sure guide, no unmistakable hall-mark by which a 'court' or 'inferior court' may unerringly be identified. It is largely a matter of impression."

In the same case, Lord Fraser of Tullybelton observed that today a large number of tribunals are created by legislation, many of which are on 'the borderline' between classification as a court or a tribunal of administrative character.

54.Many purely administrative bodies must make findings of fact, must ensure fairness and must act judicially. But it emphatically does not follow that they are thereby to be classified as courts. In Royal Aquarium and Summer and Winter Garden Society Ltd v. Parkinson [1892] 1 QB 431 (at 452) Lopes LJ said :

"The word 'judicial' has two meanings. It may refer to the discharge of duties exercisable by a judge or by justices in court, or to administrative duties which need not be performed in court, but in respect of which it is necessary to bring to bear a judicial mind that is, a mind to determine what is fair and just in respect of the matters under consideration. Justices, for instance, act judicially when administering the law in court, and they also act judicially when determining in their private room what is right and fair in some administrative matter brought before them ..."

55.The difficult question of what is or is not a court was considered at length in Attorney-General v. BBC (para.54 supra) and Mr Scott, for the respondent, placed considerable reliance on it. That case, of course, considered the question within an entirely different context (i.e. as to whether a valuation tribunal fell within the class of inferior courts to which the law of contempt applies). Nevertheless, in a general sense, I believe guidance can be taken from it.

56.One of the characteristics of a court that was considered in the various speeches was the source of its creation. If a tribunal was to be recognised as a court, it should have been created by the state, invariably by means of statute. In Dr. Ip Kay Lo, Vincent v. The Medical Council of Hong Kong (para.48 supra) Cheung JA, in holding the Medical Council to be a court for the purposes of art.35, recognised that its disciplinary powers were created by statute and that it was therefore one of a class of statutory tribunals; in short, that it was a creation of the state.

57.A statutory tribunal is, of course, to be distinguished from a tribunal created by agreement between private persons, one that derives its authority from contract or some similar form of consensus. These type of tribunals are sometimes classified as domestic tribunals.

58.What then of the Listing Committee acting pursuant to the Listing Rules as a disciplinary tribunal?

59.By way of an overview, it seems to me that the Securities and Futures Ordinance directs that, if a person (and there may be more than one) is given permission to run a stock exchange business, that person is obliged to create a set of acceptable rules for the fair and orderly administration of that business. These are rules which are to be monitored by the SFC (and which the SFC may in the final result impose) and are to be binding on those persons who agree to participate in the business. It is therefore a statutory obligation imposed upon the operator of a stock exchange to create acceptable rules for the administration of that exchange, such rules to include rules for fairly investigating and disciplining their breach. But the exact nature of those rules is a matter for the stock exchange operator. The role of the SFC is essentially one of a monitor. It is to ensure that the rules are acceptable; that is, sufficient to ensure the fair and orderly running of the market in the interests of the investing public.

60.In advocating that the Listing Committee, sitting as the first instance Disciplinary Committee, is a court, Mr Griffiths has emphasised the legislative nexus. He has emphasised that, while the relationship between the applicants and the respondent is contractual, the requirement for disciplinary procedures and sanctions under that contractual relationship is imposed by statute and is subject to the supervision of a statutory body so that the greater public interest, not merely the private, contractually-based interests of the parties themselves, may be protected. As I comprehend it, it has therefore been suggested that the Committee is a quasi statutory tribunal and, in fulfilling essentially the same disciplinary functions as the Medical Council, is itself a court.

61.In opposition to this, Mr Scott has contended that the Listing Committee, in the exercise of its disciplinary responsibilities, is in all respects a domestic tribunal and, while it may be amenable to the judicial review jurisdiction of this Court, cannot be classified as a 'court' for the purposes of art.35. In this regard, Mr Scott has emphasised a number of matters :

(i) The Committee is not a creation of statute, it is the creation of the Listing Rules and obtains its jurisdiction solely from those Rules.

(ii) The Committee derives its authority over the applicants (and all those who appear before it) from contract not statute. The applicants are not subject to its jurisdiction because a statutory instrument so dictates, they are bound to it because they have agreed to be bound : there is no other nexus.

(iii) While it is true that the respondent, in running the stock exchange - a market-driven, share-trading business - is obliged by statute to create a set of acceptable rules to ensure that those who wish to participate in that business adhere to certain standards, it cannot be said that such rules (the Listing Rules) are thereby statutory rules. They remain rules compiled by the respondent as it has deemed best for the orderly regulation of a free-market business to which persons wishing to participate in that business bind themselves by way of agreement only.

(iv) The procedures for disciplinary matters, while subject to the monitoring of the SFC, are procedures created solely by the respondent as it has deemed best and are adhered to by consensus. There is, for example, no obligation imposed by statute to ensure that the rules of evidence are adhered to or any statutory-derived power to issue subpoenas; there is no power to punish for contempt.

(v) The Listing Committee does not act as a licensing authority for Government. Even though there is presently only one stock exchange in Hong Kong and in that respect companies desiring a listing are given Hobson's choice, if they do not care to bind themselves to the Listing Rules they are not thereby debarred from carrying on their business.

(vi) Appeal and review procedures are all internal. There is no right of appeal to a judge of first instance or to the Court of Appeal as there is, for example, with the Medical Council. The judicial machinery of the state is not integral to the disciplinary process.

62.In my view, Mr Scott must be correct. While art.35, which secures fundamental rights, must be read purposively, that does not mean that the clear wording of the article can be stretched out of shape. The article speaks only of 'courts' and I have no hesitation in concluding that, when viewed in the round, the Listing Committee sitting as a disciplinary tribunal, while it is amenable to judicial review, is not and cannot be classified as a court for the purposes of art.35 of the Basic Law. As such, the applicants are unable to avail themselves of the rights guaranteed under the article.

Art.10 of the Bill of Rights

63.Although not directly advocated during the course of the hearing, it was part of the applicants' case that the limitation on their right to legal representation offends art.10 of the Bill of Rights. I have cited the relevant portion of that article in para.4 supra.

64.The first question, of course, is whether art.10 applies to the applicants in this case. The article speaks of persons facing criminal charges or seeking determination of a 'suit at law'. I have my doubts that disciplinary proceedings before a domestic tribunal exercising its authority on the basis of consensus would constitute a suit at law. But assuming for the purposes of this judgment only that, private law rights being in issue and the decision of the Disciplinary Committee being subject to judicial review, the applicants are parties to a suit at law, the second question is whether art.10 in any way guarantees a right of legal representation.

65.While art.10 in specific terms enshrines the principles of access to Hong Kong's courts and tribunals and to a fair hearing, it is silent on the matter of legal representation. In this regard, it is to be contrasted with art.11 which, in defining the rights of a person charged with a criminal offence, provides that such a person is entitled, if he chooses not to defend himself, to do so through 'legal assistance' of his choosing.

66.It would seem to me therefore that, in the present case, if a right to legal representation is to be found in art.10, it must flow from the concept of a fair hearing. I say that because the authorities (drawn mainly from cases litigated under the International Covenant on Civil and Political Rights) are unanimous in holding that one of the aspects of a fair hearing is the right to 'equality of arms'.

67.On behalf of the applicants, Mr Griffiths has pointed to the fact that the Listing Division, the division responsible for enforcing the Listing Rules and prosecuting any alleged breach, contains persons who are professionally qualified : accountants, lawyers and the like. It follows that in all probability (it can be put no higher) the disciplinary proceedings to which the applicants are subject will be prosecuted by a qualified lawyer. The applicants themselves, however, while they will be able to have their legal representatives attend the hearings and will be able to confide in them, will have to speak for themselves. That, Mr Griffiths has said, demonstrates an inequality of arms which will in the present case prevent a fair hearing.

68.I am not persuaded by these submissions. By way of an overview, I believe it is important not to lose sight of the fact that the Listing Rules are there to regulate a single area of commercial activity : the running of and participation in a stock market. Disciplinary proceedings relate only to alleged breaches of those Rules. They relate solely therefore to market matters. Persons who are brought before the Committee (such as the applicants) are representatives of or executive directors of listed companies. They are persons reasonably presumed to have experience in and knowledge of the market and the rules which regulate that market. They are not therefore lay persons, ignorant of the issues. They are (whether by way of business experience and/or professional qualifications) persons who are themselves tutored in the way of the market and the manner of its regulation.

69.It is also important to look to the nature of the disciplinary process. The Disciplinary Procedures make it plain that disciplinary hearings are not to be burdened with the rules of evidence, that the procedures are to be informal and that the emphasis is to be on 'written submissions' exchanged in accordance with a procedural time-table. Para.2.5 of the Disciplinary Procedures states that, while the procedures allow for 'limited' oral submissions at a hearing, all submissions should, as far as possible, be contained in the written submissions filed before the hearing. The Disciplinary Procedures ensure therefore that persons who are subject to those procedures do not have to struggle with the laws of evidence or procedural formalities. In addition, with the emphasis on written submissions, it means that such persons are able to place before the Committee all matters (as to law and fact) which they consider relevant with those matters advised upon and written by legal advisers before the hearing takes place.

70.It is also to be noted that persons who are brought before the Committee may be accompanied by legal representatives and may take advice from them before answering questions or making final 'limited' oral submissions.

71.As to the issue of cross-examination of witnesses, as I have said earlier, the Disciplinary Procedures, as I read them, do not (in stated terms) prohibit cross-examination by legal representatives. In the present case, of course, the Chairman's directions have not pronounced specifically on the issue and the issue therefore, as I see it, remains for his determination if he is requested to make a direction in that regard.

The Common Law

72.The common law imposes minimum standards of procedural fairness. The concept of procedural fairness embraces the requirement for a fair hearing and that requirement encompasses the principle of equality of arms. But contemporary principles of administrative law do not support an absolute right to legal representation. The editors of de Smith, Woolf and Jowell, Judicial Review of Administrative Action (5th Ed.), at 9.031, say the following :

" As regards informal proceedings before a domestic tribunal, it is ... the case that such bodies possess a discretion as to whether to allow representation, although the courts will be less willing to intervene [than in respect of a statutory tribunal] where representation is refused, even where the character of the hearing is disciplinary. However, it may be that where the allegation is an 'infamous' one, the tribunal can only reasonably exercise its discretion in one way, and there is therefore a duty to allow legal representation.

No matter what the status or functions of the tribunal, it would be contrary to the requirements of procedural fairness to allow one side to be legally represented but to refuse the same right to the other.

...

In considering whether procedural fairness implies a right to legal representation (if a party is able to obtain it), it should be borne in mind that only reasonable standards of fair adjudication, and not ideal standards, are required. Whether, and if so when, legal representation ought to be permitted before a tribunal can raise difficult questions of policy." [my emphasis]

The editors suggest that the development of case law in respect of implied rights to legal representation in 'non-statutory environments' should be guided by a realistic appraisal of the interests of those who seek it as well as the interests of the organization to which they belong. In respect of the present case, that would seem to me to be a proper approach.

73.It is said that in law context is everything and fairness, of course, must itself be identified in context. Put simply, what may be seen as according with minimum standards of procedural fairness in one set of circumstances may be seen as falling below that minimum in a different set of circumstances.

74.In the present case, Mr Scott has laid emphasis on the consensual foundations of the disciplinary procedures contained in and flowing from the Listing Rules. I believe he has been correct to do so. I say this, acknowledging, as I have done earlier, that there is at this time only one stock exchange in Hong Kong and companies that wish to obtain the benefits of being listed are constrained by that fact. But why should consensual foundations be relevant? The answer, I believe was succinctly given in the Australian authority of Dale v. New South Wales Trotting Ltd [1978] 1 WSWLR 551 (at 558) in which it was said :

" As this is a consensual tribunal, and the plaintiff has agreed to submit himself to an appeal conducted in accordance with the rules, he cannot object to the committee taking any steps which are consistent with the rules and cannot, in objecting, rely upon other methods and other standards required in tribunals which have a statutory or non-consensual basis."

This is not to say, of course, that consensual procedures can ignore minimum standards of fairness. The point really is that if parties have freely agreed that a particular process is acceptable and have (in their own interests and the interests of those joined with them in the same field of commercial endeavour) bound themselves to that process then that is a matter which should be taken into account in considering whether, in that particular set of circumstances, minimum standards of fairness have or have not been met.

75.In so far as the question of legal representation lies within the discretion of a tribunal, in Jenny Chua Yee Yen v. Hong Kong Polytechnic (unreported) MP 2825/1991, Mayo J (as he then was), following English authority, said that, in addition to any matters peculiar to a case, the following matters should be taken into account : (1) the seriousness of the charge; (2) whether points of law are likely to arise; (3) the capacity of an individual to adequately present his own case; (4) whether procedural difficulties are to be encountered; (5) the need for speed, and (6) the need to ensure fairness. In the present case, in so far as it is suggested that the Chairman acted unlawfully in the exercise of his discretion in limiting the applicants' ability to be fully represented, I use that guide to make the following observations :

(i) While the charges are serious and the sanctions that are sought may damage the reputation of the applicants, no financial penalty is at risk nor removal of New World as a listed company. 'Infamous' conduct is in no way alleged.

(ii) Yes, points of law, complex points, are to be argued. But the applicants have filed detailed written submissions prepared by their lawyers or with the benefit of legal advice and will have the opportunity to file further submissions or read from them in closing their cases.

(iii) As to individual capacity, I am told that the executive directors (the second to the fifth applicants) are all experienced businessmen who will, in any event, have the right to be accompanied by a lawyer and to confide in that lawyer.

(iv) Procedural difficulties present no impediment. Informality, free of the rules of evidence, is the order.

(v) This matter has proceeded without great haste. In this case, speed is not a issue of importance and should not of itself militate against full legal representation.

(vi) As for general fairness, while the prosecutor, a member of the Listing Division, may be legally qualified, as the emphasis will be on written submissions and as the applicants will in any event be entitled to be accompanied by their lawyers, I do not see how, in all the circumstances, the fact that the prosecutor may be legally qualified will of itself result in such inequality in arms as to render the hearing unfair.

76.Finally, on a more general basis, it seems to me that matters I have referred to and the findings I have made when looking to art.10 of the Bill of Rights apply equally when looking to the question of procedural fairness under the common law.

77.That being the case, I am not persuaded that under the common law the applicants have been denied equality of arms.

Conclusion

78.For the reasons given in the body of this judgment, I am of the view that the application for judicial review made by all the applicants must be dismissed. I see no reason why costs should not follow the event and costs are therefore awarded to the respondent.

Representation:

Mr John Griffiths, SC leading Mr Rosaline Wong and Mr Richard Zimmern, instructed by Messrs Woo, Kwan, Lee & Lo, for the Applicants

Mr John Scott, SC instructed by Messrs Richards Butler, for the Respondent