Allied Group Ltd. and Others v. The Attorney General and Another

HCMP001291/1993

The Judge has authorised publication of this Judgment.

1993 No. MP 1291

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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Coram: The Honourable Mr. Justice Kaplan in Chambers

Date of hearing: 7 June 1993

Date of delivery of judgment: 11 June 1993

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H E A D N O T E

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Administrative Law - Inspector appointed under S.143 of Companies Ordinance to inquire into affairs of a group of public companies - steering group appointed to moniter progress of inspection - whether leave to apply for judicial review should be granted on the basis that the steering group was ultra vires and/or there was an appearance of bias.

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J U D G M E N T

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1. I have before me applications for leave to apply for judicial review made on behalf of 3 applicants, namely, (1) Allied Group Limited, (2) Allied Properties (HK) Limited and (3) Mr. LEE Ming-tee. I refer to them collectively as the "Applicants".

2. This application came on ex-parte in the usual manner before Mr. Justice Rhind on 21st May 1993. The learned judge refused to grant ex-parte leave but ordered that the matter should be heard inter-partes and this took place before me on 7th June 1993.

3. I have now heard very full argument on both sides, orally and in writing, and I have been greatly assisted by all the advocates. As this matter is urgent, I have reduced my reasons into writing as a matter of urgency and trust that I will be forgiven for not setting out each and every argument relied upon by the parties.

4. On 14th August 1992, the Financial Secretary, exercising his power under s.143 (1)(c) of the Companies Ordinance, appointed Mr. Nicholas Allen, a partner in the firm of Coopers and Lybrands, Inspector of, inter alia, the Allied Group Limited and Allied Properties (HK) Limited.

5. On 8th August 1992, having considered in principle that it was appropriate for him to exercise his powers under this sub-section to investigate the affairs of, inter alia, the two corporate Applicants, he authorised the establishment of a Steering Group to:

(1) advise him of a suitable candidate to appoint as Inspector;

(2) assist him to monitor the Inspector's progress;

(3) assist him in relation to administrative matters arising during the course of the inspection.

6. The Financial Secretary left the decision of the exact composition of the Steering Group to the then acting Secretary for Monetary Affairs and although no formal appointments were to be made by the Financial secretary to this Steering Group, by the date of Mr. Allen's appointment on 14th August 1992, the membership of this group had been settled and comprised Mr. TAM Wing-pong (The then Deputy Secretary for Monetary Affairs), Mr. John Allen of the Attorney General's Chambers, Mr. Gerard McMahon of the Securities and Futures Commission (SFC) and Mr. Gannon the then Legal Advisor to the Monetary Affairs Branch. Mr. Gannon ceased to be a member of this group as from November 1992.

7. The Financial Secretary tells me that in view of his other responsibilities and duties, he considered that the appointment of a Steering Group was the most effective way, in the public interest, of monitoring the progress of the investigation and dealing with issues likely to arise during the course thereof. The Financial Secretary emphasizes that the Steering Group was not appointed to "supervise or assist" the Inspector 'in his work' as asserted on behalf of the Applicants.

8. The Financial Secretary tells me that since the inception of the inspection, he has been kept abreast of its progress and other matters relating thereto by regular reports made to him by the Deputy Secretary for Financial Affairs.

9. The Financial Secretary confirms that subsequent to Mr. Allen's appointment as Inspector, he authorised the establishment of the same Steering Group to perform the functions set out above in relation to another inspection being carried out by Mr. John Lees.

10. It is common ground that this is the first time that such a Steering Group has been set up in Hong Kong. On 17th October 1992, the Financial Secretary appointed Mr. Allen as inspector to investigate the affairs of a number of other companies which I understand to be connected with the corporate Applicants.

11. The form of relief set out in the Notice of Application for Leave to Apply for Judicial Review is the same in the case of each Applicant. Two decisions are impugned. Firstly, the Financial Secretary's appointment of Mr. Allen as Inspector and secondly, the establishment of a "Steering Committee" by the Financial Secretary or others.

12. The relief sought in the Notice of Application dated 21st May 1993 is as follows:

"1. An order of certiorari to quash the decision of the Financial Secretary in appointing Nicholas Allen as Inspector of Allied Group Limited.

2. An order of certiorari to qaush the decision of the Financial Secretary in establishing a "Steering Committee".

3. A declaration of the Financial Secretary has acted ultra vires.

4. Prohibition restrainting the Financial Secretary and Nicholas Allen from acting in excess of their respective jurisdictions, and

5. Stay of the inspection of Allied Group Limited."

13. Mr. John Griffths Q.C. who appeared on behalf of Mr. LEE, made it clear that he was not seeking an order of certiorari to quash the appointment of Mr. Allen. All applicants sought my leave to amend para. 3 of the relief by adding after the Financial Secretary the words "and/or the Inspector". I gave leave.

14. The grounds upon which relief is sought are set out in the notice as follows:

"(1) The said decisions are ultra vires.

(2) There was the appearance of bias."

15. Effectively, the Applicants are seeking a stay of the inspection of the Allied Group and Mr. Griffths told me that if I were minded to grant leave, the only interim orders he would seek are orders that the Inspector do not serve his report upon the Financial Secretary and it be not published pending the hearing of the substantive application for judicial review which, it is hoped, would be got on very quickly bearing in mind the urgency and public importance of this matter.

16. The evidence before Mr. Justice Rhind consisted of an affidavit by Mr. Sherrington, a partner in the firm of Lovell White Durrant who at all material times acted on behalf of the Applicants. At the hearing before me, Mr. Sherrington appeared, on behalf of the corporate Applicants. There were also two affidavits sworn by Mr. Brian O'Connor who was the Chief Executive of the Allied Group and there was an affidavit by Sir Gordon MacWhinnie who was a non-executive director of Allied Group Limited.

Mr. O'Connor's first affidvait

17. It is common ground that Mr. O'Connor only arrived in Hong Kong to take up his position in about September 1992. From the date he arrived in Hong Kong, he had regular contact with the Inspector. He says that at about 8.30 a.m. on 5th November 1992, he held a regular meeting with the Inspector and on that occasion he was told that Mr. McMahon of the SFC and Mr. Tam of the Office of Monetary Affairs were overseeing this investigation. He tells me that at the time of that conversation, he did not realise the significance of this revelation and took no further action.

18. On 6th April 1993, Mr. O'Connor tells me he had a telephone conversation with Mr. Stuart Crosby of the SFC who was acting as head of the Enforcement Division in Mr. McMahon's absence. The purpose of the conversation was to discuss the text of an announcement to be made by the Allied Group. During the course of this conversation, Mr. Crosby revealed to Mr. O'Connor that the draft chapters of the report, which had been prepared by the Inspector, had been issued to approximately 40 people. Mr. O'Connor expressed surprise that the report had been released to so many people, as he was not aware of 40 individuals (excluding the Inspector's staff and advisors) who had an interest in receiving draft chapters of the draft report. Mr. Crosby did not say who the potential recipients were, but Mr. O'Connor adds that he suspects that some or all of the recipients of the draft chapters were the members of the Steering Group.

19. I should add here that these draft chapters had been sent to the Applicants to enable them to comment on the tentative views expressed therein by the Inspector. As at the date I heard the matter, the Applicants had not yet responded and, as far as I know, had not yet decided whether they were in fact going to respond.

20. Mr. O'Connor goes on to tell me that on 21st April 1993, accompanied by Sir Gordon MacWhinnie, he met Mr. McMahon at the SFC office. During a discussion concerning the likely timing of production of the Inspector's report, Mr. Mcmahon apparently said that the Steering Group had received documents listing the subject matter of each draft chapter of the report and he told Sir Gordon and Mr. O'Connor that they could expect a total of 17 draft chapters. Mr.McMahon is then alleged to have added that he would know more about the likely timing of the report in the near future as he had a Steering Group meeting later that afternoon.

21. It was at this point that Sir Gordon apparently asked Mr. McMahon about the purpose of the Steering Group because he had been an Inspector and had never heard of a Steering Group. Apparently, he also said that he would not have allowed the establishment of a Steering Group because of his concern to be seen as independent. Mr. McMahon replied by saying that this was the first occasion upon which such a Steering Group had been appointed and said that its purpose was to decide policy. When pressed on this, Mr. McMahon said that this covered such matters as publication of the report and he said that the decision had already been taken to make the Inspector's proposed reportpublic. Mr. McMahon is then alleged to have said that the report had to be made public because of political pressure.

22. Mr. O'Connor goes on to say that it was only after this meeting on 21st April 1993 that he realised the significance of the Steering Group.

23. In his second affidavit, Mr. O'Connor expanded upon the conversation he had with Mr. Crosby on 6th April 1993. In that conversation, he alleges that Mr. Crosby said to him that the SFC were out to "get" Mr. LEE Ming-tee. Mr. Crosby is alleged to have said that Mr. Lee and his Australian companies had been pursued by the Australian Regulatory Authorities on an earlier occasion and that LEE Ming-tee had avoided censure on that occasion. He is then alleged to have added that he and the SFC would ensure censure of Mr. Lee at the end of the current investigation in Hong Kong.

Sir Gordon MacWhinnie's first affidavit.

24. Sir Gordon MacWhinnie tells me that he has read Mr. O'Connor's first affidavit and agrees with the description contained therein of the meeting held on 21st April 1993 with Mr. McMahon. He also makes the point that he would have objected to the imposition by the Executive Branch of Government of any supervision of an inspection had he been the Inspector.

Mr. Sherrington's first affidavit.

25. Mr. Sherrington sets out the background to this matter and deals with the various correspondence he has had with the solicitors acting for the Inspector namely Messrs. Herbert Smith and Co. I do not propose to refer to all the correspondence, but in a letter dated 17th May 1993 addressed to Messrs. Herbert Smith, Mr. Sherrington said this:

"Again, having regard to our comments on what amounts to a fair procedure, we are tempted to wonder if the inspector is being "steered". Please clarify whether the Financial Secretary or anyone else has required the inspector to submit his report by 23rd June or any similar date."

26. The position therefore, as the matter stood, on 21st May 1993, was that the Applicants were aware of the existence of the Steering Group and were expressing a fear that the Steering Group would in some way be influencing the work and conclusions of the Inspector.

The Inspector's affidavit.

27. I have before me an affidavit of Mr. Allen, the Inspector, which he swore on 1st June 1993. He tells me that his inspection has been extended into an investigation into approximately 250 related companies. Since the inception of investigation, he or his delegates have interviewed approximately 70 individuals. Investigation has also involved the obtaining and reviewing of documentation from close on 400 companies and 150 individuals. The existing budget for the Inspection is HK$41,000,000. Investigation is all but complete and draft chapters have been prepared in relation to the substantive transactions. The first of the draft chapters were sent out for comment on 1st April and the last of the draft chapters were despatched for comment on 28th May 1993.

28. The Inspector tells me that, as soon as he was appointed, he was told about the Steering Group which he was told was formed to assist the Financial Secretary to monitor the progress of the investigation and to discuss with the Inspector matters arising during the investigation. The Inspector confirms that he has reported regularly to the Steering Group or invididual members thereof principally in relation to the progress of his investigation and the likely submission date of his report, but also in relation to administrative matters such as costs and the budget for the inspection. The Inspector assures the court that none of the conclusions which he has reached have been subject to "the opinions or objectives" of members of the Steering Group nor has he consulted them invididually or as a group in relation to his conclusions. This is in direct response to Mr. Sherrington's statement in his affidavit that the Applicants are concerned that the Inspector's independence in the conduct of his investigation is inevitably compromised and his conclusions prejudiced if his investigation is subject to the opinion and objectives of the SFC.

29. The Inspector makes clear that the only involvement of the Steering Group in relation to the drafting of the report, was when he sought their views in relation to its format. He did this because he wished to consider with them whether any particular format might potentially inhibit the Financial Secretary in relation to his decision whether to publish part or all of the report.

30. In further answer to Mr. Sherrington's affidavit, the Inspector states that he was not aware that the Steering Group was appointed to supervise or assist his work as Inspector. As to his choice of 23rd June 1993 for submission of the report, he says, unequivocally, that this date was chosen by him without reference to the Steering Group. He confirms that neither the Financial Secretary nor the Steering Group has sought to impose a date upon him for the submission of his report. However, he accepts that it has been conveyed to him by the Steering Group that they desired to have the report submitted as soon as possible as they, and indeed, the Inspector considered that it is in the public interest so to do. The Inspector specifically denies that he has at any time been "improperly influenced or prevented from adopting an independent approach" by anyone as suggested by Mr. Sherrington in his affidavit nor has the Steering Group acted in a way designed to influence him improperly or to affect his independenence.

31. As to policy matters with which the Steering Group has been involved, the Inspector sets out the matter as follows:

(1) Whether his terms of reference should be extended;

(2) the cost and budget of the inspection;

(3) the format of the report; and

(4) whether regulatory or other bodies should be appraised of information he has obtained during his inspection.

32. The Inspector confirms to me that nobody from the SFC has told him that he should "get LEE Ming-tee" or anyone else involved in this inspection. Finally, the Inspector confirms that no one has imposed the Steering Group upon him, nor was it created to supervise him nor was it intended to, nor has it in fact, impaired his impartiality as Inspector.

33. In his affidavit Mr. McMahon of the SFC, confirms and assures the court that the Inspector has not sought his opinion in relation to the conclusions he has reached in respect of the inspection and nor has Mr. McMahon offered any opinions in relation thereto. He denies that the SFC is out to "get" Mr. LEE Ming-tee or any other party to the investigation. Mr. McMahon denies, improperly influencing the Inspector or preventing him from adopting an independent approach to his investigation. Mr. McMahon agrees that he did inform Mr. O'Connor and Sir Gordon that the purpose of the Steering Group was to "decide policy" and he confirms that it is true that there have been discussions within the Steering Group regarding the question of publication of the report. He also confirms that the Steering Group was involved in such matters as costs and the budget for the inspection.

34. Mr. Crosby has also sworn an affidvait in which he denies saying to Mr. O'Connor that the SFC was out to "get" Mr. LEE nor did he use any words to that effect. He denies saying that Mr. LEE had avoided censure in Australia and said he could not have said that because he believed that he had been censured. He, too, confirms that in so far as he has had any dealings with the Inspector, the Inspector has not sought his opinion in relation to the conclusions he has been reaching and nor has Mr. Crosby offered any opinions in relation thereto.

35. I have now set out the state of the evidence as it was on Friday, 4th June when the applicants appeared before me in the afternoon and sought an adjournment of the hearing on Monday which I refused. Over the weekend, there was, as can be imagined, a flurry of activity and I received further evidence.

36. Mr. O'Connor has put in a further affidavit in which he confirms what happened at the meeting on 21st April 1993. He then deals with certain matters relating to the work of the Public Relations Department of the Allied Group in relation to monitoring the Sing Tao Daily Newspaper and he also refers to the fact that the Allied Group has subscribed to the journal "Windows" since November 1992. The relevance of this will become clear later. Sir Gordon MacWhinnie has also put in a second affidavit in which he confirms that it was he who raised with Mr. McMahon the issue of a possible vendetta organised by the SFC against Mr. LEE.

37. Finally, there is the second affidavit of Mr. Sherrington who produces three sets of notes prepared by the clerk to the Finance Committee of the Legislative Council submitted to the members of that Council on 28th August 1992, 4th December 1992 and 21st December 1992. He states that these documents were obtained by a member of his firm during a review of the public files held by the Finance Branch of the Government Secretariat. He says his firm became aware of the existence of these documents when on Wednesday, 2nd June 1993. Mr. Sherrington also produces section H of a chapter in the Inspector's draft report headed "Share Trading by Wai Yick Limited" and also some other documents relating to a rights issue for Crusader Holdings Ltd.

38. The most important aspect of Mr. Sherrington's second affidavit is the production of the documents from the Finance Committee upon which both he and Mr. Griffiths have placed great reliance in their submissions.

39. The first document was issued on 28th August 1992 and it is a note for Finance Committee members on the inspection into the affairs of Allied Group Limited. Paragraph 4 reads as follows:

"The inspector has begun his investigation, which is likely to take up to six months. The progress of the inspection will be monitored by a Steering Group chaired by a Deputy Secretary for Monetary Affairs. One of the groups main aim would be to ensure that the inspection proceeds in a cost-effective manner."

40. The next document is an item for Finance Committee for discussion on 11th December 1992 in relation to the same inspection. Mr. Griffths relies upon the following passage:

"The government is conscience of the fact that a considerable sum may need to be spent on this type of investigation. Hence, in repsect of this case, progress of the inspection and performance of the inspector are monitored by a Steering Group shared by the Deputy Secretary for Monetary Affairs and including representatives of the Attorney General's Chambers and the Securities and Futures Commission to ensure that full value for money is achieved."

41. The next document is Notes on Decisions taken in Finance Committee on 11th December 1992 in relation to this Inspection. On this occasion, the Secretary for Monetary Affairs, Mr. Nendick, the Deputy Secretary for Monetary Affairs, Mr. TAM Wing-pong and the Deputy Crown Solicitor, Mr. John Allen attended before the Committee. Miss Emily Lau expressed deep concern at the amount of public money being spent on the investigation of the public companies. There then appears the following passage:

"In response to Miss Emily Lau, the Secretary for Monetary Affairs (SMA) advised that the investigations were a charge upon the general revenue and the Financial Secretary was able to commit funds when he appointed Inspectors. Members were informed of the commitments entered into at an early stage when the inspections were commissioned and also as the inspections continued and there was a better idea of the costs. In the modern commercial world, if there was the possibility of things going wrong in a company, they would often be very complex and inhibiting to investigations. Any grounds for taking criminal prosecutions should be identified as soon as possible. Appropriate teams had therefore been marshalled to obtain expeditious answers. A monitoring team of people with experience in relation to commercial law were in regular contact with the two inspectors and discussed the way in which the investigations could proceed with the objective of being able, if the evidence was uncovered, to pass matters over to the prosectuion authorities at the earliest possible stage."

42. In response to questions from other members, Mr. Nendick advised:

"The proposal represented the best estimates of what the total cost would be. He had asked the inspectors to concentrate on those areas which were likely to be most fruitful in producing results which could lead to the possibility of prosecution."

43. In answer to another member, Mr. Nendick advised:

"That the monitoring team contained the expertise of lawyers with substantial commercial experience. The inspectors were also employing legal advice, so that the direction of the investigation was most effective in addressing the issues likely to determine whether the offences were being committed which could be prosecuted. The monitoring team was charged with ensuring that value was being obtained from the investigation. It would not be practical to have the expertise employed in-house, because major investigations were exceptional. If the Securities and Futures Commission were to be involved in early investigation, they would require to have expertise available in-house."

44. That then was the state of the evidence before me on 7th June 1993.

Delay

49. It is common ground that Mr. O'Connor, the Managing Director of Allied Group Limited was informed in November 1992 of the existence of the Steering Group. Clearly everybody on the Allied side was aware of the appointment of Mr. Allen as of 14th August 1992.

50. Applications for judicial review must be made promptly and in any event not later than 3 months from the date when grounds for the application first arose unless the court considers there is good reason for extending the period within which the application should be made. (See Order 53 of the Rules of The Supreme Court).

51. Section 21K(6) of the Supreme Court Ordinance also provides:

"When the High Court considers that there has been undue delay in making an application for judicial review, the court may refuse to grant:

(a) Leave for making of the application;

(b) Any relief sought on the application;

If it considers that the granting of the relief sought would be likely to cause substantial hardship to, or substantive prejudice the rights of, any person, or would be detrimental to good administration."

52. I have already made clear that Mr. O'Connor's evidence is, that it was not until April 1993 that he realised the significance of the Steering Group to which reference had been made in November 1992 and since that date, it is suggested that matters have moved quickly.

53. In addition to the knowledge of Mr. O'Connor as from November 1992, it is also suggested that the applicants had knowledge of the Steering Group, through the Finance Committee minutes to which I have already made reference. Further reference to the Steering Group appears in articles in Windows and in the Chinese press, but Mr. O'Connor says that none of these were brought to his attention.

54. I do not propose to go into the law on this topic to which I have been helpfully referred. I am prepared to accept that it was not until recently that the Applicants through Mr. O'Connor realised the significance of the November remark concerning the Steering Committee. It is only once the Applicants have the requisite knowledge that the 3 months begins to run. I am not prepared to hold that they are out of time.

55. In the circumstances, I do not propose to refuse leave on the grounds of delay.

56. I now turn to consider whether the applicants have, in fact, met the necessary threshhold test for Order 53.

57. In so far as disputes of issues of fact are concerned, I think the correct approach at this stage is to accept the Applicant's version of those facts. They may or may not turn out to be true if this matter goes further. But, in deciding whether this is an appropriate application to go forward, it is right to consider the matters on the best basis so far as the applicants are concerned.

58. Mr. Griffiths was prepared to accept that if the Steering Group's function was solely to deal with finance and publication, he would have little to complain about. However, he seeks to support his case by reference to the various comments made at the Finance Committee which he submits show that the Steering Group has gone beyond the role set out in their terms of reference. It is fair to point out that Mr. Nendick, who made the statements, was not a member of the Steering Group although Mr. Tam, who was a member, was present. Mr. Griffths relies upon such phrases as "value for money" as indicating something sinister but I am quite satisfied that all of these minutes are perfectly explicable on the basis that Government was quite properly concerned about the cost of this inspection and was anxious to see that it was completed within a reasonable time and within a pre-set budget. I do not think it possible to read these minutes as indicating that the Government through the Steering Group was so determined to "get" the Applicants that they went so far as to compromise the indepedence of the Inspector. In my judgment, this is a wholly unreasonable reading of these public documents and I am not prepared to hold that they alone support the appearance of bias or actual bias.

59. The following points are clear;

(1) The appointment of the Inspector was clearly intra vires.

(2) No allegation of bad faith is made against the Financial Secretary.

(3) There is nothing in the Companies Ordinance which prevents the Financial Secretary from appointing a Steering Group with the terms of reference which he gave to them. This group was set up to assist the Financial Secretary fulfil more effectively his statutory obligations under the Companies Ordinance.

(4) There is no evidence whatsoever of bias or any other impropriety on the part of the Inspector. In fact the evidence before me is unanimously the other way.

(5) Inspection is not a trial although I accept it may lead to prosecution.

(6) Drafts of a number of chapters had been sent to the Applicants for their comment. (This point disposes of Mr. Griffths's criticism of the Inspector that he has been unfair or hasty with regard to a company called Wai Yick Ltd. and in relation to a rights issue of Crusader Ltd. The Applicants have been given every opportunity to comment on this but have yet not availed themselves of this opportunity.)

60. I now turn to consider whether Mr. Griffths has made good generally his case on the perception of bias. He based his submissions on statements such as that made in R. v. Sussex Justices [1924] 1 KB 256 where at 259 Lord Hewart L.C.J. said this;

"It...is of fundamental importance that Justice should not only be done, but should manifestly and undoubtedly be seen to be done. The question therefore is not whether in this case the Deputy Clerk made any observation or offered any criticism which he might not properly have made or offerred; the question is whether he was so related to the case in its civil aspect as to be unfit to act as Clerk to the Justices in the criminal matter. The answer to that question depends not upon what actually was done but upon what might appear to be done. Nothing is to be done which creates even a suspicion that there has been an improper interference with the course of justice."

61. One can find similar observations in R v Essex Justices [1927] 2 KB 475.

62. In Cooper v Wilson [1937] 2 KB 309, a police officer was dismissed by the Chief Constable. He exercised his right of appeal to the Watch Committee and when he appeared before them the Chief Constable was sitting next to the Chairman. Declarations were granted to the police officer and Greer L.J. at 324 said this;

"I ask myself what would anyone have thought who came into the room where the committee was sitting after the plaintiff had gone out while they were considering their decision, and found sitting on the bench with the committee one of the respondents to the appeal who had opened the case...Such a person, if reasonable, would have been likely to say to himself: "There has been an opportunity here for one of the parties to influence the judgment of the committee, and it looks as if justice may seem not to have been done."

63. Mr. Griffths also relied upon observations of Lord Denning in Metropolitan Properties v Lannon [1969] 1 QB 577 at 598 where he said;

"So far as bias is conerned, it was acknowledged that there was no actual bias on the part of Mr. Lannon, and no want of good faith. But it was said there was, albeit unconscious, a real likelihood of bias. This is a matter on which the law is not altogether clear: but I start with the often repeated saying of Lord Hewart C.J. in R. v Sussex Justices."

64. The question of bias in relation to juries, tribunals, justices and arbitrators was very recently considered by the House of Lord in R. v Robert Gough, the Times Law Report May 24th 1993 where Lord Goff in giving the leading speech said this;

"In formulating the appropriate test, it was unnecessary to require that the court should look at the matter through the eyes of a reasonable man, because the court personified the reasonable man.

For the avoidance of doubt, the test should be stated in terms of real danger rather than real likelihood, to ensure that the court was thinking in terms of possibility rather than probability of bias."

65. In the two Justices' cases, to which I have referred, the Clerk to the Justices was a solicitor who sat as Clerk in cases where, unbeknown to him, his firm had acted for a party involved in the matter. In both cases, the decision was set aside because of the perception of bias. In the Lannon case, the Chairman of the Rent Assessment Committee, which was considering the rental of flats owned by the Applicant, himself lived in his father's flat, which was also owned by the Applicant and his father was in dispute with them.

66. It seems to me that such cases are a long way away from the instant case. In all those cases, a determination was made by the Tribunal which determination was in each case successfully impugned. In the present case, I am faced with an inspection which decides nothing. It may lead to prosecution, but this depends, not on the Inspector, but on whether the Attorney General is of the view that the Inspector has revealed sufficient evidence of criminal conduct so as to justify a prosecution.

67. The nature of an investigation under the Companies Act was considered in Pergamon Press Ltd. [1971] 1 Ch. 388 where Lord Denning at 399 said this;

"The Inspectors are not a Court of Law. Their proceedings are not judicial proceedings: see in Re. Grosvenor v Westend Railway Terminus Hotel Co. Ltd. [1897] 76 LT 337. They are not even quasi-judicial, for they decide nothing; they determine nothing. They only investigate and report. They sit in private and are not entitled to admit the public to their meetings:...They do not even decide whether there is a prima facie case..."

68. Lord Denning returned to this theme a few years later in the associated case of Maxwell v The Department of Trade [1974] 1 QB 523 at 533 where he said;

"I will try to state the considerations which are to be borne in mind in respect of an inquiry under the Companies Act 1948. First and foremost: when a matter is referred to an Inspector for investigation and report, it is a very special kind of inquiry. It must not be confused with other enquiries which we have had to consider. Remember what it is not. It is not a trial of anyone, nor anything like it. There is no accused person. There is no prosecutor. There is no charge. It is not like a disciplinary proceeding before a professional body. Nor is it like an application to expel a man from a Trade Union or a club, or anything of that kind. It is not even like a committee which considers whether there is a prima facie case against a person. It is simply an investigation, without anyone being accused..."

69. I am faced with the clearest possible statement by the Inspector that he has not been influenced in any way relating to his conclusions, by members of the Steering Group. That evidence is not and could not be challenged. There is absolutely no evidence at all that anything improper has occurred involving the Inspector himself. There is no evidence whatsoever that members of the Steering Committee, either collectively or individually, have discussed with the inspector any matters which relate to the conclusions at which he has arrived. It is perfectly plain from the evidence placed before me that the Inspector has carried out his inspection, as one would expect, in a completely impartial and independent way and, indeed, Mr. Griffiths makes it plain, that no allegations of impropriety are made against the Inspector himself. So what I am faced with is an allegation that because the Steering Committee existed and because they discussed matters relating to the administration of the inspection and because Mr. McMahon of the SFC was on the Steering Committee and because it is alleged that Mr. Crosby of SFC said they were out to get Mr. Lee, all this can be brought home to the Inspection which should now be stopped in its tracks. It seems to me that this is just unarguable on the materials placed before me. The Inspection is a fact finding exercise. If evidence of wrongdoing is not present the Inspector, whatever may be the views of the SFC, will not find it. If there is evidence of wrongdoing he will set out the evidence of it and it will be left to others to decide what, if anything, to do about it. It cannot be suggested that the Inspector would manufacture evidence in order to please the SFC.

70. In my judgment, there is nothing like sufficient evidence for me to conclude that there is a real danger of bias in this matter. Even applying the lower test referred to in Gough, I would still not be satisfied that the Applicants' case can succeed.

71. I am, of course, concious that I am only dealing with an application for leave to apply. But if I am satisfied that on the evidence, there is no ground for complaint it is my duty to refuse leave.

72. Although perhaps not necessary for me to consider, I would also say that I find it difficult to imagine that the judge hearing the substantive application, if leave were granted, would be prepared to exercise his discretion so as to stay permanently the whole of this inspection and force it to commence all over again.

73. Mr. Griffths has submitted that if leave is granted, the Applicants would in all probability make an application for discovery of the minutes of the Steering Group. He hoped that this will show that the Applicants' suspicions are well founded. Orders for discovery are sometimes made in judicial review proceedings. However, they are not granted as a matter of course. In R. v Secretary of State for the Home Department Ex-parte BH and others [1990] C.O.D. 445, Roch J. set out the principles applicable when considering whether to grant an application for discovery in judicial review proceedings. He said this;

"Discovery is not to be ordered if the court is of the opinion that discovery is not necessary, either for disposing fairly of the application or for the saving of costs. Secondly, there can be no discovery in the case of judicial review on a contingent basis, and thirdly, discovery should only be ordered to go behind the content of an affidavit if there is some material before the court which suggests that the affidavits of the party are not accurate."

74. In R. v Secretary of State for the Environment Ex-parte Doncaster Borough Council [1990] C.O.D. 441, Leggatt L.J. in refusing an application for discovery in judicial review proceedings referred to an unreported decision of Henry J. in Re Cemi where that judge "had characterized such applications as essays in 'contingent' or 'Micawber' discovery, that is to say, discovery in the hope that something might turn up. As such, they were an illegitimate exercise, in the absence at least of a prima facie reason to suppose that the Secretary of State's evidence was untruthful." Similar reasoning applies to this case.

75. I do not propose to go into the question whether an Inspector carrying out his statutory inquiry is liable to an order for prohibition. I propose to rest my decision simply on the basis that on the materials presented to me, there is insufficient evidence upon which the Applicants can base their allegation of a real risk of or the probability of bias. Had there been direct evidence of a compromise of the Inspector's independence or had there been sufficient evidence from which at this stage it could be inferred, I would have unhesitatingly given leave. In my judgment, given the nature of the inspection and the evidence placed before me, I am not satisfied that the Applicants get anywhere near to establishing a prima facie case based on the perception of bias.

76. In all the circumstances therefore, these applications for leave to apply for judicial review made by all the Applicants against the two decisions set out in the Notice of Application are refused. I will now hear the parties on the question of costs.

77. Having heard the parties on costs I ordered the Applicants to pay the Respondent's costs with a certificate for 2 counsel (including the taking of Judgment.)

Representation:

Mr. John Griffths Q.C. and Mr. Hock Chua inst'd by

M/s Lovell White Durrant for the 3rd Applicant

Mr. Patrick Sherrington of M/s Lovell White Durrant for the 1st & 2nd Applicants.

Mr. Adrian Huggins Q.C. and Mr. Alfred Chan inst'd by Herbert Smith & Co. for the Respondents.