Re The Listing Committee

1997, No.AL110

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ADMINISTRATIVE LAW LIST

--------------------

--------------------

Coram : Stock J. in Court

Date of hearing : 23 February 1998

Date of delivery of judgment : 24 February 1998

-----------------------

J U D G M E N T

-----------------------

Background

1. It falls for me to determine whether to grant judicial review of certain decisions of the Listing Committee of the Stock Exchange. The applicants were the subject of disciplinary proceedings instituted by the Listing Division of the Stock Exchange, and brought before the Listing Committee. The Committee decided after receipt of written submissions and oral representations at a hearing that the applicants were in breach of particular rules imposed by the Listing Agreement to which the applicants were party and determined also upon a penalty to be imposed.

2. The applicants are a public listed company as well as a number of executive or former executive directors of that company. In the course of 1997, there was an approach by a party interested in the acquisition of a substantial shareholding in the company. Discussions took place and the offer, albeit not in its original terms, was accepted and a public announcement was made.

3. The Stock Exchange was however unhappy on a number of counts. Market activity in the shares of the company had been unusually active, it is said, in the days preceding the acquisition and the Stock Exchange asked the company whether it was aware of reasons for the fluctuation in the shares of the company, and for the substantial trading in the shares. The company said it was unaware and public announcements to that effect were issued. Then it is said that the company failed to notify the Exchange as soon as reasonably practicable of information which might reasonably be expected to affect market activity in the shares and the price of the shares, namely, the offer for the acquisition of shares in the company.

4. The Listing Division then conducted an investigation. Representations were made. It was decided to institute disciplinary proceedings. The Listing Division submitted written representations to the Listing Committee, and the applicants did the same. Their written representations were lengthy. They appended to one such document an opinion of an expert.

5. A date was set for a hearing and that took place on 21st October 1997. It was a hearing attended by members of the Listing Committee, representatives of the Listing Division, as well as by two directors of the applicant company and solicitors engaged on behalf of the applicants. Oral representations were made by the Listing Division, and by one of the directors of the company and questions were put to him by the Committee.

6. By letter dated 17th November 1997, the Stock Exchange notified the applicants that the Listing Committee reached a decision which was that the applicants had been in breach of certain provisions of the Listing Agreement and announced its intention to issue a public censure of the applicants.

The applicants' complaints

7. The applicants have a number of complaints, the first of which was aired on behalf of the applicants after the hearing but before the decision of the Listing Committee was communicated to the applicants. The complaints, broadly put, are these :

1. That the Chief Executive of the Stock Exchange sat as a member of the Listing Committee and took part in its deliberations. So much is not in dispute, but the complaint arises from the fact that the Chief Executive is titular head of the executive arm of the Stock Exchange, which arm includes the Listing Division. One of the functions of the Listing Division is to investigate and pursue disciplinary matters, and to conduct the prosecution of complaints before the Listing Committee. It follows, according to the argument, that there arises a real danger of bias when a member of the adjudicating tribunal is also the boss of the prosecutor. It is also said that the Chief Executive made comments to the press which intimated that he was intent on pursuing the applicants, and had prejudged their guilt. The grievance about the participation of the Chief Executive as a member of the Listing Committee in this case was the subject of a letter from Herbert Smith & Co., solicitors then and now for the applicants. The letter is dated 27th October 1997 and it asked the Listing Committee to recuse itself on the ground of the Chief Executive's participation in the hearing. That complaint was in due course noted by the Stock Exchange, but it is evident that the Listing Committee did not recuse itself. In response to this complaint the respondent says that the Chief Executive took no part in the investigation or in the decision to refer the matter to the Listing Committee, and that in any event within the self regulatory framework in which the Stock Exchange lies, the point has no validity.

2. There was present for part of the proceedings a member of the Listing Committee with whose family company it is said the applicants had been in commercial conflict and competition. It is said that his identity was not disclosed to them and that it should have been. The respondent says that he took no part in the financial deliberations and that in any event the conflict is imagined rather than real, and did not warrant his disqualification and anyway that there has been a waiver, for the applicants knew or should have known in advance of the meeting that he was to be there.

3. Then there are complaints about the Listing Committee's interpretation of the relevant paragraphs of the Listing Agreement which are said to give rise to the obligations allegedly breached by the applicants; about its findings of fact, and the alleged failure to give reasons for certain findings. It is said that the findings were findings which no reasonable tribunal properly directed could reach. There is here a straight response by the respondent by which the court is invited to examine the evidence and the findings, and to come to a contrary conclusion.

4. The applicants contend further that they were refused permission to call a witness - an expert in market matters - to give oral evidence. That they say constitutes a material irregularity. The respondent answers by saying that that very expert had already advanced his opinion to the Listing Committee as an annexure to the applicants' written submissions; that it was not shown what it was he had to add by any oral evidence; that the members of the Listing Committee were in any event experts in the sphere and could not be assisted by his evidence; and that the proceedings - as was frequently made clear to the applicants - contemplated written submissions with oral evidence only as an exception which had to be justified.

5. Finally, leave is sought to add another ground of complaint. It is that a legal submission was made by the lawyer acting on behalf of the Listing Division to the Committee and it was in these terms :

"... the Committee is a lay tribunal. It is not bound by rules of evidence or legal procedures and the Division does not have an evidential burden of proof which it is required to discharge."

That, it is said, is wrong in law, and that in so far as the Listing Committee has not specified at any stage what burden it has applied in its determinations, it must be taken to have proceeded on a wrong footing. No objection is taken to the proposed amendment and I grant to the applicants leave to amend their application for leave accordingly. The respondent's answer to this complaint is that it is not to be assumed that the tribunal adopted that contention, and that in any event all the representation was referring to was the evidential and not the legal burden, and that the complaint ignores the fact that a contrary or clear submission as to the burden was made by the applicants at the hearing.

These proceedings

8. After communication of the Listing Committee's decision, the applicants and the respondent corresponded - correspondence to which I shall have to return. In the event, the applicants made application for leave to apply for judicial review. By the application they seek to quash the decision to conduct disciplinary proceedings with the Chief Executive and the member named on the Listing Committee; to quash the decision to refuse to allow the applicants to call their witness; and to quash the determination communicated on 17th November, that is, the determination which finds the applicants to be in breach of the rules and which determined upon a penalty.

9. On 1st December, and upon consideration of the documents alone, I granted leave to apply for judicial review. The Notice of Motion was issued on 12th December for the hearing of the substantive application, and hearing dates set for 23rd and 24th February 1998, but in the interim there were two interlocutory applications. One was for directions and for discovery of documents - that was inter partes and I heard that on 18th December. Then there was a hearing on 15th January 1998, again before myself, in which the applicants pursued an application for discovery of the tape of the disciplinary hearing.

10. And so we arrived at yesterday's hearing. Apart from the substantive application on the merits, there were before me by yesterday morning a number of other applications. There was an application that the respondent answer certain interrogatories. There was an application by the respondent that the leave granted to apply for judicial review should be set aside - this on the basis of suggested non-disclosure of material facts. It is said that applicants did not disclose facts which show that they knew or ought to have known of the identity of the competitor member of the Committee; did not disclose the fact that the expert had already submitted an opinion to the Listing Committee; and that they did not disclose to the court the fact that the applicants had not exhausted their rights of review and appeal available to them under procedures prescribed by the Listing Agreement to which the applicants were party.

11. It was also evident from the text of skeleton submissions which were before me that the respondent intended to argue that in any event this was not a case in which the court should grant judicial review since there was an alternative remedy available to the applicants.

The present issue

12. It seemed to me that it was rather late in the day for the respondent to be complaining of material non-disclosure such as would justify the setting aside of leave, and that the appropriate course was for me to address, as a preliminary issue, whether this was or was not a proper case for review, given the alternative remedies suggested to be available. Counsel for the parties were content to proceed on that basis. I accordingly heard argument yesterday on that issue alone, although that argument necessarily entailed some encroachment upon the merits of the complaints themselves.

13. The courts do not normally intervene where there is an adequate alternative remedy available to a party who has been at the adverse end of disciplinary proceedings. Indeed in such cases the court will only intervene in exceptional circumstances (see Stock Exchange of Hong Kong Limited v. Onshine Securities Limited [1994] 1 HKC 319).

Alternative avenues

14. There is no question in this case but that the internal procedures of the Stock Exchange and the Listing Agreement to which the applicants have subscribed make provision for further hearings after and beyond the first determination of the Listing Committee.

15. Paragraph 2A.19 of the Listing Rules provides as follows :

"2A.19 The Listing Committee will, if requested by any party to be reprimanded, criticised, censured or otherwise sanctioned in pursuance of the powers contained in rules 2A.09 and 2A.10 (an 'appellant') give its reasons in writing for the decision made against that appellant pursuant to rules 2A.09 and 2A.10 and that appellant shall have the right to have the decision against him referred to the Listing Committee again for review. If the Listing Committee modifies or varies the ruling of the earlier meeting, it will, if requested by the appellant, give its reasons in writing for the modification or variation and, in respect of decisions pursuant to rule 2A.09(2), (3), (5), (7), (8) or (9) only, the appellant shall have a right to a further and final review of the decision against the appellant by the Listing Appeals Committee. The decision of the Listing Appeals Committee on review shall be conclusive and binding on the appellant. If requested by the appellant, the Listing Appeals Committee will give the reasons in writing for its decision on renew."

The next paragraph of the Rules prescribes that a request for review must be notified to the Exchange within seven days of the Listing Committee's decision unless written reasons are requested for the decision in which event the request for review must be made within seven days of the receipt of the written reasons.

16. The same Rules provide for the composition of the Listing Committee, specifying the categories from which they are to be drawn - including stockbrokers, listed company representatives, market practitioners and officers of merchant banks, and it is also provided that : "The Chief Executive, ex officio shall be a member". It is elsewhere provided (para.2A.39) that a quorum for the transaction of any business shall be five members.

17. There is provision, too, for the composition of the Listing Appeals Committee - and that does not include the Chief Executive of the Exchange.

18. Paragraph 2A.39 is entitled : "Conduct of Meetings of the Listing Committee". And it says :

"2A.39 The Listing Committee shall meet for the dispatch of business, adjourn and otherwise regulate its meetings in accordance with the provisions of the rules made by the Council for this purpose, including rules governing members' conflicts of interest, subject to the provisions of this rule 2A.39. The quorum necessary for the transaction of any business by the Listing Committee shall be five members or their alternates present in person. A members' alternate may not be counted in the quorum if that member is also present at the meeting. The Chief Executive may be counted in the quorum for a meeting of the Listing Committee (including a meeting at which the Listing Committee is determining a matter in the first instance) except that he shall not be counted in the quorum for any meeting at which a decision of the Listing Division or the Listing Committee is under review. The Chief Executive may attend meetings of the Listing Committee convened for such purpose and put forward his views (if any) on the matter under review but he shall not thereafter be entitled to participate in the deliberations of the Listing Committee or to vote on such matters. At any meeting held to review an earlier decision of the Listing Committee, all of the members and alternates present at the second meeting must be persons who were not present at the first meeting. Members who attended the first meeting may arrange for their alternates to attend the second meeting."

19. I am informed, and it is not in dispute that the proceedings of the Listing Committee on review are constituted by way of a rehearing.

20. The Rules empower the Listing Committee to prescribe procedures for review meetings and hearings, and such procedures for disciplinary hearings have been prescribed. They provide, inter alia, that hearings are to be primarily by way of written submission, and oral submissions are to be limited to matters not contained in the written submissions. Clause 10.5 states that the Listing Committee may confirm, vary or modify a decision of the Listing Committee which is being reviewed.

21. So it follows that beyond the first instance hearing, there is clear provision for review, which is a rehearing before a differently constituted membership of the Listing Committee; and beyond that, there is provision for an appeal, again to a differently constituted body. It is accordingly evident that there are avenues of review which the applicants have, before coming to this court, not exhausted.

22. Which brings us then back to the principles of law to be applied when those avenues have not been utilised.

The Law

23. The Onshine case was a case with a not dissimilar setting in that the disciplinary body was the Stock Exchange and the disciplinary proceedings were brought against a member of the Exchange. Some of the allegations raised by the disciplinary member in that case resemble those in this case, although there are differences urged upon me. It was the judgment of the Court of Appeal (at p. 328) that :

"... The authorities in our judgment establish that (save in exceptional circumstances 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."

24. What had not been shown in that case was that there were exceptional circumstances which required the immediate intervention of the court in the interests of justice. As to that which constituted exceptional circumstances, the court said (at p. 329) that that was not susceptible of an exhaustive definition :

"... It is neither advisable nor possible to define 'extraordinary circumstances', 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. ..."

25. The rationale for the firm line taken by the courts was emphasised in Onshine by reference to R. v. Panel on Take-overs and Mergers, Ex parte Guinness Plc, [1990] 1 QB 146, namely the "public interest in abating litigation". In Ex parte Guinness, it was not only the need to have regard to limited judicial resources which required a limitation to the number of cases in which leave was given, but in cases where the legislature had provided for an appeals procedure, it was not, said Lord Donaldson at p.177, "for the courts to usurp the functions of the appellate body." And one might add to that, that where there is provision in rules to which the disciplined party has contracted itself for further avenues of redress within the organisation to which that contract of membership relates, there must be sound reason indeed to permit the member or party from approaching the courts before utilising those avenues - a principle reflected in Calvin v. Carr [1980] AC 574 at p.592.

26. Mr Huggins on behalf of the applicants accepts that it is far from every defect that cannot be cured by a review or an appeal within domestic appellate procedures. Nonetheless, there are strands of his argument which complain that, even so, the result is the loss to these applicants of a proper first instance hearing, a loss which should not readily be countenanced. That hearing, as he graphically put it, goes into the bin, and the applicants enter the review a goal down - though I have pulled the metaphors together, and the mixing of them is not his.

27. There will be cases where the complaint must hold good, in other words, where the right of a complainant to a fair hearing at the first hearing is absolute in the sense that the existence of the appeal stage may well be treated as irrelevant. The nature of some such cases was described by the Privy Council in Calvin v. Carr at p.592C to 593E :

" Although, as will appear, some of the suggested inconsistencies of decisions disappear, or at least diminish, on analysis, their Lordships recognise and indeed assert that no clear and absolute rule can be laid down on the question whether defects in natural justice appearing at an original hearing, whether administrative or quasi-judicial, can be 'cured' through appeal proceedings. The situations in which this issue arises are too diverse, and the rules by which they are governed so various, that this must be so. There are, however, a number of typical situations as to which some general principle can be stated. First there are cases where the rules provide for a rehearing by the original body, or some fuller or enlarged form of it. This situation may be found in relation to social clubs. It is not difficult in such cases to reach the conclusion that the first hearing is superseded by the second, or, putting it in contractual terms, the parties are taken to have agreed to accept the decision of the hearing body, whether original or adjourned. ...

At the other extreme are cases, where, after examination of the whole hearing structure, in the context of the particular activity to which it relates (trade union membership, planning, employment, etc.) the conclusion is reached that a complainant has the right to nothing less than a fair hearing both at the original and at the appeal stage. This was the result reached by Megarry J. in Leary v. National Union of Vehicle Builders [1971] Ch. 34. In his judgment in that case the judge seems to have elevated the conclusion thought proper in that case into a rule of general application. In an eloquent passage he said, at p.49:

'If the rules and the law combine to give the member the right to a fair trial and the right of appeal, why should he be told that he ought to be satisfied with an unjust trial and a fair appeal? ... As a general rule ... I hold that a failure of natural justice in the trial body cannot be cured by a sufficiency of natural justice in an appellate body.'

In their Lordships' opinion this is too broadly stated. It affirms a principle which may be found correct in a category of cases: these may very well include trade union cases, where movement solidarity and dislike of the rebel, or renegade, may make it difficult for appeals to be conducted in an atmosphere of detached impartiality and so make a fair trial at the first - probably branch - level an essential condition of justice. But to seek to apply it generally overlooks, in their Lordships' respectful opinion, both the existence of the first category, and the possibility that, intermediately, the conclusion to be reached, on the rules and on the contractual context, is that those who have joined in an organisation, or contract, should be taken to have agreed to accept what in the end is a fair decision, notwithstanding some initial defect.

In their Lordships' judgment such intermediate cases exist. In them it is for the court, in the light of the agreements made, and in addition having regard to the course of proceedings, to decide whether, at the end of the day, there has been a fair result, reached by fair method, such as the parties should fairly be taken to have accepted when then joined the association. Naturally there may be instances when the defect is so flagrant, the consequences so severe, that the most perfect of appeals or re-hearings will not be sufficient to produce a just result. ..."

28. In this respect, the impact of recent authorities is summarised in de Smith, Woolf & Jowell Judicial Review of Administrative Action 5th ed. at para.10.022 (p.489) :

" ... Whilst it is difficult to reconcile all the relevant cases, recent case law indicates that the courts are increasingly favouring an approach based in large part upon an assessment of whether, in all the circumstances of the hearing and appeal, the procedure as a whole satisfied the requirements of fairness. At one end of the spectrum, when provision is made by statute or by the rules of a voluntary association for a full re-hearing of the case by the original body (constituted differently where possible) or some other body vested with an exercising original jurisdiction, a court may readily conclude that a full and fair rehearing will cure any defect in the original decision. However, where the rehearing is appellate in nature, it becomes difficult to do more than to indicate the factors that are likely to be taken into consideration by a court in deciding whether the curative capacity of the appeal has ensured that the proceedings as a whole have reached an acceptable minimum level of fairness. Of particular importance are (i) the gravity of the error committed at first instance, (ii) the likelihood that the prejudicial effects of the error may also have permeated the rehearing, (iii) the seriousness of the consequences for the individual, (iv) the width of the powers of the appellate body and (v) whether the appellate decision is reached only on the basis of the material before the original tribunal or by way of rehearing de novo."

The suggested agreement

29. There runs through the applicants' submissions a thread of strong indignation the fact that the respondent has taken this preliminary point, for it is said that the applicants were led to believe - indeed that there was an agreement to this effect - that the point would not be taken, and that the review procedures would be held in abeyance whilst the applicants proceeded with this judicial review. But the complaint is not advanced for complaint's sake, nor is it flourished merely to preserve some argument as to costs in the event that the respondent were to succeed on the preliminary point. It forms part of the argument on the preliminary point, for it is said to constitute in itself, and also in combination with the other arguments advanced, the exceptional scenario which, despite the avenues of review, should justify a hearing of this judicial review on the merits. The agreement or representation is in a letter dated 20th November 1997 from the Stock Exchange to Messrs Herbert Smith, but before I set out its terms I must refer to some preceding history.

30. By letter dated 17th November 1997, Herbert Smith gave notice that the applicants wished to review the decision, asking that the penalty upon which the Listing Committee had determined should not be invoked until that review, should a review transpire to be necessary. In the same letter, the solicitors pointed out that on 27th October they had asked the Listing Committee to recuse itself on the basis of bias, but that that had not happened. Accordingly, they said :

"5. ... our clients have instructed us to apply to the High Court for Judicial Review in which they will seek to quash the decisions of the Listing Committee to sanction our clients, inter alia, on the grounds of bias. Please let us know the full names of each of the members of the Listing Committee. The matter of bias is not an issue which can be addressed in the context of a review of the Listing Committee's decision pursuant to the procedures in Paragraph 8 of the Disciplinary Procedures. Accordingly, our clients intend to make their application prior to any substantive review of the decision pursuant to Paragraph 8.

6. In light of what we say in paragraph 5 we consider that the best way to proceed with this matters is as follows. Namely, that pending determination of our clients' application for Judicial Review our client's review of the Listing Committee's decision and all associated procedures relating thereto be stayed. In the event that our clients quash the decisions of the Listing Committee there will be no need for a review. In the event that our clients' application for Judicial Review is wholly or partially unsuccessful we would suggest that, thereafter, our clients be given 7 days in which to give you notice of their intention to pursue the review pursuant to Paragraph 8 whereupon the time will begin to run to comply with the review procedures. We would be grateful if you would let us know whether you are prepared to proceed on the aforementioned basis."

31. Two days later, the Stock Exchange responded as follows :

"It is, of course, entirely a matter for your clients, but we would point out that the Listing Rules provide an adequate and cost effective means of review. As you will no doubt appreciate, if your clients should seek to avail themselves of the existing procedures for review, the Review Committee will be constituted of members of the Listing Committee who have has no previous connection with this matter. That being the case, we believe that any alleged bias or perceived bias on behalf of the Disciplinary Committee will be more than adequately expunged by the existing review process and that your clients will not thereby have been exposed to prejudice or unfair treatment (even if that was the case, which of course is denied).

In our respectful view the initiation of a process of judicial review at this stage is inappropriate and premature.

We shall address the issues raised by your letter of 27th October 1997 under separate covers. However, we confirm that the censure will not be published pending the outcome of any review (judicial or otherwise) which is initiated by your clients, without adequate notice being given to you or your clients."

32. Herbert Smith replied saying that bias went to the root of the whole disciplinary process and could not be dealt with adequately in the context of the review.

33. Then followed the letter of 20th November from the Stock Exchange :

"Your Mr Mark Johnson confirmed to our Ms Bonnie Chan that you have in your Letter requested a review of the decision of the Disciplinary Committee delivered on 17th November 1997 in connection with the above matter. We shall accept that the request for review made in the Letter triggered the review process.

Under normal circumstances, the Secretary to the Listing Committee (the 'Secretary'), upon receipt of a request for review of a disciplinary hearing, would set out a timetable for the review process. However, given your current position and having discussed the same with the Listing Division, the Secretary is prepared to hold the review in abeyance pending the outcome of your clients' application for judicial review. We do, however, reserve the right to proceed with the review upon giving reasonable notice to you or your clients."

34. The Notice of Application for Leave was dated 22nd November 1997. Leave was granted on 1st December.

35. At the interlocutory hearings of 8th December and 15th January at which the respondents were represented, nothing was then said about this preliminary point. Yet it is evident from the correspondence that the respondent still maintained that judicial review was not the appropriate route whilst the alternative avenues remained available. On 4th December, this is what the Exchange had to say :

"For the avoidance of doubt, we do not agree that the course of action which your client proposes to follow is correct in the circumstances. We maintain that the review procedure provided by the 'Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited' should be exhausted before any application for judicial review is contemplated and that such remains the proper course of action to be followed at this stage."

The following day the Stock Exchange wrote again saying :

"However, please give us and our solicitors adequate notice of your intended appearance before the Chief Judicial Clerk for the purposes of fixing a date for the hearing of the substantive judicial review application. As you will no doubt appreciate, it will be necessary for us to instruct Counsel and possibly leading Counsel and the substantive hearing will be fixed in conjunction with Counsel's diaries."

36. I do not accept the contention that the letter constituted an agreement that the point now taken before me would not be taken. Viewed strictly, the "outcome of the application" to which the letter refers means what it says, and must be taken to include an outcome after whatever valid arguments were presented in opposition by the respondent. I can see that it could be read to imply that the merits should be determined at a judicial review; but that is not the only way it can be read. Be that as it may, the letter is not to be scrutinised in isolation, for it is preceded and followed by contentions by the Stock Exchange that judicial review was not the way to go. It is said that in the circumstances the respondent should have opposed the application for leave, or should have sought to set aside leave once granted, or ought at least not to have let the interlocutory proceedings go by without the expression of a caveat. These are matters which, if they have validity, are in my judgment more appropriately the subject of an argument as to costs, but in the circumstances, I do not see them as providing a sound reason for departing from the normal course and for requiring this court to embark upon two more days of argument on the substantial merits; and to issue a judgment on those merits; and to permit the courts then to be subjected to appeal procedures on the substantial merits, when there is an alternative avenue for review and when that alternative avenue might resolve the matter in the applicants' favour, and if not, where in any event the court might ultimately take the view that the applicants have had a fair deal despite such first disciplinary hearing errors as may be shown. And in any event, the matter is ultimately not one for the parties to determine, although their combined view will of course carry considerable weight. The rationale for the general rule to which I have made some detailed reference requires that the court itself, once alerted to the issue, should ask why the alternative avenue is not in use, and to satisfy itself that there is good reason for the court to engage upon what has been called the last stop resort of judicial review.

A suggested range of exceptional circumstances

37. I turn now to the substantive grounds of review to examine how they sit with the test which I must apply. That test requires consideration of what is exceptional; and Mr Huggins contends that even though there exist alternative review or appeal procedures, judicial review should nonetheless lie in certain cases and that those cases embrace the situation where the disciplinary body has abused its powers or acted ultra vires its powers; and that unfairness can constitute an abuse or excess of power. For the abuse and unfairness point, he relies on a passage from Inland Revenue Commissioners v. Aken [1990] 1 WLR 1374, 1380 (referred to in Harley Development Inc & Anr. v. Commissioner of Inland Revenue [1986] 1 WLR 727 which was the subject of submission before me) where Fox L.J. said :

"... However, I do not say there are no cases in which, exceptionally, a challenge by way of judicial review or otherwise to a decision of the revenue would be possible. There may be cases where, for example, there has been some abuse of power or unfairness, which would justify the intervention of the court: see for example Reg. v. Inland Revenue Commissioners, Ex parte Preston [1985] A.C. 835. But that is exceptional. ..."

38. It cannot of course be - indeed, I do not understand Mr Huggins to suggest - that it is every unfairness that can constitute an abuse of power. There is, he alleges, multifaceted unfairness in this case which constitutes such abuse. So, too, does he say that the rule which permits the Chief Executive to sit as a member of the Committee is so contrary to fundamental principle in so far as it permits the titular head of the prosecuting division to sit in judgment of the prosecuted members as to be unconstitutional or ultra vires the power of the Exchange to make.

39. Mr Huggins rightly reminds me that the exceptional circumstances to which the cases refer are not capable of precise demarcation. Some have been referred to; others are not difficult to imagine. Delay, where the review procedure does nothing to mitigate that delay. A lack of jurisdiction to prosecute a complaint or a complainant - a fault which will permeate the appellate procedure. Mr Ma adds corruption as a possible example, and Mr Huggins adds bias.

Bias

40. Mr Huggins stresses bias because bias is one of the linchpins of his clients' case. The applicants' case is that there is or will be demonstrated in this case actual bias. It is bias which he says has different manifestations. It is first to be found in the very fact that the head of the Listing Division sits on the Committee. It is fundamental, of the stark kind of abuse, he says, which the courts will root out without further ado. Mr Ma has labeled this kind of bias allegation as an allegation of institutional bias. It seems to me to be the type of bias which is addressed in Onshine. A complaint there was that the prosecutor and the judge were all members of the Council of the Stock Exchange. It was not a point which impressed the Court of Appeal where, at p.328D, they said :

"... we turn to consider the submission of apparent bias raised in the respondent's notice. We have no hesitation in rejecting this submission. A professional body such as the Stock Exchange must act through its appointed committees. Self regulation is best and necessarily done by its own members. The fact that the members of particular committees are also elected members of the council falls far short of any appearance of bias. There is no suggestion of personal bias or the appearance of personal bias; indeed the Disciplinary Rules guard against this."

41. I have in this regard the following observations as far as concern this case - observations which I make without finally determining the point. The allegation of the applicants on its face and of itself is not, I think, very strong. I have information about the numerous committees and divisions which constitute the Stock Exchange and which fall under the responsibility of the Chief Executive, and I have information about the various departments which constitute the Listing Division, and that disciplinary matters comprise but one function of one of those departments. I am far from persuaded that, on its face, the fact that the Chief Executive sits on a committee to hear a complaint investigated by the Listing Division, in which investigation and the institution thereof he has had no direct role is an affront to principle. And I cannot ignore the fact that at the next stage of the process, the review stage, and at the stage beyond that, if that last stage were to be engaged, the Chief Executive does not sit in deliberation. He is expressly precluded from doing so. If the review procedure is followed and the appeal, too, and if thereafter the applicants remain culpable in the eyes of the Exchange, then the court can, if invited, examine the fairness of the proceedings as a whole; and it does not seem to me that the applicants have demonstrated something which is so fundamental as to require intervention at this stage. Mr Huggins says too that the point needs to be judicially determined - the point, that is, whether the Chief Executive ought ever to be permitted to sit; whether the rule permitting him to do so is or is not ultra vires. I can see that that may be helpful, but it is not necessary - at least not at this stage, and that in my judgment is the acid test.

42. The allegations of bias though do not stop there, for it is alleged that the Chief Executive is likely to have been involved in instituting the inquiry and involved to some extent in the investigation itself. If that is so, argues Mr Huggins, then this court should intervene now; and he prays in aid the passage in Onshine at p.328 which in so far as it says that there was in that case no allegation of personal bias or the appearance of it, implies that where there is such an allegation, the exceptional circumstance comes into play.

43. Whether an allegation of factual bias will constitute an exceptional circumstance must of course depend on all the circumstances (if I may be forgiven that hackneyed phrase), including the apparent strength of the allegation, the danger of permeation of the fault, and the nature of the review. I have before me evidence from the Chief Executive which asserts that he took no part in the institution of the investigation nor in the investigation itself. Mr Huggins seeks to rely on what is not said by the Chief Executive, and on the vagueness of certain expressions he uses and on comments he has made in his affirmation, albeit in the context of a point of general application, that in the course of his work he is "fully informed" about the operation of the Exchange. In so far as there may be cases in which actual bias is such as to call for a court's immediate intervention whatever the appeal or review procedures, a prima facie case somewhat stronger than this would have to be shown. I am asked to draw inferences, but I have to say that the fabric from which they are fashioned is somewhat nebulous.

The expert witness

44. It is then said that the applicants were refused permission to call a witness, an expert witness, and that the contention of the Listing Committee was that the applicants had no right to call that witness. The argument is that since it is apparently the Committee's view that there is no right to call witnesses, this deprivation of a fundamental right is bound to persist at the next stage, and that such a contention requires the decision of this court. I do not on the papers before me adjudge that the Listing Committee were saying that in no circumstances might the applicants call this witness. The applicants were asked to justify his calling, and there seems to me to be ground for saying that they did not provide sufficient justification. The correspondence shows that the applicants were told that the proceedings were designed to be primarily in writing and that oral submissions were to be avoided if possible. The applicants had already submitted to the Listing Committee the opinion in writing of the expert, and they were asked to state what it was he wanted to add. I have to say that the answer was far from particular, and given those circumstances, and the fact that the Listing Committee was itself comprised of experts, and that it was not shown what it was he could offer outwith their experience, this too does not strike me at this stage as the kind of stark point which warrants present intervention. More particularly, I cannot conclude that he will not be permitted his further say, whether in writing or orally, at the review.

The burden of proof

45. No one would suggest that the representation to the Listing Committee about the burden of proof was other than obscure. Quite what a lay committee was meant to make of the representation about evidential burden is very difficult to say, and it is a disturbing facet of the hearing. I note that the Committee received a somewhat more precise and accurate submission by the applicants. True, that submission was made by the lay applicants and not their lawyers but their lawyers were present, next to the director who spoke, and the Committee can be taken, I think, to have assumed that the point was prompted by the lawyer advising the applicants. What the applicants said was this :

"As to the standard of proof, is beyond the balance of probabilities. And if you have any doubt on the complaints, or even the facts, I mean the benefit should be given to the parties concerned and specifically I think it would be unfair to punish those parties concerned who played no role in the events in question."

We do not know what burden and standard the Committee in fact applied, though some help might be derived in due course from a study of their decision and the grounds for it.

46. Unfortunate though this episode is, the question is whether it constitutes a reason for precluding the further passage at this stage of the review and appeal procedures. I do not agree with Mr Huggins' contention that the obscure and perhaps misleading representation is bound to be repeated upon review or that there is a need for this court to spell out for the benefit of the Listing Committee, in its original or review or appellate jurisdiction, what test as to the burden it should apply. The availability of review must incorporate an ability to put right that which is said to have been wrong at the first hearing, and there is nothing of which I am aware which precludes the applicants from making representations in writing before the review hearing, copied to the Listing Division, about the correct burden of proof, both legal and evidential. The same goes for any suggested error about the right to call a witness. The very word "review" implies such an opportunity to look again at matters of that kind, and to receive and consider representations about them. If the error has been made, it is an error that can be cured upon review. I would add that the very airing that it has been given in these proceedings to the submission by the solicitor for the Listing Committee will, I think it safe to assume, mean that something more precise and accurate will be advanced on the next occasion, and on other occasions too.

Other authorities

47. I have been taken to two authorities which I should address. They are cited by the applicants in support of the proposition that where a party complains of some substantial material irregularity or of bias, that party should not then be required to pursue rights of appeal, rather than enjoy the benefit of a judicial review. It is a principle which has been articulated in the case of supervisory jurisdiction over magistrates, and it is contended that there is authority for the principle that the same approach applies in the disciplinary context.

48. In the first such case, allegations of bias were culled from decisions by magistrates in the course of proceedings before them in two separate criminal trials. The convicted defendants, instead of exercising their right of appeal to the Crown Court, applied for judicial review of the justice's decisions on the ground of bias, and the fact that the defendants had not exhausted all rights of appeal still available to them was held not to bar the exercise of the court's supervisory jurisdiction in judicial review proceedings. The decision in the case R. v. Hereford Magistrates' Court, Ex parte Rowlands [1997]2 WLR 854 is not authority for a broad proposition that an allegation of bias, even of serious bias, is necessarily ground for the intervention of judicial review in domestic disputes whilst the domestic avenues of redress remain open. The case turns much on the singular importance which is attached to the need to guarantee, as an end in itself, the integrity of the process in magistrates courts. It is one of those categories of cases in which the courts have taken the view that defendants are entitled to no less than a fair trial at all levels. To hold otherwise, said Lord Bingham, CJ, at p.866B :

"... would be to emasculate the long-established supervisory jurisdiction of this court over magistrates' courts, which has over the years proved an invaluable guarantee of the integrity of proceedings in those courts. The crucial role of the magistrates' courts, mentioned above, makes it the more important that that jurisdiction should be retained with a view to ensuring that high standards of procedural fairness and impartiality are maintained."

49. Conversely, that is not to say that every allegation of procedural defect in domestic tribunals will as a matter of course be held in suspension by this court, the court insisting that, come what may, the domestic appellate path must first be traversed ― a point highlighted by the Chief Justice in Rowlands in his reference to the Privy Council's comment in Calvin v. Carr [1979]2 All ER 440 that :

"... There might be instances where the defect was so flagrant and the consequences so severe that the most perfect of appeals or rehearings would not be sufficient to produce a just result, ..."

50. And he went on to cite the following passage from Rowlands at page 593, a passage particularly pertinent to the point urged upon me by Mr Huggins :

"While flagrant cases of injustice, including corruption or bias, must always be firmly dealt with by the courts, the tendency in their Lordships' opinion in matters of domestic disputes should be to leave these to be settled by the agreed methods without requiring the formalities of judicial processes to be introduced."

51. I am satisfied that in the case before me - if defects there have been - there is not shown, even on a prima facie basis, a defect so flagrant, or irreparable consequences so severe, as cannot be cured by the agreed domestic procedures.

52. In so far as Mr Huggins relies on the unreported decision of R. v. The Police Complaints Authority and another Ex parte Wells, a decision of 31 August 1990 by Popplewell J in the Queen's Bench Division upon an application for review by a number of police officers, it is not in my judgment a case which helps him; for the complaint there was of undue delay, and undue delay is not something that can be cured by an appeal. Undue delay once established cannot be rectified. That is the nature of the ailment, and it festers and it permeates subsequent proceedings. The applicants however rely on the following passage in the judgment :

" It seems to me that if there were plainly an injustice being done to these applicants, or that the tribunal had plainly misdirected themselves either as a matter of law or plainly arrived at a perverse verdict, judicial review should lie. It is, as I have indicated, a discretionary remedy; the courts are here to do justice. It would be quite wrong, in my judgment, that an applicant should be required to go through a long and wearisome process if in a particular case it is plain that an injustice has been done."

53. It is said that in the case before me there have been findings which are manifestly perverse and that there is clear evidence of a misdirection. The sentiments or principles there expressed by Popplewell J are not, I apprehend, intended to be applied without regard to the facts of a case, or to the nature of the error, or the character of the appeal or review procedure and the makeup of the review body. The law seems clear enough, and it is that judicial review even in the face of errors at the first domestic hurdle lies only in the rare circumstances which are fully canvassed by those authorities to which I have at some length referred, and there is nothing in the judgment in Wells that provides a new ground for the applicants on the preliminary point.

Wednesbury

54. In so far as the applicants intend to argue that the findings of fact by the Listing Committee were perverse, that is not in my judgment the type of circumstances as would constitute an exceptional reason for entertaining this judicial review. Wednesbury unreasonableness is, I would think, the most common of all complaints in judicial review proceedings, and to intervene in the prescribed domestic route for this reason would drive a coach and horses through the rationale for the general rule. I have studied the complaint of irrationality, and the evidence in support of it, and there is in my view nothing in any event which at present, and without the benefit of argument, strikes me as obviously perverse.

Conclusion

55. Mr Huggins asks me to examine the complaints presented by the applicants not only on the merits of each one, but in their cumulative impact; and, for that purpose, not to ignore the first complaint that the applicants have been misled into believing that they were not to be required to travel the domestic road.

56. The overall impact does not change my view. I do not see exceptional reasons to justify a departure from the general rule, which is that the applicants should follow the procedures to which they have subscribed. They are procedures which can be invoked swiftly. In the course of those procedures they can make their representations of fact and law afresh to a newly constituted body. If then they remain dissatisfied, they can go still further and appeal to yet another newly constituted body. And there is no reason to conclude that the matters of which they complain, even if they have substance, cannot be cured in the course and by virtue of the review and appeal procedures. The decision of the Listing Committee was made in November 1997, and the time lost in coming to this court is not great so far as concerns the applicants, and the penalty imposed by the Listing Committee has not been put into effect. There is no suggestion that the applicants are not properly amenable to the jurisdiction of the Listing Committee in this matter. There is nothing so apparently flagrant or severe in its consequences as to require the immediate intervention of this court. If by following the domestic procedures the applicants are absolved, then there will be no need to come to this court. If they are not absolved and still then feel aggrieved, that is the time to seek judicial review, at which time, should it arise, this court can then examine such complaints as are made and assess whether in the context of the proceedings as a whole, the decisions which the applicant seeks then to impugn should be quashed.

57. But I am satisfied that judicial review now is premature. Accordingly this court will not in this application grant the relief sought, and the application for that relief is dismissed.

[Submission on costs]

Costs

58. In the normal course the respondent should have its costs, and I have given some thought to the question whether there is justification for departing from that norm. It is said that the respondent has caused much waste by leading the applicants to suppose that the hearing set for several days, on 23rd and 24th February, is a hearing to determine the substantive merits of the applicants' complaints. For that they rely on the letter of 20th November in particular, and they say that the respondent ought to have made it clear after that letter that it opposed the application for leave; ought to have come to the court to have it set aside; or ought to have given express advance notice of its intention to take the point; before that notice was given a week or so before the hearing yesterday; and that the respondent was too secretive by halt, appearing at interlocutory applications directed clearly at the substantive hearing of the merits, without suggesting to anyone that the preliminary point should first be determined.

59. The respondent, on the other hand, points not only to the number of occasions when before the application for judicial review, it reminded the applicants of their right to review but, in particular, to the letter of 4th December - to which I have already referred - a letter written after leave was granted in which it said "For the avoidance of doubt we do not agree ..." that the course of action which was proposed was correct in the circumstances, maintaining that the review procedure within the Stock Exchange had to be exhausted before judicial review was contemplated and that such remained the proper course of action to be followed.

60. Mr Huggins points me to the letter of 5th December in which the Stock Exchange seeks agreement as to hearing dates for the substantive judicial review application. In my judgment, "substantive judicial review application" is not necessarily to be equated with a judicial review hearing on the substantive merits of the complaints themselves. I have heard substantive judicial review applications in the course of which the appropriateness of the remedy has been canvassed. I would point out, too, that in order to determine the preliminary point, as it has been called, it was necessary for this court, and the litigating parties, to be fully at home with the details of the case. It might, I suppose, be said that the respondent could have more clearly stated its proposed course, and it might be said that perhaps it might have applied for the matter to be heard as a preliminary point. But the letter of 4th December in particular, to which I have referred, should, I think, be taken as putting the applicants well on notice that such a point may very well be taken.

61. The applicants have contested the point and have been unsuccessful, and in the circumstances I do not propose to depart from the normal award.

62. The order that I shall make, apart from the order that the application itself is dismissed, is that the applicants shall pay the respondent its costs of this application.

Representation:

Mr Adrian Huggins, S.C., inst'd by Herbert Smith, for Applicant

Mr Geoff Ma, S.C. and Mr Godfrey Lam, inst'd by Richards Butler, for Respondent