Chau Chin Hung and Another v. Market Misconduct Tribunal and Another
Read the full judgment text of HCAL 123/2007 on BabelCite. This High Court CFI judgment was delivered on 22 September 2008.
1. The Market Misconduct Tribunal is a body established under the Securities and Futures Ordinance, Cap. 571 (‘the Ordinance’). Its statutory purpose is to ‘hear and determine’ whether, in respect of proceedings instituted by the Financial Secretary, any form of market misconduct has taken place and, if so, the identity of the perpetrators and the amount of money gained or loss avoided by reason of the misconduct.
Cited by 6 cases · Cites 2 cases
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HCAL 123/2007, IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST NO. 123 OF 2007 --------------------- BETWEEN
--------------------- AND CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST NO. 124 OF 2007 --------------------- BETWEEN
--------------------- AND CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST NO. 22 OF 2008 --------------------- BETWEEN
---------------------- Before : Hon Hartmann and Lam JJ in Court Dates of Hearing : 17 and 18 June 2008 Date of Handing Down Judgment : 22 September 2008 ------------------------- J U D G M E N T ------------------------- Introduction 1.The Market Misconduct Tribunal is a body established under the Securities and Futures Ordinance, Cap. 571 (‘the Ordinance’). Its statutory purpose is to ‘hear and determine’ whether, in respect of proceedings instituted by the Financial Secretary, any form of market misconduct has taken place and, if so, the identity of the perpetrators and the amount of money gained or loss avoided by reason of the misconduct. 2.As to the commencement of proceedings before the Tribunal, s.252 of the Ordinance directs that :
3.On 6 June 2007, the Financial Secretary issued a notice pursuant to s.252 of the Ordinance informing the Tribunal that it appeared to him that market misconduct may have taken place in respect of certain dealings in the securities of a publicly listed company, QPL International Holdings Limited. The Financial Secretary specified three forms of market misconduct which he believed may have occurred : false trading, price rigging and stock market manipulation. 4.Schedule 9 of the Ordinance directs that a notice issued under s.252 shall specify the identity of the person or persons believed to have committed the market misconduct. To this end, the notice issued by the Financial Secretary identified the following ‘specified persons’ : Mr Chau Chin Hung, Ms Cheung Sau Lin, Cheeroll Limited and Sun Hung Kai Investment Services Limited. 5.When the matter came before the Tribunal for hearing and determination, a number of fundamental challenges to its powers were raised by counsel representing the specified persons. In two written rulings, Mr Justice Lunn, Chairman of the Tribunal, dismissed all of the challenges. It is in respect of those dismissals that the specified persons (the applicants) have now sought judicial review. 6.The most fundamental challenge made by counsel on behalf of all four specified persons went to the true nature of the proceedings before the Tribunal; that is, whether they were civil or criminal in nature. On behalf of the applicants, it was argued that the proceedings are criminal in nature and that matters going to the standard of proof, the compellability of testimony and such must be determined in accordance with that fact. The Tribunal, however, concluded that the proceedings were civil. 7.The second challenge, again made by counsel on behalf of all four specified persons, went to whether the notice dated 6 June 2007 issued by the Financial Secretary had complied with the requirements of the Ordinance. It was contended that the notice had not complied strictly with the requirements of the Ordinance and that accordingly the notice was invalid. That being the case, the Tribunal itself had no authority to hear and determine matters pursuant to the notice. The Tribunal, however, rejected any submission that the requirements of the Ordinance resulted in the notice being the equivalent of an indictment in criminal proceedings or pleadings in civil litigation. It found that —
8.The third challenge was made by Mr Kevin Patterson, counsel representing Ms Cheung Sau Lin. Mr Patterson’s arguments were supported by John Brewer, counsel for Cheeroll Limited and Sun Hung Kai Investment Services Limited. In was Mr Patterson’s contention that the Tribunal did not, in law, have the power to compel Ms Cheung, a specified person, to give testimony. Nor did the Tribunal, in law, have the power to admit into evidence her record of interview obtained under compulsion by investigating officers on 3 October 2003. Mr Patterson submitted that this was so because any purported exercise of the two powers would deny Ms Cheung her constitutionally protected right to a ‘fair hearing’ under arts.10 and 11 of the Hong Kong Bill of Rights. The Tribunal, however, found that a fair balance had been struck between the general interest of the community in realising the legitimate aims of the Ordinance and protecting the fundamental rights of the individual and that, accordingly, there was no undermining of Ms Cheung’s constitutionally protected right to a fair hearing. The remedies sought 9.Before us, the applicants have sought orders of certiorari to bring up and quash the rulings of the Tribunal together with declarations that are in accordance with their original challenges. Are proceedings before the Tribunal criminal or civil in nature? 10.Art.39 of the Basic Law directs that the International Covenant on Civil and Political Rights (‘the ICCPR’) is to be implemented into Hong Kong law. The implementation finds its expression in the Hong Kong Bill of Rights Ordinance, Cap. 383. Through art.39, the Bill of Rights is itself given constitutional force. 11.Art.10 of the Bill of Rights, in so far as it is relevant, provides that :
12.Art.11, which concerns the determination of criminal proceedings, again in so far as relevant, provides that :
13.Since the judgment of the Court of Final Appeal in Koon Wing Yee v. Insider Dealing Tribunal (unreported, 18 March 2008, FACV 19 and 20 of 2007), it is now settled that, in determining whether, for the purposes of arts.10 and 11 of the Bill of Rights, a matter is civil or criminal in nature, three criteria must be considered :
14.These three criteria are not to be treated as analytically distinct. They are to be weighed together. However, it is now settled that criteria (ii) and (iii) are to be considered more significant. 15.As to the concept of a ‘criminal charge’ contained within art.10 of the Bill of Rights, in giving the judgment of the court in Koon Wing Yee Sir Anthony Mason NPJ said that perhaps the best explanation of the concept was to be found in the words of Lord Hope in R (Mc Cann) v. Manchester Crown Court [2003] 1 AC at 819 :
16.As Sir Anthony Mason observed, it follows that —
17.Sir Anthony Mason further observed that a monetary penalty which is punitive and deterrent rather than compensatory may suggest that the matter is ‘criminal’ in nature if the penalty is sufficiently substantial. Generally speaking, therefore, proceedings which are not expressed to be criminal proceedings will not be classified as criminal for the purposes of the Bill of Rights unless the penalty for wrongful conduct, which may be imposed, is substantial. 18.Against this background, we turn now to consider the three criteria. (i) Classification of the offences 19.In his notice, the Financial Secretary specified three forms of market misconduct which he believed may have occurred : false trading, contrary to s.274 of the Ordinance; price rigging, contrary to s.275 and stock market manipulation, contrary to s.228. Each alleged offence of market misconduct is serious. 20.But, that being said, in s.252 of the Ordinance – the same section which specifies the procedure to be adopted by the Financial Secretary in instituting proceedings before the Tribunal – the legislature has seen fit to lay down the standard of proof required to determine all issues before the Tribunal. In this regard, s.252(7) states that :
21.That being the case, the classification of proceedings before the Tribunal under the Ordinance, and therefore according to domestic law, is civil. A civil standard is set for one purpose; that is, to determine civil proceedings. 22.We accept, of course, that the Ordinance provides for a dual regime of both civil and criminal proceedings to determine allegations of market misconduct. But the Ordinance in this regard is not unique and nothing was placed before us during the course of the hearing to cause us any concern that this dual character, of itself, infringes the Bill of Rights. In this regard, we note the observation of Sir Anthony Mason, albeit obiter, in Koon Wing Yee,para 67 :
(ii) The nature of the offences 23.As we have said, the three offences of market misconduct alleged against the applicants are serious. The Tribunal also accepted this. The offences, even at the lowest level of culpability, incorporate a course of conduct intended to undermine the orderly workings of our financial markets; in short, to a greater or lesser degree, to distort those markets. A finding of false trading, price rigging or stock market manipulation brings with it a professional stigma. As such the offences cannot be equated, for example, with a failure to follow arcane procedural regulations, offences essentially of oversight or neglect. 24.The Ordinance incorporates a dual regime, one which seeks to proceed by way of civil enquiry, if necessary imposing civil sanctions, and one which proceeds by way of criminal prosecution. 25.As we perceive it, the civil regime seeks to deal with those persons who, in respect of market conduct regulated under the Ordinance, are believed to have acted inappropriately but nevertheless outside the ambit of the criminal law. 26.Nevertheless, the Ordinance, in the working of its dual regimes, does make the same offences subject to both civil and criminal proceedings. To that extent, even when civil misfeasance only is under consideration, it must be recognised that the conduct is therefore, even if only generically, to be considered serious or at least potentially so. (iii) The nature and severity of the potential sanctions 27.The Court of Appeal, in its judgment in Koon Wing Yee (unreported, 30 May 2007) was of the view that this third criteria was the most important. Certainly, during the course of submissions before us, counsel for the applicants placed the greatest emphasis on it. 28.S.257 of the Ordinance gives to the Tribunal the power to visit a number of sanctions on a person who has been identified as having engaged in market misconduct. 29.S.257(1)(a) provides for orders of disqualification; namely, orders that disqualify an identified person from being concerned in the management of listed or other specified companies. The sub-section reads :
30.We have no difficulty with the nature of this order. It is not penal. It is designed to protect the investing public. 31.In Koon Wing Yee, Sir Anthony Mason was satisfied that an order of disqualification under s.23(1)(a) of the old Securities (Insider Dealing) Ordinance, Cap.395, was protective rather than punitive in character, the primary purpose of the power being to protect investors and the public. While obviously the power to make such an order has a deterrent effect, Sir Anthony Mason commented that the —
32.In our judgment, the disqualification order in s.257(1)(a) of the Ordinance serves the same purpose and has the same character as the order in the old statute. 33.S.257(1)(b) of the Ordinance makes provision for what are commonly called ‘cold shoulder’ orders; that is, orders that – without the leave of the Court of First Instance – deny an identified person access to the financial markets. The sub-section reads :
34.In our judgment, a ‘cold shoulder’ order serves the same essential purpose as a disqualification order. It is not penal in character. It is protective. The integrity of the financial markets must be safeguarded and, if it has been demonstrated that a person cannot be trusted to operate in the markets in accordance with the requirements of the Ordinance, then he can be prevented from doing so for such period of time as the Tribunal considers appropriate. A cold shoulder order serves to protect financial institutions as well as the investing public. 35.Yes, of course, the consequence of a cold shoulder order may be damaging to the identified person but that does not detract from the primary purpose and essential character of the order. In this regard, it is important to note that the Court of First Instance is given the power to alleviate any burden created by a cold shoulder order which, while detrimental to the interests of the identified person, may not serve to advance the protective purpose of the order. By way of example, the Court of First Instance may permit investment, certainly through a reputable broker or agent, that enables an identified person to save for retirement. 36.S.257(1)(c) of the Ordinance gives the Tribunal the power to issue what are often described as ‘cease and desist’ orders. These are orders in terms of which a person who has been identified as a perpetrator of some form, or forms, of market misconduct is made the subject of a warning —
37.In plain language, as we see it, the Tribunal is given the power to demand that an identified person shall in future act professionally, avoiding what has been identified by the Tribunal – even if the person should contest it – to be a form, or forms, of market misconduct. 38.In our view, such demands, or warnings, are intended to do no more than look to the future protection of the financial markets. To that extent, such orders are preventative and not penal. 39.S.257(1)(d) of the Ordinance gives the power to the Tribunal to order disgorgement of any profits made by an identified person. The sub-section provides for an order —
40.This power is to be contrasted with the power given to the Insider Dealing Tribunal in the old statute to make an order imposing on an identified person a penalty “of an amount not exceeding three times the amount of any profit gained or loss avoided by any person as a result of the insider dealing.” In his judgment in Koon Wing Yee, Sir Anthony Mason found that the penalty of up to three times the profit or loss avoided in the old statute was comparable to a fine, its purpose being punitive and deterrent. As he said :
41.However, in looking to the Ordinance (the statute which is the subject of this judgment), Sir Anthony Mason noted that the Tribunal has been given the power to impose “civil sanctions”, including surrender of any profit made or increased by market misconduct, but “without power to impose a fine or penalty.” As Sir Anthony Mason noted, the decision to leave the Tribunal —
42.In our judgment, the intention of the legislature in providing for disgorgement orders is clear. It is to the effect that any person identified as being the perpetrator of any form of civil infraction of the market conduct provisions contained in the Ordinance should not be permitted – in the discretion of the Tribunal – to retain the fruits of their infraction. That, we believe, is not a punishment. It is no more than an application of the ancient principle – based on natural justice – that a wrongdoer should not be permitted to retain the proceeds of his wrongdoing. Effectively, in so far as it is possible, it seeks to restore the status quo ante. 43.It is true that the proceeds of a disgorgement order are made payable to the Government. But, in this regard, while market misconduct in its various forms – especially insider dealing – may no longer be considered a victimless crime, the legislature, we believe, was entitled to take into account that the location of ‘victims’ in respect of each and every identified act of market misconduct may not be possible. Hence, based, at least in part, on a practical imperative, comes the provision that the fruits of a civil wrong of market misconduct should be forfeit to the state. 44.On behalf of the applicants, however, it is emphasised that, if any person is able to show that he has sustained a loss as a result of market misconduct, he may seek compensation from an identified person even if that identified person has been ordered to make disgorgement to the state. In this regard, s.281(1) of the Ordinance provides that :
45.S.281(1) is, however, to be read with s.281(2) :
46.The argument is therefore made on behalf of the applicants that, if an identified person is made liable to pay compensation to one or more identified ‘victims’ under s.281 and, in addition is ordered to make disgorgement under s.257(1)(d), he will not merely be liable to make restitution of any wrongful gain that he has made but will have to pay compensation too, perhaps several times. In such circumstances, it is argued, the disgorgement order becomes a penalty. As Mr Bell puts it : “This demonstrates very clearly that although disgorgement is limited to an amount not exceeding the profit gained or loss avoided it is not compensatory in nature: it may result in an additional penalty over and above compensation paid to a ‘victim’. In such circumstances it merely substitutes a ‘two-times penalty’ for the ‘three-times penalty’ that existed under [the old statute]. The fact that it is payable to the Government and not to the ‘victim’ reinforces its penal characteristics.” 47.In our view, this is not a correct analysis of the statutory provisions. We agree with the submissions advanced by Mr Peter Duncan SC, leading counsel for the respondents, that the two sets of proceedings are distinct. A disgorgement order seeks to ensure that an identified person does not benefit financially from his market misconduct. He is thereby placed in the financial position in which he would have been if not for his misconduct. By contrast, civil proceedings under s.281 seek to ensure that a person who can demonstrate that he has himself suffered loss as a result of the market misconduct is able to obtain compensation for that loss. The actual loss sustained by that person, of course, may bear no relationship whatsoever to the amount which the identified person has had to disgorge as a result of his market misfeasance. As it is put by Mr Duncan, whether a profit is made or a loss avoided by an identified person does not affect the existence of a liability to one or more third parties under s.281. 48.We are satisfied that it is incorrect to seek to join the two proceedings – disgorgement under s.257(1)(d) and a claim for compensation under s.281 – as if they are integral to each other. They are not. Civil law recognises that there may be more than one consequence to an act which constitutes an infraction of law. This is such a case. 49.The Tribunal is given a further power under s.257(1)(g) to refer an identified person to his own professional body for possible disciplinary proceedings. The provision states that the Tribunal may make an order —
50.Of course, the true effect of this order, if it is made, is one of recommendation only. Whether disciplinary proceedings are undertaken by a professional body remains a matter entirely for the exercise of its own discretion. 51.A manifest object of the Ordinance is the protection of Hong Kong’s equity and financial markets. The power given to the Tribunal to refer an identified person to his professional body is, in our view, integral to the protective purpose of the Ordinance. As such, we do not see the power as being penal in nature. 52.S.257(1) further gives to the Tribunal the power to make costs awards, including setting interest rates. This power – which is vested in our civil courts – is compensatory. 53.Although we have examined each sanction separately, we have, of course, taken into account their combined measure in determining their true character. We are satisfied, however, that the statutory sanctions given to the Tribunal are intended to be civil in nature and, having regard to the relevant criteria and the manner in which their significance should be assessed, are correctly to be judged as being civil. In this regard, we can do no better than repeat the words of the Chairman of the Tribunal given at the conclusion of his ruling :
54.By way of a postscript, we record that, both before the Tribunal and before us, argument was advanced on behalf of the applicants that the true nature of the proceedings before the Tribunal were adversarial; proceedings commenced of course by a public party not a private litigant and, by that fact, should be considered criminal. 55.In our judgment, while we see the relevance of the arguments advanced, we do not think that, in this case, they really take matters much further. As we see it, the proceedings are sui generis, their nature being dictated by the provisions of the Ordinance, those provisions themselves being created to meet a particular set of challenges thrown up in the modern market place. To this end, we believe that the Chairman was correct to describe the proceedings as —
56.However, in so far as it may be necessary to go further, we are satisfied that the true nature of the proceedings are not adversarial. They are, on an analysis of the relevant provisions of the Ordinance, more essentially inquisitorial. The validity of the notice issued by the Financial Secretary 57.As we have said earlier, it was on 6 June 2007 that the Financial Secretary issued his notice pursuant to s.252(2) and Schedule 9 of the Ordinance. Counsel for the applicants contend that it is invalid. This is because the notice does not strictly satisfy the requirements of the Ordinance. In particular, Mr Bell submitted that in the notice, the Financial Secretary failed to specify the following matters with sufficient particularity :
58.The notice itself is in the following form :
59.On behalf of the applicants, it is argued that the defects in the notice are not curable by amendment or by the supply of further and better particulars. The defects therefore destroy the validity of the notice and without a valid notice the Tribunal has no power to act. 60.The Chairman of the Tribunal rejected this submission. He said that the effect of the relevant provisions of the Ordinance was not —
61.We agree with that conclusion. 62.The Tribunal is established under s.251 of the Ordinance. It is a standing institution as opposed to an ad hoc tribunal. More importantly, for present purposes, the Tribunal is not set up by a notice issued by the Financial Secretary under s.252(2). There cannot therefore be any suggestion that a particular panel of the Tribunal is not validly constituted due to a defect in such notice. 63.A notice issued under s.252(2) is a document by which the Financial Secretary institutes proceedings in the Tribunal. But, in our view, the notice is not equivalent to an indictment or a charge in criminal proceedings, requiring such persons to enter a plea of guilty or not guilty. Nor is it in the nature of originating pleadings requiring the persons alleged to have committed market misconducts to plead in response. 64.Further, the Financial Secretary is not a party to the proceedings in the Tribunal. The proceedings are conducted by a Presenting Officer appointed by the Secretary for Justice under s.251(4). Accordingly, while a copy of the report of the Tribunal will be given to the Financial Secretary under s.262(2)(a), he does not have any right of appeal under s.266 of the Ordinance. 65.The involvement of the Financial Secretary was explained at paras.107 and 108 of the report of the Legislative Council Bills Committee dated 5 March 2002. At para.108, it was said :
66.Upon receipt of a notice, the Tribunal is tasked to determine the three matters set out in s.252(3) :
67.It is noteworthy, in our view, that s.252(3)(a) does not confine the market misconduct to the market misconduct set out in the Financial Secretary’s notice. Further, the Tribunal is given power to hear and determine any question or issue arising out or in connection with the proceedings so long as it is done in accordance with Part XIII and Schedule 9 of the Ordinance : see s.251(1). 68.There are, of course, limits to the Tribunal’s jurisdiction. For example, it is clearly spelt out that the Tribunal cannot identify any person as engaging in market misconduct or make any order against him unless he has been specified in the Financial Secretary’s notice : see s.17 of Schedule 9. It is also specifically provided that the Tribunal cannot exercise its power of amendment to amend the identity of the person specified in such notice : see s.15(9) of Schedule 9. Nor can the Tribunal amend a s.252(2) notice to turn the focus of the proceedings to another financial product : see s.15(b) of Schedule 9. 69.Subject to these limitations, however, the Tribunal is given wide powers to amend: ‘in such manner as it considers appropriate’. The power can be exercised ‘at any time during the course of any proceedings’ : see s.15 of Schedule 9. We are prepared to accept that the power must be exercised in a manner fair to the parties to the proceedings. However, we see no justification for limiting the power of amendment to, say, confining the amended statement to market misconducts already identified in the existing notice or provisions of Part XIII already specified. 70.S.16 of Schedule 9 provides that, after an amendment to the notice, the Tribunal shall have jurisdiction exercisable by reference to the statement as amended. 71.In the result, even though it is right to say that the Tribunal proceedings are instituted by the Financial Secretary under a s.252(2) notice, in the sense that the notice is the first step in the proceedings and it defines the scope of those proceedings in terms of the identity of the persons alleged to have committed market misconduct and the financial product in question, the contents of the notice do not by any means serve as the last word on the precise parameters of the proceedings. 72.The Tribunal has the power to order amendments to the Financial Secretary’s notice in order to refer to a market misconduct not set out in the original notice. This is, of course, provided that the person identified and the financial product remains the same. Whether the power would be exercised is, as usual, subject to the overriding requirement of fairness to the parties. We see this as an inquisitorial power. 73.The substantive requirements for a notice are set out in s.13 of Schedule 9. Though s.252(2) provides the manner in which proceedings are to be instituted by the Financial Secretary, it really adds nothing to those requirements. 74.S.13 of Schedule 9 requires the following to be specified in the notice :
75.The notice under consideration in this judgment does set out the provisions of Part XIII by reference to which the applicants are said to have perpetrated market misconduct : it refers to ss.274, 275 and 278. 76.The real complaint of the applicants, however, is that under those sections there can be many ways in which market misconduct may be committed and each section contains many permutations and combinations of possible misconduct. This, it seems to us, is analogous to a complaint that a criminal indictment is bad for duplicity. 77.But, as we have indicated earlier, we are satisfied that a notice issued by the Financial Secretary pursuant to s.252(2) is not a criminal indictment nor a document which the Ordinance intends to be read as such and thereby subject to the same limitations. As we have said, we can find no basis for imposing on the notice the requirements of a criminal indictment or of civil pleadings. 78.We are of the view that s.13 falls to be interpreted in the context of the statutory scheme as a whole and in this regard we note that :
79.We would add that, even in criminal proceedings, a defect arising from duplicity can be cured by amendment : see Archbold Hong Kong 2007 para.1-138. 80.In our view, the crux of the matter is whether the notice contains such brief particulars as are sufficient to disclose reasonable information concerning the nature and essential elements of the market misconduct. We fail to see how the information set out in the notice is inadequate. It is not suggested by counsel that there is any ambiguity in the factual allegations. We consider the allegations to be reasonably clear, as least sufficient as brief particulars of the nature and essential elements of the alleged market misconducts. 81.What counsel complains of is that there is no correlation of each factual allegation to each element of each alleged market misconduct in the notice. But there is no specific requirement to that effect in s.13 of Schedule 9. Nor do we regard that as necessary in order to provide reasonable information concerning the nature and essential elements of the alleged market misconduct. 82.In any event, even assuming there are defects in the notice, it does not necessarily follow that the proceedings have not been validly commenced. A defective notice may still be valid even though it may have to be amended. As Neuberger J said in Bell v. Touhy [2002] 3 All ER 975 at para.23 :
83.In our view, therefore, even assuming, for the purposes of argument only, that counsel for the applicants were correct in criticising the notice as not complying with s.13 of Schedule 9, we do not think that such a defect would render the proceedings commenced by the notice null and void. At worst it is an irregularity that can be cured by amendment. The issue of compellability 84.As we have found, the primary purpose of the statutory powers of sanction given to the Tribunal are not penal but protective. Nevertheless, it must be recognised that the exercise of one or more of the sanctions may have a severe effect on an identified person. Aside from any monetary loss, it may well restrict his freedom of access to the markets. In short, it may deprive him of his livelihood. As such, although proceedings before the Tribunal are civil, it does not follow that they are to be equated in all respects with private civil law proceedings. They have their own special character, regulatory in nature, where specified persons stand in jeopardy perhaps of their careers. 85.By way of analogy, it is now well settled, we understand, that disciplinary proceedings against a professional person, although not classified as criminal in nature, may still incorporate certain requirements of a fair trial that are more normally identified as being integral to criminal proceedings : the presumption of innocence would be one example. 86.On behalf of the applicants, Mr Patterson submits that, having regard to the special nature of proceedings before the Tribunal, especially regarding the potential severity of the sanctions that may be imposed, a person accused of market misconduct would be denied a fair hearing (pursuant to his rights under art.10 of the Bill of Rights) if :
87.As it is, the Ordinance does compel all persons, including persons specified by the Financial Secretary, to give evidence if the Tribunal so requires. In this regard, s.253(1)(b) provides that the Tribunal may :
88.In addition, there is the requirement that evidence must be truthful. S.253(1)(d) gives the power to the Tribunal to :
89.The possibility, of self-incrimination provides no grounds for refusing to testify. S.253(4) provides that :
90.S.253(2)(a) makes it a criminal offence if a person, without reasonable excuse —
91.What must be underscored, however, is that, although evidence is compellable, even by a person believed by the Financial Secretary to have committed acts of market misconduct, such evidence is, with very limited exceptions, only admissible in those proceedings before the Tribunal. Such evidence is not admissible against the person who has given it in any other proceedings – civil or criminal – in any court of law. In this regard, s.255(1) of the Ordinance directs that :
92.The circumstances contemplated by sub-section (2) in which the evidence may be admissible in other proceedings are very limited and, in our view, do not undermine the purpose of s.255(1) itself. 93.As to the admission into evidence of any record of interview made by a specified person, s.253(1)(a) of the Ordinance provides that the Tribunal has the power to receive and consider —
94.Under s.183(1) of the Ordinance, when a person is under investigation for possible market misconduct, he may be compelled to :
95.S.183(1), however, is to be read in conjunction with s.187(2) which provides that, if a person under investigation claims that an answer to any question “might tend to incriminate” him, then his answer shall not be admissible in evidence against him in any criminal proceedings. 96.It is therefore clear that, subject to certain important protections, a specified person may be compelled to give evidence before the Tribunal even though such evidence may tend to incriminate him. It is equally clear, again subject to important protections, that, if a specified person has made a statement pursuant to s.183 of the Ordinance, that statement may be admissible. 97.The issue is whether those provisions of the Ordinance, if exercised, deny a specified person a fair hearing. 98.In determining the issue, what must first be borne in mind is that, in our judgment, proceedings before the Tribunal are civil in nature and that, as a basic principle, there is no right to silence in civil actions. As Chu J put it in Ming Hsing Development Ltd v. Ming Shiu Tong (unreported, HCA 671/1995), citing Rouqier J in Halford v. Brookes [1992] PIQR 175 :
99.That being said, we accept that it goes too far to deny that the principles which, as ‘common law rights’, weigh against self-incrimination and compellability in criminal proceedings may not have their place in certain civil proceedings too. 100.In our judgment, the Chairman of the Tribunal correctly identified the essential route to a determination of the issue when he concluded, citing Ribeiro PJ in HKSAR v. Lee Ming Tee (2001) 4 HKCFAR 133, at 176, that what has to be decided is whether —
101.The right to a fair hearing is a constitutionally protected right. But, as we have observed, the inroads in the Ordinance into the rights against self-incrimination and compellability are ringed with measures which ensure that such inroads are, for all material purposes, restricted to proceedings before the Tribunal. 102.In addition, what must be noted, as the Chairman noted in his ruling, is that the sanctions which the Tribunal may apply are protective in nature. Their purpose is not to punish. What then are they protective of? They are protective of the financial services industry in Hong Kong, an industry of inestimable importance to the Territory. In this regard, we can do no better than repeat the words of the Chairman :
103.In our judgment, taking all matters into account, we are in agreement with the Chairman that a fair balance has been struck. Accordingly, if a specified person is compelled to give evidence before the Tribunal which may tend to incriminate him, or if a statement taken from him pursuant to s.183 of the Ordinance is admitted into evidence, he is not thereby, on either count, denied a fair hearing. Conclusion 104.For the reasons given, we are satisfied that these applications for judicial review must be dismissed. 105.We see no reason why costs should not be awarded to the second respondent and a final order is made. We understand that the first respondent, the Tribunal itself, has not been represented. However, if we are wrong in that regard, we are prepared to hear submissions as to costs.
Mr Adrian Bell, instructed by Messrs Haldanes, for the 1st Applicant in HCAL 123/2007 and 2nd Applicant in HCAL 22/2008 Mr Kevin J Patterson, instructed by Messrs Haldanes, for the 2nd Applicant in HCAL 123/2007 and 1st Applicant in HCAL 22/2008 Mr John Brewer, instructed by Messrs Haldanes, for the Applicants in HCAL 124/2007 1st Respondent in HCAL 123, 124/2007 and 22/2008, absent Mr Peter Duncan, SC & Mr Nicholas Cooney, instructed by Department of Justice, for the 2nd Respondent in HCAL 123, 124/2007 and 22/2008 |
Cases cited in this judgment
Other judgments that cite this case
Further hearings and rulings under HCAL 123/2007