Securities and Futures Commission v. "C" and Others

CACV 319/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 319 OF 2008

(ON APPEAL FROM HCMP NO. 727 OF 2008)

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BETWEEN

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Before: Hon Le Pichon JA and A Cheung J in Court

Date of Hearing: 16 July 2009

Date of Judgment: 16 July 2009

Date of Handing Down Reasons for Judgment: 17 July 2009

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REASONS FOR JUDGMENT

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Hon Le Pichon JA:

1.This was an application by the first, third and fourth defendants (collectively “the applicants”) for leave to appeal to the Court of Final Appeal.  The application relates to an order of this court dated 22 May 2009 allowing an appeal by the SFC from an order made by Kwan J dated 22 October 2008.  At the conclusion of the hearing leave was refused.  The reasons appear below.

2.The full background is set out in paragraphs 3 to 15 of the judgment to which reference should be made.  In outline, in a case of suspected insider-trading, the SFC applied ex parte to the judge who granted interim injunctions pursuant to section 213(6) of the Securities and Futures Ordinance, Cap. 571 against the applicants and also another defendant, namely, the second defendant, who is within the jurisdiction and who took no part in the appeal to this court.

3.The injunctions granted were akin to Mareva injunctions.  The judge also granted leave to serve the applicants out of the jurisdiction.  Those orders were discharged and set aside by the judge after an inter partes hearing.  This court allowed the SFC’s appeal.

Questions of great general or public importance

4.This application seeks leave to appeal to the Court of Final Appeal under section 22(1)(b) of the Hong Kong Court of Final Appeal Ordinance.  The notice of motion identified six questions said to be of great general or public importance.  Question 5 has since been abandoned.  In my view, none of the remaining five questions raises any question of great general or public importance.

Question 1

“1.  Whether Section 213(2)(c) of the Securities and Futures Ordinance (Cap 571) (the “SFO”) on its proper construction conferred upon the Court the power to grant “Mareva-type” injunctions.  In particular, whether the words “dealing in” are synonymous with or have the same meaning as the words “dealing with” within the context of that section.”

5.The fact that the question posed concerns a matter of statutory interpretation does not of itself render that question one of great general or public importance.  Where, as here, the meaning of that provision admits of little doubt and the construction advanced by the applicants would defeat the purpose of the Ordinance and where, in any event, the provision unquestionably conferred power to prohibit the person against whom the order is directed from disposing of or acquiring the assets identified, I cannot see that any question of great general or public importance arises.

Question 2

“ 2.  Whether leave for service out of the jurisdiction can be granted under RHC Order 11 r.1(1)(b), where the proceedings are solely for statutory interim “Mareva-type” injunctions and no final or substantive rights are claimed or can be determined in those proceedings.”

6.At the hearing, when it was drawn to the attention of Mr Lam, counsel for the applicants, that the question posed does not arise in that it fails to reflect the critical fact the jurisdiction to grant injunctions pursuant to section 213(2)(c) of the Ordinance is statutory and freestanding and thus juridically different and distinguishable from Mareva injunctions considered in Mercedes Benz v Leiduck [1996] 1 AC 284, he applied to amend the question.  As rephrased it reads:

“ 2.  Whether leave for service out of the jurisdiction can be granted under RHC Order 11 r.1(1)(b) for a claim made under s. 213(2)(c).”

7.As section 213(2)(c) empowers the court to make a restraining order and RHC Order 11 r.1(1)(b) permits service out of the jurisdiction where an injunction is sought, I do not see how any question of great general or public importance can be said to arise.

Question 3 and 4

“ 3.  The principles the Court will apply in deciding whether to allow a plaintiff to rely upon a different sub-rule of RHC Order 11 r.1 to justify leave for service outside of the jurisdiction after service had been effected and after an application had been made by the party served to set aside issue and service of the Writ pursuant to RHC Order 12 r.8.

4.  The principles the Court will apply in deciding whether to allow a plaintiff to amend to add a new cause of action (in this case, a cause of action under Section 213(2)(b) of the SFO) to justify leave for service outside of the jurisdiction after service had been effected and after an application had been made by the party served to set aside issue and service of the Writ pursuant to RHC Order 12 r.8.”

8.The principles are well-settled.  What is being challenged is the exercise of the court’s discretion.  That does not raise a matter of great general or public importance.

Question 6

“ 6.  Whether leave can be granted for service outside of the jurisdiction on a person as a “necessary or proper party” within the meaning of RHC Order 11 r.1(1)(c), where for all practical purposes, there is no longer a real or “live” issue as between the plaintiff and the person “duly served within or out of the jurisdiction”.”

9.This court granted the SFC leave to amend the originating summons by including relief under section 213(2)(b) of the Ordinance.  I agree with Mr Beresford who appeared for the SFC that this question, predicated on a claim for relief solely under section 213(2)(c), has been rendered academic.

Hon A Cheung J:

10.I agree.

Mr Roger Beresford, instructed by Securities and Futures Commission, the Plaintiff/Respondent

Mr Douglas Lam, instructed by Messrs Johnny K.K. Leung & Co., for the 1^st, 3^rd & 4^th Defendants/1^st, 2^nd & 3^rd Applicants

(I) Leave to Appeal by the 1st, 3rd and 4th Defendants to Court of Final Appeal granted. Please refer to FAMV47/2009 dated 11 December 2009 (II) Appeal by the 4th Defendant to Court of Final Appeal allowed. Please refer to FACV1/2010 dated 6 December 2010