Lam Hon Nam v. Insider Dealing Tribunal and Another

CACV96/2007 & CACV109/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 96 OF 2007

(ON APPEAL PURSUANT TO SECTION 31 OF THE
SECURITIES (INSIDER DEALING) ORDINANCE, CAP.395
FROM DETERMINATIONS AND ORDERS OF AN
INSIDER DEALING TRIBUNAL IN RELATION TO
VANDA SYSTEMS AND COMMUNICATIONS HOLDINGS LIMITED)

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Before : Hon Yeung JA, Lunn and To JJ in Court

Date of Hearing : 28 September 2010

Date of Determination : 28 September 2010

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D E T E R M I N A T I O N

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Hon Lunn J (giving the Judgment of the Court):

1.There are applications before the court for leave to appeal to the Hong Kong Court of Final Appeal pursuant to section 22(1)(b) of the Hong Kong Court of Final Appeal Ordinance, Cap. 484 from the judgment of this court handed down on 10 February 2010 dismissing the appeals of the applicants in respect of determinations made by the Insider Dealing Tribunal (“the Tribunal”) in a report to the Financial Secretary dated 26 March 2007.

CACV96/2007

2.It is submitted on behalf of Chong Wai Lee Charles and Chong Bun Bun (“the Chongs”) that there are questions of law involved in the appeal which are of great general or public importance, or otherwise, ought to be submitted to the Court of Final Appeal for decision.

The questions of law

3.It is contended on behalf of the Chongs that the questions of law involved in the appeal are:

(i)      whether the Tribunal erred in admitting and using evidence relating to the purchase of Harbour Ring shares by the applicants, but restricting the ambit of that evidence, it being known that the conduct was the subject of a pending enquiry by another Tribunal and failing to make findings to the requisite standard in respect of collateral facts;

(ii)     whether the Tribunal and this court, in the absence of direct evidence, engaged in impermissible “backward reasoning” in determining that the purchase of Vanda shares by the Chongs was because of contact between Sammy Tse and Charles Chong; and

(iii)    whether the Tribunal erred in failing to give reasons or adequate reasons for rejecting or discounting facts in favour of the Chongs.

4.It is submitted, in support of the alternative basis that this court ought to be of the opinion that questions involved in the appeal “otherwise ought to be submitted” to the Court of Final Appeal.

The ‘Harbour Ring’ evidence

5.As noted in the judgment of the Vice-President, the Tribunal admitted the evidence in respect of Harbour Ring for the limited purpose of rebutting coincidence only (paras. 33-34 of the judgment).  That issue was raised in the explanations of the Chongs.  Clearly, the evidence was probative.  Although there was no direct evidence of Sammy Tse’s knowledge of Harbour Ring, there was compelling circumstantial evidence (see para. 38) as there was of contact between him and Charles Chong (see para. 39).  That evidence was relevant, as the Tribunal stated it to be, to the issue of the coincidence of the Chongs’ buying shares in both Vanda and Harbour Ring.

Backward reasoning

6.The Tribunal heard 54 witnesses in a hearing that extended over 77 days (see para.5 of the judgment).  The inferences that it drew “… were so blatant that it would have been perverse for the Tribunal to come to any other conclusion” (see para. 32).  The Tribunal reached its conclusions on that basis, not on “backward reasoning”.

The need to deal with each and every argument advanced

7.The Tribunal dealt with all the important and major arguments that had been raised.  In doing so, it discharged its duty to give reasons for its findings.  It is not the duty of a tribunal to mention each and every argument that it has considered (see para. 41 of the judgment).

Conclusion

8.No questions of law of great general or public importance arise nor are there questions that ought otherwise to be submitted to the Court of Final Appeal.  Accordingly, we decline to grant leave to appeal.

CACV109/2007

9.It is submitted on behalf of Lam Hon Nam that this is an exceptional case, in that there are questions of law involved in the appeal which “otherwise” ought to be submitted to the Court of Final Appeal for decision.

Grounds of appeal

10.The grounds of appeal upon which it is submitted this court ought to grant leave to appeal to the Court of Final Appeal are:

(i)      that the Tribunal denied Lam Hon Nam a fair hearing, in that he was not given the opportunity in his oral testimony before the Tribunal to explain the nature and ambit of telephone conversations he might have had with Ms Sylvia Chan, on 15 and 16 February 2000, on which dates the latter purchased the Vanda shares; and

(ii)     that the Tribunal was not entitled to draw inferences therefrom that Lam Hon Nam had provided Ms Sylvia Chan with “relevant information” in respect of Vanda.

A “fair hearing”

11.There is no dispute that in the course of cross-examination of Lam Hon Nam by counsel to the Tribunal, in face of it having been suggested to him that he had a nine-second of telephone conversation with Ms Sylvia Chan on the afternoon of 16 February 2000 in which they discussed Vanda shares, that he had protested that if there was such a telephone conversation at all he would like to tell the Tribunal what might have been discussed.  Cross-examination by counsel to the Tribunal ended at that point.  Thereafter, following questions of the applicant by the Chairman of the Tribunal in respect of a landline relevant to the issue of contact with Ms Sylvia Chan, the applicant was re-examined by his counsel.  However, neither the applicant nor his counsel raised or otherwise addressed the issue of the nature and ambit of such telephone conversation as might have been had on 15 and 16 February 2000 between Ms Sylvia Chan and Lam Hon Nam.  Obviously, no issue of being denied the opportunity to testify as to the issue arises at all.  The applicant did not avail himself of that opportunity.

The drawing of inferences adverse to the applicant

12.In its report (see pages 94-97), the Tribunal examined in detail the positive correlation between the purchase of Vanda shares by Ms Sylvia Chan and the “disproportionately high” contact between telephones to which each had access in that period.  In the result, whilst the Tribunal determined that they were not satisfied that the applicant had procured or counselled Ms Sylvia Chan to purchase Vanda shares they determined that they were satisfied that he had provided her with relevant information, having reasonable grounds to believe that she would act on that information to purchase Vanda shares.

13.As noted in the judgment of the Vice-President (see para. 32), in drawing inferences adverse to those suspected of having contravened the provisions in respect of insider dealing, the Tribunal was mainly concerned with “inferences drawn from the timing of telephone calls in relation to the trading by various persons.”  The Vice-President went on to note that those inferences “were so blatant that it would have been perverse for the Tribunal to have come to any other conclusion.”  That observation is entirely apposite in respect of the inferences the Tribunal stated it drew in respect of the applicant in that respect.

Conclusion

14.No question of law arises that “otherwise” ought to be submitted to the Court of Final Appeal for decision.  Accordingly, we decline to grant leave to appeal.

Costs

15.Costs of this application be to the 2^nd respondent as against the applicant in both cases.

Mr Simon Chiu, instructed by Messrs Sit, Fung Kwong & Shum, for the 1^st Appellant, Chong Wai Lee Charles, and the 2^nd Appellant, Chong Bun Bun, in CACV96/2007

Mr Clive Grossman, SC and Ms Chyvette Ip, instructed by Messrs Ko & Chow for the Appellant, Lam Hon Nam, in CACV109/2007

Mr Peter Duncan, SC and Mr Jonathan Kwan of the Department of Justice, for the 2^nd Respondent, the Financial Secretary,  in CACV96/2007 and CACV109/2007

Application by appellant in CACV109/2007 to Court of Final Appeal dismissed. Please refer to FAMV36/2010 dated 16 March 2011