Li Kwok Keung Asser v. Securities and Futures Commission

CACV 85/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 85 OF 2010

(ON APPEAL FROM APPLICATION NO. 2 OF 2009

IN THE SECURITIES AND FUTURES APPEALS TRIBUNAL)

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Before: Hon Kwan JA, Stone and Bharwaney JJ in Court

Date of Hearing: 22 October 2010

Date of Judgment: 26 November 2010

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J U D G M E N T

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Hon Kwan JA:

1.I have had the benefit of reading in draft the judgment of Stone J. I agree entirely with his reasoning and with the orders he proposed to make. Whilst we are concerned primarily with the appropriate sanction to be imposed on the applicant in disciplinary action for what was essentially a wilful breach of an undertaking to the court, it is right we should make known our views that in the context of disciplinary proceedings under the Securities and Futures Ordinance, Cap. 571, it is in appropriate to import by analogy criminal procedure and the giving of evidence under immunity in a criminal prosecution. As submitted by Mr Westbrook SC for the respondent, to do so would be to undermine the policy behind Part VIII of Cap. 571, which provides for compulsory power to require information from a person under investigation (section 183) and abrogates the privilege against self-incrimination in exchange for a limited use immunity (section 187).

Hon Stone J:

This appeal

2.This is an appeal mounted by and on behalf of the Securities and Futures Commission (‘SFC’) against a Decision dated 19 March 2010 of the Securities and Futures Appeals Tribunal (‘SFAT’) which consisted of the Chairman, Hon Mr Justice Saunders, and two lay members, Mr Edward Kwan Pak Chung and Mr Clement Chan Kam Wing.

3.After a two-day hearing held on 25 and 26 November 2009, on 19 March 2010 the SFAT handed down its Decision upon an application by one Mr Asser Li Kwok Keung, a licensed broker, who was seeking a review of a decision of the SFC, pursuant to s. 194 of the Securities and Futures Ordinance, Cap 571 (‘SFO’) to revoke Mr Li’s licence, and for a period of 10 years to prohibit him:

(1)    from applying to be licensed or registered with the SFC;

(2)    from applying to be approved under s. 126(1) of the SFO as a ‘responsible officer’ of a licensed corporation;

(3)    from applying to be given consent to act or continue to act as an executive officer of a registered institution under s. 71C of the Banking Ordinance; and

(4)    from seeking through a registered institution to have his name entered in the register maintained by the Monetary Authority under s. 20 of the Banking Ordinance as that of a person engaged by the registered institution in respect of the regulated activity.

4.The Decision of the SFAT against which the regulator now complains to this court was that of allowing Mr Li’s application for review, setting aside the decision of the SFC, and substituting therefor an Order that:

“Pursuant to s. 194, all licences held by Li Kwok Keung, Asser, be suspended for a period of 18 months.”

5.In fact, the original decision of the SFC had been to impose a revocation of Mr Li’s Type 1 (dealing in securities) dealer’s licence and to prohibit him from being licensed or registered for life; however, upon submissions to the regulator made by the solicitors acting for Mr Li, the lifetime ban was set aside and there was substituted therefor a period of 10 years.

6.Hence, in stark numerical terms, in the judgment of his case Mr Li had gone from a revocation/prohibition for life, to 10 years, to 18 months, and clearly the regulator was and is not best pleased at such a significant alteration by the SFAT to its professional judgment.

7.Hence this appeal, the regulator/appellant being represented by Mr Simon Westbrook SC, leading Mr Roger Beresford, and the applicant/respondent broker by Ms Rachel Lam who, as with Mr Westbrook and Mr Beresford, had appeared before the tribunal below.

The factual background

8.The facts of this unfortunate case have been meticulously set out by the learned Chairman of the SFAT in the Decision dated 19 March 2010, they have been rehearsed in the helpful skeleton arguments prepared for this appeal by counsel on both sides; for present purposes there is no necessity to do other than to state the gravamen of the case which was mounted by the SFC against Mr Li, who was first registered as a security dealer’s representative under the then Securities Ordinance in 1987.

9.In outline, during the course of an investigation by the SFC into other matters, it came to light that a cheque in the sum of HK$64,900.00 had been issued to Mr Li in October 2003, and as to which in an interview on 27 May 2005 he had given one explanation to the regulator after receipt of an inquiry letter from the SFC; however, at a second interview in July 2005, Mr Li admitted in writing that the initial explanation as given by him was false, and that he had done this at the behest of another dealer, who apparently had not wanted the truth regarding a certain share placement to emerge.

10.In turn, this development caused the SFC to issue a summons in the Magistrates’ Court charging Mr Li with knowingly giving false or misleading answers to questions raised by an investigator pursuant to powers under section 183(1)(c) of the SFO.

11.On 3 November 2006, Mr Li entered a plea of guilty to that charge, and following mitigation by his counsel, the court fined Mr Li the sum of HK$4,000, and ordered him to pay the SFC’s costs in the sum of HK$12,261.00.

12.However ‑ and this is where the present story really begins ‑ as an integral part of the mitigation made on his behalf in the criminal prosecution, an undertaking was given to the Magistrate by counsel for Mr Li to the effect that his solicitor would write a letter to the SFC offering “full cooperation” to the regulator.

13.On the same day, Mr Li’s solicitor wrote to the SFC in the terms following:

“Pursuant to the undertaking given to the Court, we hereby write to you to confirm our client’s intention to offer co-operation with you in your investigation of the matter.”

14.Subsequent thereto, as the Chairman’s Decision recounts, on 20 December 2006 Mr Li duly was sent a draft witness statement by an SFC officer but declined to sign it; as the Chairman records (at para 10) this was “apparently because of uncertainty as to how he would be dealt with in any disciplinary procedure that might be taken by the SFC”, and on 11 January 2007 a conversation took place between Mr Li’s solicitor and the SFC officer in question, Mr Yuen regarding Mr Li’s stated reluctance to sign the statement.

15.Thereafter there followed correspondence between Mr Li’s solicitor and the SFC; in particular on 12 January 2007 Mr Yuen wrote to Mr Li informing him as to a forthcoming interview on 22 January, and attached to that letter was a Notice pursuant to section 13(1), SFO.

16.As earlier indicated, the precise sequence of events is laid out in detail in the Decision of the SFAT now under appeal, but to cut a long story short Mr Li ultimately declined to cooperate with the regulator, the gravamen of his objection being his claim that he previously had been given an assurance by the SFC that if he in fact co-operated he personally would not be disciplined by the regulator in respect of the matter with regard to which he had been convicted and fined by the Magistrate.

17.In particular, Mr Li is on record as stating that he wanted to know the criteria used by the SFC for instituting the prosecution against him, that he had co-operated earlier, and expressed his view that “the SFC could have treated my case by way of public reprimand instead of instituting a prosecution”, and thereby leaving him with a criminal record.

18.On 5 May 2008 the SFC wrote to Mr Li setting out proposed disciplinary action against him pursuant to section 194, SFO, alleging misleading the regulator in an interview, failing to honour an undertaking given to the Magistrate in his prosecution, and failing to disclose certain information in breach of his company’s staff dealing policy and General Principle 1 of the Code of Conduct.

19.The Notice of Proposed Disciplinary Action (‘NPDA’) apparently based its decision principally upon Mr Li’s failure to honour his undertaking to the Magistrate, and perhaps less so on the other matters therein cited.  In any event, the SFC indicated that it proposed to revoke Mr Li’s licence and prohibit him from being licensed or registered for life.

20.In response, those acting for Mr Li made representations on 18 July 2008, and “remarkably” (to use the Chairman’s apt characterization) it was not until 30 January 2009 that the SFC in turn responded, and indicated that having considered the submissions as made to the SFC, it had determined to revoke Mr Li’s licence, and to prohibit him from, inter alia, applying to be registered or licensed with the SFC for a period of 10 years.

21.Thus Mr Li came to the SFAT upon his application for review of this penalty.

The reasoning of the Tribunal

22.The basis of the Tribunal’s decision is carefully set out at paragraphs 21 ‑ 48 of its Decision.

23.It appears that during the hearing Ms Rachel Lam, counsel for the applicant, Mr Li, specifically had abandoned an argument to the effect that Mr Li had a “legitimate expectation” that if he co-operated with the SFC he would not be disciplined, and instead had focused on her primary submission that the revised period of 10 years imposed by the regulator on her client was, in all the circumstances, “manifestly excessive”.

24.The Tribunal clearly agreed with her argument, given its ultimate reduction in sentence from one of 10 years to 18 months.

25.Looking at the Decision in the round, it is evident that the Tribunal came to its conclusion on the basis of one predominant conclusion, namely that this case exhibited “confusion” and “misunderstanding” between the regulator and Mr Li.

26.The Tribunal observed that the sequence of events/policy intimated in the SFC Guidance Note issued in March 2006 entitled ‘Cooperation with the SFC’ had not been followed, and that (at para 32), “…what happened in this case led to confusion, and, on the part of Mr Li and those advising him, that confusion was quite understandable.” 

27.The Tribunal then expressed the view that there had been discussions between Mr Li and the SFC as to whether, if Mr Li gave information to the SFC that they did not have, that he would be subject to disciplinary action.  The Decision then continues (at paras 33-37):

“In our view, the moment that issue was raised, Mr Li and his advisers should have been supplied with the policy document prepared and published by the SFC. They would have then immediately understood that, for quite proper policy reasons, even if Mr Li cooperated and gave evidence, he would still potentially be subject to disciplinary action.

Had this course been followed, we have no doubt at all that Mr Li would have been advised by his solicitors to make the statement…

But that was not the case. Instead each party proceeded on a different understanding. The SFC understood that they had reserved the right still to take disciplinary proceedings against Mr Li. Mr Li and those advising him mistakenly understood that if truth was revealed he would not be disciplined.

But it is plain that no assurance was given to Mr Li that he would not be subject to disciplinary action. He must recognise that he had given a promise to the court that he would assist the SFC. He demonstrably failed to do so. Notwithstanding his misunderstanding of the position, he was obliged to honour that undertaking. The SFC were entirely justified in being concerned that he failed to do so.

However, we believe that it is necessary to recognize that a misunderstanding had arisen. In those circumstances we are satisfied that it is open to us to review the penalty imposed by the SFC.” (emphasis added)

28.Thereafter the Tribunal reviewed case law in this area, and in particular the six cases cited by the SFC in its Notice of Final Decision, in which the penalties ranged from a public reprimand to prohibition for life.  The Tribunal noted that 3 of those cases involved the use of secret accounts, which situation did not apply in the present case, whilst the 3 other cases, one of which involved prohibition for life, clearly were distinguishable on their facts.

29.Having stated that the SFC was right to be concerned about the situation in terms of the breach of undertaking, the Tribunal then took the view (at para 44) that:

“it is necessary to view that situation in light of the misunderstanding between the SFC and those advising Mr Li, and Mr Li, as we have set out above. Those circumstances go a very long way to ameliorate what might otherwise be a very serious breach.

Had the appropriate procedure been followed…and Mr Li properly understood that notwithstanding his admission and likely prosecution, disciplinary action was also likely, we believe that he would have co-operated and have given the necessary evidence if required.  Consequently, in our view, in these very unusual circumstances, we believe the penalty ought to be imposed on that basis.”

30.Thereafter came the Order from which the SFC now appeals, which, to repeat, was that:

“Pursuant to s 194, all licences held by Li Kwok Keung, Asser, be suspended for a period of 18 months.”

The argument

31.No disrespect to counsel is intended if I refer in broad terms only to the arguments rehearsed on both sides of the fence on this appeal.

32.Mr Westbrook SC, for the regulator/appellant, leading Mr Beresford, recounted the procedural and factual background in some detail ‑ indeed there is little or no dispute as to what actually had occurred ‑ and in effect ran two broad lines of argument:

first, that the Tribunal’s emergent (and evolved) concept of a “misunderstanding” entirely was unjustified on the available evidence; and second, and conceptually, whether the analogies to criminal procedure as contained within the Tribunal’s published Decision were well-founded as a matter of law ‑  so that in pursuing such line of thought the Tribunal thereby effectively had misdirected itself.

33.To be fair, leading counsel for the regulator had a good deal more to say, but for present purposes the foregoing will suffice as a broad summary of the parameters of the argument.

34.On behalf of the respondent, Mr Li, who (no doubt to his surprise and gratification) had seen his sentence slashed by some eight and a half years, namely, from 10 years to 18 months, Miss Rachel Lam skillfully argued her case, emphasizing that notwithstanding the lengthy and detailed Notice of Appeal, the basic question for consideration on the very particular facts of this particular case was whether, “as a matter of fundamental fairness”, after taking into account all relevant factors, was the Tribunal entitled to arrive at the very much reduced sentence now imposed on her client.

35.To this rhetorical question, Miss Lam’s quiet but firm response was ‘Yes’, and that having regard to all the factors as clearly were in play, this Court was invited either to confirm the Tribunal’s decision or, if this Court was so minded, to maintain the result in the SFAT “but with observations on the reasoning of the Tribunal”.  As to this latter point, I apprehend that Miss Lam was making eliptical reference to the criminal law analogies within the Decision, the presence of which also was subject of forceful complaint by Mr Westbrook SC during the course of his address.

Decision on this appeal

36.It remains established jurisprudence within the SFAT jurisdiction, which now has been in existence in its present incarnation (in succession to its forerunner, the Securities and Futures Appeals Panel) for well over 7 years, that the Tribunal interferes only with the decision of the regulator when something patently has gone wrong with its decision, and manifestly requires to be put right. 

37.To take but one example, in Hong Kong Forex Investment Ltd v Securities and Futures Commission, SFAT No 6 of 2007 (Determination dated 20 March 2009), the then Chairman of the SFAT observed (at paras 91-92):

“In light of the principles expressly laid down over the past 6 years since the establishment of this Tribunal ‑ which statutorily succeeded its forerunner in this area, the Securities and Futures Appeals Panel – I see no necessity to repeat in detail the content of the accumulated Determinations dealing with the operation of these principles: suffice it to say, once again, that this Tribunal is not a regulator, that it neither has the skill nor the knowledge to be a regulator, and that it exists only as a statutory ‘check and balance’ to the exercise of executive disciplinary power in order to ensure that nothing has gone seriously wrong ‑ “out of whack” is the rather blunt colloquial term that has crept into the lexicon of this jurisdiction, or to ascertain whether, for any other reason, unfairness clearly can be demonstrated to have been visited upon an applicant for review.

In short, this Tribunal certainly does not exist to ‘rubber stamp’ the disciplinary actions of the SFC, but neither does it seek to substitute its own views for that of the market professionals ‘on the ground’: the fact that the Tribunal may, in its wisdom, have passed or considered passing a different sentence at the SFC disciplinary level, is nothing to the point: unless and until a disciplinary action is demonstrated to be clearly wrong, either in principle or on the basis of mistaken/overlooked fact, this Tribunal will not interfere…..”

38.The Tribunal as now constituted, under the distinguished leadership of its current Chairman, Mr Justice Saunders, clearly is well aware of the tenor and basis of this broad approach in adjudicating SFAT applications, and indeed in this very case has seen fit to act robustly and to reduce the regulator’s disciplinary sentence from one of 10 years prohibition to one of 18 months.

39.In my view the Tribunal indeed was correct in its decision to move to interfere with sentence in this case ‑ on any basis a sentence of 10 years prohibition simply cannot be justified on these facts ‑ but, and I am afraid it is a big ‘but’, in my view the Tribunal has seen fit to ‘over-egg the pudding’ too far in the opposite direction.

40.So that whilst in my judgment ten years clearly was too high a penalty (and with respect to the SFC, how this case provisionally could have been considered, as per the terms/tenor of the NPDA, to be worth a life prohibition, is not apparent), by the same token I take the view that a reduction to 18 months in the present circumstances certainly is far too low, and equally cannot be justified either in terms of basic principle or on the basis of ‘comparables’ ‑ albeit, to be realistic, given that all cases of this nature are peculiarly fact-sensitive it is difficult to locate a truly ‘comparable’ case.

41.In argument Mr Westbrook SC recognized this, I think, and sought to defray this line of thought by emphasizing the relative seriousness and obvious disingenuousness as had been demonstrated by the applicant, Mr Li, during this entire saga, whilst sensibly recognizing (albeit not conceding) that some reduction probably was necessary in the interests of fairness.

42.In my judgment where the learned Chairman and his lay colleagues went ‘off course’ in this case is clear: the entire argument underpinning the reduction as ultimately ordered was premised on the basis of a “misunderstanding” which simply had, and has, no evidential basis whatever.

43.The stark fact remains that this applicant, Mr Li, did not give evidence to the Tribunal.  For my part I find this extremely surprising, given the welter of evidence otherwise in place against him, but what perhaps is even the more surprising ‑ and I say this with great respect to the amount of work which clearly has been put into the Decision now under appeal ‑ is that the entire Decision is permeated with nothing more than speculation as to the existence of “the misunderstanding between the SFC and those advising Mr Li, and Mr Li, as we have set out above…”(para 44).

44.The objective and informed observer legitimately would have cause to wonder where this comes from, because it certainly does not come from any evidence or from any concession in this regard from the SFC.  As Mr Westbrook pointed out, the suggestion that the applicant was labouring under a “misunderstanding” was never canvassed at the hearing, the ‘legitimate expectation argument’ had been expressly withdrawn, and the SFC was given no intimation at the hearing of the Tribunal’s intention to rely upon this “new way of putting it”, so that the SFC had had no opportunity to answer the point, and that as a consequence the Tribunal had erred in law: had the SFC been given the opportunity, he said, it would have submitted that there was no evidence upon which the SFAT could find that any such “misunderstanding” had arisen, alternatively that the evidence that was before the SFAT did not justify any such inference as to any “misunderstanding”, and that in fact there was clear evidence to the contrary on the applicant’s representations as made to the regulator.

45.To the contrary, leading counsel continued.  The regulator remains adamant that, when push came to shove, Mr Li simply had reneged upon his explicit ‘cooperation undertaking’ as given in mitigation to the magistrate prior to his sentencing, and thereafter unaccountably has had attributed to him by the Tribunal (at para 45) that had the appropriate policy as to cooperation been explained properly to Mr Li and his advisers, and that had he properly understood that notwithstanding his admission and likely prosecution disciplinary action may be forthcoming “we believe that he would have cooperated and given the necessary evidence if required.”

46.It is difficult to disagree with this submission of Mr Westbrook.  In my judgment this speculative approach adopted by the Tribunal neither can be upheld nor justified, and to her forensic credit Miss Lam implicitly recognized the complete evidential lacuna and the nature of the speculative reasoning behind the Decision thus to reduce her client’s penalty from 10 years to 18 months. 

47.As Mr Westbrook SC simply put it in submission: “there was no evidence before the Tribunal which could have supported such a finding”, and that in any event such a finding was inconsistent “with the uncontested fact that the applicant refused to reveal the truth or otherwise co-operate without an assurance that he would not be disciplined”, and further that it was inconsistent with the applicant’s representations which had been made with knowledge of and reliance upon the SFC Guidance Note” (as to cooperation with the regulator).

48.If therefore, as I believe to be the case, it was correct for the SFAT in this specific instance to interfere with the penalty, but nonetheless has permitted the sentencing pendulum to swing far too far in favour of the applicant ‑ from whom they had not heard ‑ this begs the question as to the correct penalty, given that at one end of the spectrum the SFC conclusion [10 years] obviously is too high, and at the other the SFAT finding [18 months] equally obviously is too lenient.

49.Unsurprisingly Mr Westbrook declined to be drawn on this aspect, doubtless conscious of the possibility that any suggestion he might have essayed in this regard may have transpired to be lower than the penalty this court in fact was to consider appropriate in light of all the circumstances.

50.At the end of the day, in my judgment the correct penalty, which, as Mr Beresford explained to the court, now must take the form of a prohibition given the deemed revocation of the applicant’s licence 180 days after he ceased to be accredited (vide section 123(1), SFO), so that licence revocation or suspension no longer remained an option (given that section 194(1)(i), SFO is applicable only to licensed persons), is a prohibition from doing any of the acts as specified in paragraph 1 of the Decision for a period of three (3) years from the date of the SFAT Decision, that is 19 March 2010.

51.In so saying, I confess that my instinct is that this probably remains a little low, but since this is in the context of an appeal from an SFAT Decision, I consider it appropriate, if anything, to err on the conservative side, and in any event the fact remains that it amounts to a literal doubling of the penalty as handed down by the Tribunal which was seized with this matter.

Other issues

52.For my part I am content to decide this case in the foregoing manner, that is, upon the absence of any evidence underpinning the critical speculative conclusion as to a “misunderstanding”, and in normal course this court would have been content to leave it at that.

53.However, in this instance I do not think it correct to leave this judgment without at least some reference to the other integral part of the SFC appeal, as adumbrated in the detailed skeleton argument put in by counsel on behalf of the SFC, which made complaint about parts of this SFAT Decision which saw fit to canvass analogies between the statutory disciplinary process as enshrined in the SFO and the principles/processes of the criminal law.

54.I suspect that this may be a significant reason why the SFC has driven this otherwise relatively inconsequential matter to appeal; as Mr Westbrook stated in his written opening, this appeal raises the “wider issue” of whether, or the extent to which, it is appropriate for the SFAT to guide itself by analogy to criminal proceedings when reviewing regulatory decisions of the SFC”.

55.Let me say immediately that in my judgment such an approach clearly is not appropriate. 

56.The basis and tenor of the jurisprudence as laid down in the initial six years of the life of the SFAT was, if I may say so, entirely premised upon the statutory principles enshrined in the SFO as to the operation of the Tribunal, the provisions of which make it abundantly clear that the disciplinary appellate process as thus created by Part XI of the statute, together with Schedule 8 thereof, are not to be trammelled by or otherwise confused with considerations specifically pertinent to the criminal law.  In fact, the distinguishing characteristics marking out disciplinary regulatory action from the precepts of the criminal law were discussed at some length by an earlier Determination of the SFAT: see SFAT Application No 4 of 2007, dated 9 November 2007, Lee On Ming, Paul and the SFC, which essentially concerned a debate as to the appropriate disciplinary standard of proof, but which went on (in particular at paragraphs 52-61) to make comparative law observations as to established conceptual distinctions between disciplinary proceedings under domestic law as compared with the criminal law.

57.It is, for example, specified in the SFO that the standard of proof to be applied by the Tribunal in the exercise of its power of review of SFC disciplinary action is to be the civil standard: vide section 218(7):

“Subject to section 221(3) [the standard of proof in contempt cases] the standard of proof required to determine any question or issue before the Tribunal shall be the standard of proof applicable to civil proceedings in a court of law”

and, in further example, pursuant to section 219, the powers of the Tribunal are extremely widely framed: vide section 219(1)(a):

“…the Tribunal, for the purposes of a review, may, on its own motion or on the application of any of the parties to the review –

(a)          receive and consider any material by way of oral evidence, written statements or documents, even if the material would not be admissible in evidence in civil or criminal proceedings in a court of law;”

In fact, the sole express statutory nod in the direction of criminal law principles is the provision within section 220, SFO, which deals with restrictions in admissibility in criminal proceedings against a person testifying to the Tribunal when the answer given may tend to incriminate.

58.Viewed against this backdrop, it might be considered surprising that the Decision of the Tribunal the subject of this appeal the part entitled ‘Discussion’ (at para 25 et seq) the opening statement that “it is first necessary to consider the situation of a person facing investigation of a criminal offence who wishes to give evidence and who seeks immunity in exchange for that evidence”, and thereafter continues to describe (at paras 26 and 27) what occurs in the criminal prosecution scenario.

59.With great respect the question which immediately arises in the mind of the informed objective observer in relation to this proposition is ‘why’, and I have no idea why this should have been thought to be “necessary”.

60.To the contrary.  If I may say so, such analogies manifestly are inappropriate and unhelpful, and obscure the fact that the SFO contains what clearly is intended to be a self-sufficient statutory code for dealing with regulatory disciplinary matters.

61.By the same token, at the end of the Decision there appears a section entitled ‘Unused material’, with the learned Chairman observing (at para 52) that it was felt “appropriate to say something about the question of unused material”, and thereafter (at para 53) the following statement appears:

“The preliminary view held by the Chairman was that the obligation on the SFC as to the disclosure of unused material ought to be equivalent to that of a prosecutor in criminal proceedings….the matter was not the subject of full argument from counsel before us, as the matter of disclosure was not pressed further by Ms Lam. Because the issue did not ultimately proceed to full argument this is not an appropriate occasion in which to lay down principles.”

62.Notwithstanding such observation, the learned Chairman nevertheless then goes on to specifically to consider the decision of the Court of Final Appeal in Lam Siu Po v Commissioner of Police [2009] 4 HKLRD 575, and after reference to Article 10 of the Bill of Rights, observes (paras 54-55) that, as in Lam Siu Po:

“it seems that the requirement of fairness demanded by Article 10 should lead also to a requirement for the disclosure of unused material in disciplinary proceedings, equivalent to that in criminal proceedings. It appears to us from the limited argument on the issue that did take place that the SFC take the view that in disciplinary proceedings the obligation of disclosure upon them is not as extensive as that in criminal proceedings. There not having been full argument, it is not appropriate for us to say anything further, other than having set out preliminary views held by the chairman at the present time”.

63.If I may be permitted to say so, within an appellate context almost always ‘less is more’.

64.As Mr Westbrook commented, correctly in my view, this matter was not before the Tribunal, it had not been argued, and the expression of such ‘preliminary views’ on the part of the Chairman, with reference to criminal law analogy, is and was wholly inappropriate, and not unnaturally caused alarm bells to ring in the mind of the regulator, the SFC, which clearly foresaw the complications arising in its regulation of the market, as currently authorized/mandated by statutory principle, should criminal law principles effectively be imported by a side-wind into its disciplinary activities.

65.Whilst, as I have said, I have been minded to decide this appeal purely on the absence of any cogent evidence underpinning the speculative conclusion as to a “misunderstanding” existing between Mr Li and the SFC, in my judgment the observations made by the Tribunal in the Decision under appeal as to criminal law analogies cannot be permitted to go unremarked; in fact, it was noticeable that in argument in this court Miss Lam pointedly distanced herself from the observations in question.

66.In short, the point was not, and never had been, ‘live’, and in my judgment observations of a generally discursive and unrelated nature have no place in Decisions/Determinations of the SFAT, which strictly should confine itself to making decisions solely upon the particular facts/evidence before it in light of the guidance given within the provisions of its statutory charter, the SFO.

Order

67.It follows, therefore, that for my part I would allow this appeal on the basis that the Order of the Tribunal be varied to substitute therefor the figure of 3 years prohibition for that of 18 months period as intimated in the Decision.  I leave it to junior counsel for the SFC to draw the appropriate Order for engrossment.

Costs

68.This brings into stark relief the issue of costs of this appeal.

69.Although her client has lost this appeal solely in terms of the length of a prohibition as put in place by the Tribunal, Miss Lam says, in my view not without some justification, that her client did not want to be “dragged” to this court and that, in part at least, he has been subject to the appellate process by reason of ancillary and irrelevant comment concerning analogous application of criminal law principles which were raised by the Tribunal entirely of its own volition.

70.I confess that I have some sympathy with this argument.

71.Any award of costs always contains the element of the ‘broad brush’ and as all practitioners well know, costs cannot be subject to precise calibration.

72.Suffice to say, therefore, that looking at this case in the round, and in light of all the circumstances surrounding this appeal by the SFC, I would make an order nisi that the respondent, Mr Li, do pay to the SFC, the appellant, 40% of the costs of this appeal.

Hon Bharwaney J:

73.I agree with the judgment of Stone J and with the orders proposed.

Hon Kwan JA:

74.Accordingly, the appeal is allowed and there will be an order in terms of paragraphs 67 and 72 above.

Mr Simon Westbrook SC and Mr Roger Beresford, instructed by Messrs Maureen Garrett and Lee Tung Mei, for the Respondent/Appellant

Ms Rachel Lam, instructed by Messrs Hastings & Co., for the Applicant/Respondent