Luk Ka Cheung v. Market Misconduct Tribunal and Another

HCMP 326/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO. 326 OF 2011

(ON AN INTENDED APPEAL PURSUANT TO S. 266 OF
THE SECURITIES AND FUTURES ORDINANCE, CAP. 571 FROM
DETERMINATIONS OF THE MARKET MISCONDUCT TRIBUNAL
IN RELATION TO CHINA OVERSEAS LAND AND INVESTMENT LIMITED)

BETWEEN

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Before : Hon Cheung and Yuen JJA

Date of Decision : 24 May 2011

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D E C I S I O N

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Hon Cheung JA (giving Decision of the Court) :

1.The applicant applies for leave to appeal out of time against the orders of the Market Misconduct Tribunal (‘the Tribunal’) dated 20 August 2009.  The 2^nd Respondent opposes this application.  We will consider the application on paper.

Background

2.On 8 July 2009, the Tribunal, after conducting an inquiry, concluded that the applicant was an insider dealer together with two other persons, namely David Tsien and Leung Chi Keung.

3.On 20 August 2009, the Tribunal ordered the applicant,

(1)   pursuant to section 257(1)(a), that for a period of nine months he shall not, without the leave of the Court of First Instance, be concerned or take part in the management of CIMB-GK Securities (HK) Limited or of any company that is now or becomes a subsidiary of CIMB-GK Securities (HK) Limited;

(2)   pursuant to section 257(1)(b), that for a period of nine months he shall not, without the leave of the Court of First Instance, in Hong Kong, directly or indirectly in any way acquire, dispose of or otherwise deal in any securities or an interest in any securities;

(3)   pursuant to section 257(1)(e), that he shall pay the Government the sum of $2,038,429.85;

(4)   pursuant to section 257(1)(f), that he shall pay the Securities and Futures Commission the sum of $174,601.00; and

(5)   pursuant to section 257(1)(g), that the Hong Kong Institute of Certified Public Accountants and the Hong Kong Society of Financial Analysts be recommended to take disciplinary action against him.

(the “Order”)

4.The Order was registered as a Court order on 24 August 2009 under HCMP 1613/2009.

5.The present application was issued by the applicant by summons dated 2 March 2011.

Relevant considerations

6.The Court will consider the application in accordance with the well established considerations, namely,

1) length of the delay;

2) reason for the delay;

3) merits of the appeal; and

4) prejudice to the respondent.

Length of the delay

7The applicant had 28 days to appeal against the Order of 20 August 2009 (Order 59 Rule 4, Order 60A Rule 3 of the Rules of the High Court).  That period expired on 18 September 2009.  As the present application was only lodged on 2 March 2011, there is a delay of about 1½ years.  This is a substantial delay.

Reasons for the delay

8.The applicant stated that although he wished to appeal against the Order, he was unable to do so due to financial reasons.  The event over which the applicant was sanctioned took place in January 2004.  Inquiries by the Securities and Future Commission (‘SFC’) began in the same year.  In August 2005 he left his former employment due to difficulties with the ongoing investigation.  Since then he has suffered a drop in income due to job change or loss of employment.  Between August 2005 and December 2006, he had changed two jobs.  In May 2007 he joined CIMB-GK Securities (HK) Ltd (‘CIMB’).  Due to the refusal by SFC to approve his application to give advice on securities he was limited to do general research work.  In April 2009, when it was apparent that the Tribunal would commence the inquiry, he switched to part-time work and his salary was reduced.  Because of the Order which banned him from being involved with the management of CIMB, he tendered his resignation in September 2009, although he continued to be a part-time consultant until April 2010 when he received a lifetime ban on becoming a registered person.  On 21 October 2009 the SFC notified him that it was considering imposing a lifetime ban against him in the regulated industry.  This was confirmed on 10 March 2010.  He has appealed against that decision.  He has to bear the government and SFC’s costs of $2,200,000, although his former employer contributed in part for his own legal costs.  His wife also suffers from health problems and is likely to leave her job in the near future.

9.The decision not to pursue the appeal was a considered one.  The applicant said that he had informed his lawyers that he ‘could not pursue an appeal at that time’.  This could only mean that he had received proper legal advice as to the time for appeal.  Further in March 2010 when he was faced with a lifelong ban to be engaged in the regulated industry, he had not considered it appropriate to lodge an appeal against the Order imposed by the Tribunal but only against the decision of the SFC.  He only did that one year later in March 2011.  He said that his situation has improved since the Tribunal delivered its decision.  He is now employed by DBS Vickers (HK) Ltd as a research consultant on a contract basis.  The decision of Tribunal was delivered in July 2009 and the applicant did not say when he had obtained the new job.  We are not satisfied that the applicant has provided a satisfactory explanation for the delay.

Merits of the appeal

10.The applicant maintained the defence he raised at the Tribunal that the case against him was legally flawed.  This issue was specifically considered in detail by the Tribunal.  We are not satisfied that he has a reasonable prospect of success on this ground.

11.On 16 November 2010 this Court in HCMP 2539/2009 granted leave to Leung Chi Keung (‘Leung’) to appeal out of time against the order of the Tribunal.  Leung made the application for leave to appeal out of time in December 2009.  One of the grounds for which we had granted leave was whether David Tsien was a connected person under section 247(1)(c) of Securities and Futures Ordinance, Cap. 571. 

12.This is a ground now also relied upon by the applicant although it was not relied upon by him before the Tribunal.  In our view the fact that we have granted leave on that ground to Leung is only one of the relevant factors we have to consider in the present application.  In any event although we had granted leave to Leung to argue this point, we have not yet finally adjudicated upon this point.  We are not satisfied that this ground alone is enough to justify an extension of time.

13.As to whether the applicant had and knew that he had the relevant information, we are satisfied that the Tribunal had properly addressed the issues.

Prejudice

14.The Respondent does not rely on prejudice.  It is, however, clear that the absence of prejudice on the part of the respondent is not a ground for extending time.

Conclusion

15.In the circumstances we will refuse leave and order costs of the application to be borne by the applicant on a provisional basis.

16.We are of the view that the application is totally without merits.  We will, pursuant to Order 59 Rule 2A(8), further order that the applicant is not allowed to apply for a hearing to reconsider his application.

Messrs Reed Smith Richards Butler, for the Applicant

Mr. Peter Duncan SC and Mr. Jonathan Kwan, instructed by Department of Justice, for the 2^nd Respondent