The Securities and Futures Commission v. Tsoi Bun

HCMA451/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

(Appellate Jurisdiction)

MAGISTRACY APPEAL NO. 451 OF 2010

(ON APPEAL FROM ESS 46433 – 46437 OF 2008)

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BETWEEN

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Before : Hon Lunn J in Court

Dates of Hearing : 5 October 2010, 3 March and 3 June 2011

Date of Judgment : 13 June 2011

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J U D G M E N T

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1.There is before the Court an appeal by way of case stated, by the Securities and Futures Commission (“SFC”) following the acquittal by deputy magistrate Mr Thomas C.Y. Chan on 20 January 2010 of the respondent Mr Tsoi Bun after a trial of five summonses.

2.Each of those amended summonses alleged that, contrary to section 296(1)(b) and (4) of the Securities and Futures Ordinance, on specified dates in the period on and between 14 February and 25 September 2007, that he :

“... did enter into or carry out, directly or indirectly an artificial transaction or device ie placing or causing to be placed on the futures market operated by the Hong Kong Futures Exchange Company Limited your orders concerning Hang Seng …. futures contracts for the contract month of… During the Pre-Market Opening period in a specific pattern, with the intention that, or being reckless as to whether the transaction or device had the effect of…”

increasing/reducing the ‘calculated opening price’ for dealings in those futures contracts.

THE TRIAL

3.At the trial, which lasted four hearing days, a considerable volume of evidence was put before the court pursuant to the provisions of section 65B and C of the Criminal Procedure Ordinance, Cap. 221.  Expert evidence was led on behalf of the prosecution through Mr Eric Cheng Kai Sum and on behalf of the respondent by Mr David White.  Two reports, of over 200 pages in total, were put into evidence through Mr Eric Cheng. Similarly, two reports of a total of over 50 pages were put into evidence through Mr David White.  Testimony of each witness lasted about one hearing day.  The respondent did not give evidence.  Having received the benefit of lengthy written submissions from the parties, together with their oral submissions at a hearing held on 15 December 2009, proceedings were adjourned until the magistrate delivered his reasons for verdict on 20 January 2010.

The prosecution case

4.The prosecution case was that the respondent intentionally or recklessly rigged the ‘calculated opening price’ by artificially increasing/depressing it, thereby allowing him to sell/buy at a profit.  He did so by placing large orders in the last few seconds of the period before the market opened, which were in the opposite direction (buy/sell) to orders he had placed earlier.  In consequence, the ‘calculated opening price’ was moved significantly.  As soon as the market opened, the respondent unwound the positions that he had created in the pre-market opening period.

The defence case

5.It was the respondent's case that his trading activity was legitimate and that there were legitimate reasons for the adjustments that he made to his trading position shortly before the end of the premarket opening sessions.

Reasons for Verdict

6.In his Reasons for Verdict delivered orally on 20 January 2010, the deputy magistrate said that :

“ The basic facts in the present case were not in dispute. They are all dealt with by way of the admitted facts and statements read under section 65B of the Criminal Procedure Ordinance.

The Prosecution had to prove an essential element of the five summonses against the defendant. That is, the defendant had entered into artificial transactions or devices by his trading activities in respect of the five summonses.

The prosecution only had called one expert witness. The defendant had elected not to give evidence, but called one defence expert witness.

The central issue in this case is the contest of different expert opinions between PW1 [Mr Cheng] and DW1 [Mr White] to decide the question if the defendant had entered into artificial transaction or device by his trading activities.

I have considered PW1 and DW1’s evidence in court, and the content of their expert reports.  While I must say the defendant’s trading activities in respect of the five summonses did give rise to great suspicion, I am not satisfied beyond all reasonable doubt that the defendant had entered into artificial transactions or device. Hence I acquit the defendant of the five summonses on the benefit of doubt.”

THE CASE STATED

7.Application was made on behalf of the applicant on 1 February 2010 to state and sign a case, pursuant to section 105 of the Magistrate's Ordinance, Cap. 227. In the event, the Case Stated signed by the deputy magistrate was provided to the applicant under cover of a letter dated 27 May 2010.

8.In the Case Stated the deputy magistrate said that he had found proved numerous primary facts which he set out over 11 pages, being material adduced into evidence pursuant to section 65B and C of the Criminal Procedure Ordinance, Cap. 221.  Included in those findings was a description of the history and operational procedures of futures contracts of the Hang Seng Index, Hang Seng China Enterprises Index and the ‘calculated opening price’, the latter arrived at by calculations based on orders placed during the 30 minute premarket opening session, for both the morning and the afternoon.  Further, that the respondent placed all of the relevant orders in one or other of three accounts, one in the name of his mother and the other two in the name of his wife.  Then, the magistrate recited the short Reasons for Verdict that had accompanied his delivery of verdict on 20 January 2010.

The questions of law

9.The deputy magistrate set out the following questions of law for the opinion of this court :

“(i) Was I correct to hold , on the evidence adduced before me, that there was a reasonable doubt as to whether the transactions entered into by the Defendant were artificial;

(ii) if there was on the evidence no reasonable doubt that the transactions were artificial, whether it follows that the Defendant was guilty of the five summonses, or any of them; and

(iii)  whether any reasonable magistrate properly directing himself as to the evidence could have acquitted the Defendant of the five summonses or any of them?”

Order to amend the Case Stated

10.In its judgment of 5 October 2010 this court determined that the Case Stated was deficient and, pursuant to section 109 of the Magistrates Ordinance, Cap. 227, ordered that the deputy magistrate amend the Case Stated, in particular to have regard to the guidance as to the form of a case stated given by Huggins J (as he then was) in the judgment of the Full Court in the Attorney General v Leung Chi Kin [1974] HKLR 269 at 272‑273.  Of those requirements, Huggins J said that they included :

“… the material findings of fact or, where appropriate, a statement that no finding was made on an issue which is alleged to be material … the facts should include ‘the primary facts based upon [the magistrate’s] estimation of the truthfulness or otherwise of the witnesses who appeared before him and any facts deduced by him from the primary facts as so found : Attorney General v Munro-Smith (1961) HKLR 209 at 211.’”

Re-appointment of the deputy magistrate

11.Noting that at the time of the hearing in the lower court the magistrate was sitting as a deputy magistrate, he then being a practising member of the Bar, this court went on to say in that earlier judgment that there was no reason to think that the deputy magistrate would not be invited to be re-appointed to continue the case or that he would refuse such an invitation.  Although section 5A of the Magistrates Ordinance gives power to a deputy magistrate to continue proceedings in certain circumstances, notwithstanding that his appointment has expired, those circumstances do not extend to an order to amend a Case Stated.  The expectation that the deputy magistrate would accept a re-appointment and continue with the proceedings has proved to be too optimistic.  In a letter to the Chief Magistrate, dated 26 October 2010, Mr Thomas C.Y. Chan wrote :

“ I am sorry to inform you that I am unable to accept your offer to appoint me as Deputy Magistrate to complete the outstanding matters arising from the appeal case in the Securities and Futures Commission v Tsoi Bin.”

This court has been informed by the Chief Magistrate that he has been given to understand that Mr Thomas C.Y. Chan ceased to practice as a barrister.

THE APPELLANT’S SUBMISSIONS

12.At the outset of proceedings on 3 March 2011, Mr Bell SC invited the court to remit the case for rehearing before another magistrate.  Both he and Mr Plowman SC were agreed that it would not be appropriate for the appeal to proceed before this court on the basis of the existing Case Stated.  However, in his written submissions filed for the resumed hearing on 3 June 2011 and in his oral submissions Mr Chan, who then appeared without leading counsel, resiled from the position taken by Mr Plowman and submitted that the questions of law posed in the Case Stated were ones that this court could resolve on the Case Stated as drafted.

13.Mr Bell submitted that the deputy magistrate had failed to set out in the Case Stated the grounds for his determination.  That, he submitted was an error of law, which vitiated the determination, namely the acquittal of the respondent.  He submitted that a professional judge has a general duty to give reasons (see Flannery v Halifax Estate Agencies Ltd [2000] 1WLR 377 at page 381B).  Further, that duty extended to the Magistrates court (see English v Emory Reimbold & Strick Ltd [2002] 1 WLR 2409 at 2415D-E, paragraph 7).  The duty to give reasons requires the provision of adequate reason, in particular showing not only that the substantial issues have been addressed but also explaining why the decision has been reached (see Oriental Daily Publisher Ltd v Commissioner for Television and Entertainment Licensing Authority [1997-1998] 1 HKCFAR 279 at 290J-291D).

14.Mr Bell accepted that the failure of the deputy magistrate to give reasons for his decision was not a complaint made specifically in the Case Stated.  How could it be?  The appellant had repeatedly urged the deputy magistrate to provide his reasoning in the Case Stated, but he had declined to do so.  Following that failure, the appellant had applied to the court, which had ordered that the deputy magistrate to amend the Case Stated to provide the grounds for his determination.  Again, they were not forthcoming.  In any event, it had been made clear in the appellant’s written submissions, dated 1 September 2010, that the appellant took issue with the deputy magistrate’s failure to provide reasons for his decision.

Section 118(1)(f) : any step in the appeal rendered impossible

15.In the course of oral argument Mr Bell submitted that the provisions of section 118(1)(f) of the Magistrates Ordinance were relevant to the resolution of the appeal.  It provides that :

“… if any step in or in connection with any appeal or intended appeal is rendered impossible by the death, absence or incapacity of magistrate, a judge upon motion for good cause shall have power to order that the case be heard de novo by a magistrate and the case shall be so heard accordingly.”

On Mr Bell’s application, proceedings were adjourned on 3 March 2011 to enable a Notice of Motion and supporting evidence to be filed with the court.

16.On 3 June 2011, by Notice of Motion supported by the affirmation of Tong Hon Fai, an Associate Director of Enforcement of the Securities and Futures Commission, Mr Bell invited the court to determine that a step in the hearing of the appeal was rendered impossible, namely the amendment of the case stated, by the “absence” from judicial office and/or by the “incapacity” of the deputy magistrate on his refusal to be re-appointed to that office.

17.Mr Bell submitted that in construing section 118(1)(f) the court ought to do so in terms of section 19 of the Interpretation and General Clauses Ordinance, Cap. 1 namely in a fair, large and liberal construction, to better attain its true intent, meaning and spirit.  So construed, the purpose of section 105 of the Ordinance was to provide a right of appeal to both parties, which right was not to be frustrated.

Absence and incapacity

18.Of the word ‘absence’, Mr Bell submitted that it is not qualified in any way.  He submitted that clearly it includes absence from Hong Kong, but also it is to be construed as encompassing absence from the office of magistrate.  Similarly, he suggested the word “incapacity” is not limited or qualified.  Whilst it obviously extends to mental and physical incapacity it also extends to legal or jurisdictional incapacity, namely to perform the duties of a deputy magistrate.

19.Mr Bell submitted that assistance was to be derived in construing the term ‘absence’ from the judgment of the Supreme Court of Canada in R v Brunet (1918) 42 DLR 405, which judgment had been drawn to the attention of the parties by the court.  At issue, was the construction of the statute which permitted another judge to preside in a trial only in the “absence or incapacity of the judge of Sessions”.  In his judgment Anglin J said (page 413) that ‘absence’ connoted physical non-presence of which he observed, “We are not concerned with the cause of absence.”  Lemieux CJ was of like view, noting (page 437) that there may be numerous reasons for absence.

Trial de novo

20.Of the discretionary power in the court to order a trial de novo, Mr Bell drew the court’s attention to the judgment of the Court of Appeal in the Attorney-General v Chun Kin Man, CACC254/1987 (unreported) in which the court ordered a re-trial.  The court was faced with three different disputed versions of the Case Stated on which it determined that it was impossible to render any verdict which would do justice to the parties, nor could the court rely on any further amended version of the Case Stated.

21.In inviting the court to order that the deputy magistrate’s decision be reversed and that the case be heard de novo before another magistrate, Mr Bell submitted that the court ought to have regard to the following factors :

(i)  the respondent’s misconduct was serious, and involved the deployment of considerable skill and ability to manipulate the market (see the judgment of the Court of Appeal in HKSAR v Fu Kor Kuen, Patrick & Another, CACC179/2010 at paragraphs 59 and 60);

(ii)  the penalties for such misconduct are substantial, namely a maximum sentence on summary conviction of three years’ imprisonment and a fine of $1 million; and

(iii)  the respondent had made a substantial profit from his misconduct the subject of the five summonses, namely over $2.2 million.

Delay

22.Of the contention made on behalf of the respondent, that the misconduct the subject of the proceedings was stale, Mr Bell submitted that delay was not attributable to the conduct of the appellant.  The investigation had begun from the outset of the alleged misconduct in February 2007.  The complexity of the investigation required the assistance of an expert, who furnished a report of over 200 pages on 8 July 2009.  The summonses were issued on 17 December 2008.  Plea was taken in January 2009 and, after pre-trial reviews held in July and August 2009, the trial proceedings occurred on and between 8 and 15 December 2009.  Verdict was delivered on 20 January 2010.  The application that the deputy magistrate sign a Case Stated was made on 1 February 2010.

THE RESPONDENT'S SUBMISSIONS

23.Mr Plowman accepted that a failure by a magistrate to give reasons for his decision can amount to an error of law (see the judgments of the Divisional Court of England and Wales in R v Crown Court at Harrow, ex p. Dave [1994] 1All ER 315 and R v The Crown Court Sitting at Inner London, 7 December 1999; unreported).  However, he submitted that the error was one of procedure only and not one that fell within the ambit of an error of law in an appeal by Case Stated.  Further, since the Case Stated itself did not contain an allegation of failure to give reasons this court did not have jurisdiction to deal with an error of law arising from that failure.  Accordingly, the appeal ought to be dismissed.

24.In the alternative, having resiled from Mr Plowman’s acceptance that, in light of the limited material contained in the case stated it was not possible to proceed with the hearing of the appeal, Mr Chan submitted that nevertheless this court could proceed to determine the appeal.  In particular, it was to be inferred from the respondent’s acquittal that the deputy magistrate had refused to accept the evidence of the expert witness, Mr Eric Cheng, called at trial by the appellant.  That was understandable : counsel for the respondent had challenged his independence, given that he was an employee of the appellant, and had “strongly advocated” his opinion that the respondents trading strategies were unfair.

Trial de novo

25.In the event that his primary submission did not find favour with the court, Mr Plowman invited the court not to use its discretion to order a trial de novo.  The case was stale.  The events the subject of the proceedings had occurred in a period three and a half to four years ago.  He pointed out that section 389(1) of the Securities and Futures Ordinance, Cap. 571 provided a three‑year limitation after the alleged misconduct for the commencement of proceedings for these offences.  The allegations were not serious.  The respondent had already stood trial.  The appellant had resiled from the position taken during the trial that the crucial issue was in fact as a “contest between experts”.  In addition, Mr Chan submitted that the court, the court ought to take into account that such an order would afford the appellant a “second bite at the cherry”.  At a re-trial, the appellant might seek to lead expert evidence through another expert witness.  Further, it would be unfair to the respondent to allow the appellant to pursue a re-trial by taking advantage of the failure of the magistrate to provide full reasons.

The applicability of section 118(1)(f)

26.Mr Chan submitted that the provisions ofsection 118(1)(f) of the Ordinance did not apply.  If the word ‘absence’ was to be construed as meaning absence from judicial office, the other words in section 118(1)(f) ‘incapacity’ or ‘death’ were otiose, since by either of those circumstances a person would be absent from judicial office.  He submitted that the judgment in Brunet was of no assistance in the particular circumstances.  In particular, the reasons for the deputy magistrate’s absence were relevant.  An election or voluntary decision not to resume judicial office was not an ‘absence ‘from judicial office.  The deputy magistrate was not absent.  He had been found, but had simply declined to resume judicial office in order to comply with the order of this court.

A CONSIDERATION OF THE SUBMISSIONS

The nature of an appeal by Case Stated

27.Section 105 of the Magistrates Ordinance, Cap. 227 provides that either party to proceedings in the Magistracy who desire to question by way of an appeal :

“….any conviction, order or determination or other proceedings on the grounds that it is erroneous in point of law, or that it is in excess of jurisdiction, may apply in writing to the magistrate to state and sign a case setting forth the facts and the grounds on which the conviction, order or determination was granted and the grounds on which the proceeding is questioned, for the opinion of a judge.”

28.There is no dispute that an appeal by way of case stated is not an appeal by way of a re-hearing.  Rather, the appellate court is limited to an examination of whether or not there was an error of law or an excess of jurisdiction (see the judgment of Chan PJ, with whom the other judges in the Court of Final Appeal agreed, in Li Man Wai v Secretary for Justice [2003] 6 HKCFAR 466 at472H-473C).

“18. An appeal by way of case stated under s.105 of the Magistrates Ordinance is not an appeal by way of rehearing. (See Lord Widgery CJ in Harris Simon & Co. Ltd v. Manchester City Council [1975] 1 All ER 412, 417b dealing with a similar provision in England.) It is a review by the appellate court on the limited ground that there is an error of law or an excess of jurisdiction.

19. Where a magistrate has come to a conclusion or finding of fact which no reasonable magistrate, applying his mind to the proper considerations and giving himself the proper directions, could have come to, this would be regarded as an error of law.  Such a conclusion or finding is often described as ‘perverse’ (See Lord Goddard CJ in Bracegirdle v. Oxley [1947] 1 KB 349 at 353; Lord Widgery CJ in Harris Simon & Co. Ltd v. Manchester City Council at 417d; and Lord Bingham of Cornhill CJ in R v. Mildenhall Magistrates’ Court, ex parte Forest Heath District Council (161) JP 401 at 410 E-F.)  This is the case where the court is satisfied that the magistrate, in reaching his conclusion or finding, has misdirected himself on the facts or misunderstood them, or has taken into account irrelevant considerations or has overlooked relevant considerations.  (See Lord Denning MR in Re D J M S (a minor) [1977] 3 All ER 582 at 589c-e.)  In such a case, the court is entitled to intervene and the magistrate’s conclusion or finding would not be allowed to stand.” 

29.As noted earlier, in the Case Stated the deputy magistrate said that he found proved a swathe of facts that he said were established in witness statements or Admitted Facts.  Clearly, as the deputy magistrate noted, they were not in dispute between the parties.  Whilst he said that he had considered the evidence, both oral and in report form, of the two expert witnesses the magistrate did not condescend to any description of any common ground let alone the specific issues of difference between them.  He did not identify what, if any, primary findings of fact he made in respect of their evidence nor, conversely, did he state that he made no finding on a material issue.  Similarly, the deputy magistrate did not engage in an analysis and articulation of any consideration whatsoever of what inferences might or might not be properly drawn from the undisputed primary facts.

30.In the circumstances described earlier, this court has failed in its attempts to require the magistrate to comply with the requirements of a Case Stated.  On the material available to the court it is clear that the magistrate failed to set forth, “the grounds on which the…. determination was granted.”  [See section 105 of the Magistrates Ordinance.]

The duty to give reasons for its decision or determination

31.The reasons for the requirement that a judge provide reasons for the decision or determination he reaches in respect of proceedings between parties was addressed by Chan CJHC (as he then was) in the context of civil proceedings in the judgment of the Court of Appeal in Zhou Cui Hao v Ting Fung Yee [1999] 3 HKC 634 at 639C-I :

“ Generally speaking, a professional judge is under a duty to analyse in his judgment the material points in the evidence of the case and give reasons as to why he has reached a particular conclusion or decision. This is the only way to make people understand why their evidence is not accepted by the court and why they lose in a case. Only by this can justice be seen to be done. Furthermore, the losing party needs to be clear on whether there is any error in the reasons for the decision given by the court before he can decide whether to appeal or not, and, at a later stage, submit to the Court of Appeal his grounds of appeal in order to seek to set aside the original decision. A professional judge is under a duty to give adequate reasons for any decision which he has made. This is a principle of paramount importance in the common law system. This principle is quite clear. Recently the Court of Final Appeal has also mentioned this important principle in Oriental Press Group v. Obscene Articles Tribunal [1998] 4 HKC 505 at 514 nevertheless, from time to time some professional judges still forget to give adequate reasons in their judgments. Take the United Kingdom as an example. The English Court of Appeal has recently found it necessary to restate this principle in Flannery v Halifax Estate Agencies Ltd ….. the trial judge simply stated that he accepted the expert evidence of a particular party and entered judgment in favour of that party without specifically analysing the evidence or giving reasons as to why he accepted the evidence of that party. The English Court of Appeal took the view that from such a brief and simple judgment it was rather difficult for anyone to find out the reasons for the decision. For this reason the original decision was set aside.”

32.That passage, in large part, was cited with approval, in the context of criminal proceedings in the District Court, in the judgment of the Court of Appeal delivered by Tang VP in HKSAR v Poon Chun Kit [2007] 4 HKLRD 12 at 15, paragraph 11.

33.In Flannery v Halifax Estate Agencies Ltd [2000] 1WLR 377, after the passage cited with approval by Chan CJHC, Henry LJ had gone on to qualify his general assertion that a professional judge owes a duty to give reasons by observing, (381B-C) “ it does not always or even usually apply in the magistrates’ court. ….”.  Subsequently, in the judgment of the Court of Appeal of England and Wales, delivered by Lord Phillips MR (as he was then), in English v Emory Reimbold & Strick Ltd [2002] 1 WLR 2409 that qualification was described as no longer operating : (page 2415D-E) :

“ Flannery's case [ 2000] 1 WLR 377 was decided before the Human Rights Act 1998 came into force. It is clearly established by the Strasbourg jurisprudence that the right to a fair trial guaranteed by Article 6 of the Convention includes a requirement that judgment shall be pronounced publicly, normally carries with it an obligation that the judgment should be a reasoned judgment. In response to this requirement, magistrates’ courts now give reasons for their decision”

It is to be noted that Article 6 of the European Convention on Human Rights is similar to section 8, Article 10 of the Hong Kong Bill of Rights Ordinance, Cap. 383 and Article 14 of the International Covenant on Civil and Political Rights, applied in Hong Kong by Article 39 of the Basic Law.

34.In R v The Crown Court sitting at Inner London the Divisional Court was seized of a judicial review from a decision of the Crown Court on appeal from a Magistrates’ court.  The Crown Court had allowed the appeals against conviction and ordered costs of £7,500 in favour of the successful appellants against Lambeth Borough.  The Divisional Court quashed the orders and ordered a re-hearing in the Crown Court, having determined that the Crown Court had given inadequate reasons for its decision.  In addressing the reasons for the requirement that adequate reasons for the decision be provided, Mrs Justice Smith said (paragraphs 27 and 29) :

“27. … there is a duty on the Crown Court to give brief reasons for its decision. The parties should know why they have won or lost and should have the material necessary to consider an appeal: see R v Harrow Crown Court, ex parte Dave [1994] 1 All ER 315.

…

29.  … it does not seem to me that, as a matter of law, the prosecutor could or should be in a different position from the accused.  Each is entitled to know why he has won or lost and the loser is entitled to the material necessary to consider an appeal.  I can see that when it comes to the exercise of the discretion, which is an essential factor in the granting of relief by judicial review, the courts may be more ready to assist a convicted person than a disappointed prosecutor.  But, as a matter of law, I do not think it can be said that the duty to give reasons arises only for the benefit of a convicted person.”

35.As noted earlier the magistrate was required in stating and signing a case to set forth, inter alia, the grounds on which the determination was made, and to do so having regard to the guidance given by the Full Court in Leung Chi Kin.  His reasons need not be elaborate but they must be sufficient to show the parties and this court the basis on which he acted.  His failure to do so is an error.  In my judgment it is an error of law which goes to the root of the appeal.  Without a properly drafted Case Stated it is not possible to conduct the appeal.  Accordingly, it is an error of law which is not only procedural but also substantive and one which falls within the ambit of the powers of this court in hearing an appeal by way of case stated, including the power to reverse the deputy magistrate’s determination and order a trial de novo (see Chun Kin Man).

The applicability of section 118(1)(f)

36.Counsel were unable to assist the court by identifying any previous consideration by a court of the provisions of section 118(1)(f) of the Magistrates Ordinance or of similar legislation elsewhere.  Section 5A(2) of that Ordinance provides that during the period for which he is appointed a deputy magistrate shall have all the jurisdiction, powers and privileges, and perform all the duties of a permanent magistrate and “any reference in any law or to a magistrate shall be construed accordingly”.  Accordingly, the reference to a magistrate in section 118(1)(f) encompasses a deputy magistrate.

37.Clearly, on a purposive construction, section 118(1)(f) is intended to assist parties, who have availed themselves of the right to appeal, to overcome the frustration of that right by circumstances relating only to the magistrate who had conducted the earlier trial.  The order of this court that the Case Stated be amended was a step in or in connection with this appeal.  The Case Stated has not been amended.  The deputy magistrate has refused to be re-appointed in order to amend the Case Stated.  Accordingly, that step in the appeal has been rendered impossible.  At issue, is whether or not it has been rendered impossible by the “absence or incapacity” of the deputy magistrate.

38.In my judgment, the term “absence” connotes not only physical absence but also absence from judicial office, including such absence that has it been brought about by the expiry of a term of appointment.  It is to be noted that the Legislature specifically addressed some of the difficulties arising from the temporary nature of the appointment of deputy magistrates by the addition in 1999 of section 5A of the Magistrates Ordinance.  Section 5A(4) provides for a power in a deputy magistrate to continue proceedings, notwithstanding the expiration of his term of appointment, in the limited circumstances of adjourned proceedings, a reserved judgment or review of a determination.  Clearly, that is to be taken as a measure of the intent of the Legislature to ameliorate the difficulties that might arise on the appointment of deputy magistrates for limited periods of time.

39.The reasons for the non-compliance with the order of the court that the Case Stated be amended are known.  Firstly, the term of the appointment of the deputy magistrate has expired.  Secondly, he declines to be re-appointed.  The fact that the latter reason is a free and voluntary choice of the deputy magistrate is nothing to the point.  What is to the point is his absence from judicial office.  In consequence, a step in the appeal is rendered impossible.  In my judgment those circumstances fall within section 118(1)(f). It remains to consider whether there is good cause to order that the case be heard de novo.

TRIAL DE NOVO

Delay

40.There is no doubt that the events that are the subject of the summonses are relatively stale, having occurred over a period beginning about four years and three months and ending about three years and nine months ago.  I am satisfied that no part of the delay was attributable to the SFC.  The investigation was of complicated conduct.  Nevertheless, I accept that the fact that these proceedings have dragged on over several years must have caused the respondent stress and anxiety.  Certainly, the respondent is in no way responsible for any delay anymore than he, or from that matter the appellant, is responsible for the delay ensuing from most regrettable circumstances obtaining in this appeal.

41.The limitation period provided for by section 389(1) of the Securities and Futures Ordinance, Cap. 571 namely that an information or complaint relating to the commission of the offence alleged against the respondent be brought within three years after the commission of the offence, is of no relevance.  The alleged misconduct occurred in February, August and September 2007 and the five summonses were issued on 17 December 2008.

Other factors

42.The profits from the alleged misconduct, over $2.2 million, were substantial.  The alleged misconduct, reflected in the five summonses, occurred over a period of time, in February and September 2007, and is of a serious nature.  The purpose of the legislation is to protect the investing public.  The penalty upon conviction is significant.

43.Implicit in every order for a re-trial is the possibility that the prosecution will present its case having regard to the issues identified in the earlier trial.  Nothing of any weight has been advanced before this court that militates against the making such an order.

44.In the result, I am satisfied that it is appropriate and that there is good cause to order a trial de novo in the Magistracy.

ORDERS

45.Accordingly, pursuant to section 119(1)(d) of the Magistrates Ordinance, I order that the determination of the deputy magistrate, namely the acquittal of the respondent on the five summonses, be reversed and pursuant to that section and section 118(1)(f) I order that there be a trial de novo in the Magistracy.  In addition, I order that the matter come on for relisting in the Magistracy within 21 days and that an expedited date for the trial be fixed.

Mr Adrian Bell, SC instructed by the Securities and Futures Commission, for the Appellant.

Mr Gary Plowman, SC (only on 5 October 2010 and 3 March 2011) and

Mr Derek Chan, instructed by Messrs Richards Butler, for the Respondent.