AA AND ANOTHER v. THE SECURITIES AND FUTURES COMMISSION

HCAL 41/2016

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST

NO 41 OF 2016

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APPLICATIONS TO INTERVENE AND TO PROVIDE DOCUMENTS

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1.  On 5 May 2016, this Court granted leave to the applicants to judicially review the decision of the Securities and Futures Commission (SFC) to transmit compelled answers, testimony and documents obtained from them to Japanese regulators. The relief sought by the applicants consists of a declaration that the SFC acted unlawfully in transmitting compelled answers, testimony and documents to Japanese regulators, absent a binding prohibition against their use in criminal proceedings and/or a proper assurance against them, or their contents, being leaked to the media and otherwise made public; and a declaration that section 181 of the Securities and Futures Ordinance, Cap 571, (SFO), contravenes Article 10 of the Hong Kong Bill of Rights Ordinance, Cap 383, and is unconstitutional.

2.  The hearing of the substantial judicial review is scheduled to commence on 17 January 2017 with three days set aside.[1] Directions were given to the parties in relation to the hearing.  The applicants were required to file and serve their skeleton argument and list of authorities 7 clear working days before the hearing, namely 5 January 2017.  The SFC was required to file and serve its skeleton argument and list of authorities 3 clear working days before the hearing, namely 11 January 2017.[2] 

3.  Two applications have been brought before this Court in relation to these proceedings.  The first is from the Secretary for Justice (SJ) who by summons dated 23 December 2016 applies to join as an intervener in these proceedings and for consequential directions.[3] The second is from the SFC which by summons dated 9 January 2017 applies for retrospective leave to provide all Court documents and affirmations in these proceedings to the Department of Justice (DoJ).[4] 

Application to intervene by the SJ

4.  The SJ applies to intervene because of the challenge to the constitutionality of section 181 of the SFO, and wishes to participate in the proceedings on this issue only. 

5.  By way of background, it should be noted that Order 53, rule 1A of the Rules of the High Court (RHC) defines an application for judicial review as including an application in accordance with the order for a review of the lawfulness of an enactment or a decision, action or failure to act in the exercise of a public function.  As pointed out in the commentary of Hong Kong Civil Procedure 2017 at paragraph 53/1A/1, the definition of the word “enactment” at section 3 of the Interpretation and General Clauses Ordinance (Cap 1) has the same meaning as “Ordinance” in the same section of that ordinance and includes ordinances enacted by the legislature as well as subsidiary legislation.  It is noted that this definition recognises the constitutional significance of judicial review if the court so orders as a means of testing the validity of laws enacted. 

6.  Rule 1A also defines “interested party” as a person other than the applicant and the respondent, who is directly affected by the application.  Pursuant to Order 53, rule 5(3), there is an obligation that the originating summons must be served on all persons directly affected.  In the original Form 86, the applicants are obliged to list all interested parties known to the applicants.  In this instance, they listed the two Japanese regulators only, namely the Financial Services Agency and the Securities and Exchange Surveillance Commission.  The SJ was not listed.  The obligation to list an interested party falls on the applicant bringing the judicial review proceedings. 

7.  Mr Ambrose Ho, SC,[5] for the SJ, submits that this is a very important constitutional issue because it concerns the financial services industry, and such matters are “of very considerable importance to the community”.[6]  He stresses that the importance of such a matter is of even greater significance where it concerns the constitutionality of a statutory provision enacted to aid and assist the SFC in carrying out its regulatory objectives and functions.  

8.  The SFC consents to the proposed intervention.  The applicants oppose it. 

9.  Mr Ho submits that in the circumstances of this case, and given the nature and importance of the constitutional issue, the public interest warrants the SJ’s intervention.  I agree.  Where a matter of considerable public importance is at stake, the Court will accord far greater weight to that fact, and to the interests of the general public in the effective determination of the matter. 

10.  Mr Ho also notes that the applicants do not dispute that the constitutional issue which they have raised is one of general importance.  Nor do they suggest that the SJ as a guardian of the public interest, particularly in matters of constitutional or public importance, has no legitimate interest in how the issue is determined.  In oral submissions, Mr Gerard McCoy, SC,[7] for the applicants, did not seek to argue otherwise.  He acknowledged that the challenge to section 181 had significant implications and that the SJ could quite rightly intervene on a constitutional challenge.[8] 

11.  Mr McCoy bases his opposition to the application on three grounds.  First, the inexcusable delay in making the application.  Secondly, the DoJ was a recipient of materials supplied by the SFC in breach of the anonymity order of Au J.  I do not see how this has any bearing on this application.  The DoJ had the decision of the Court dated 5 May 2016 which set out in detail the nature of the judicial review.  The fact that the materials had been supplied in these circumstances is the subject of the second application by the SFC.  Thirdly, the prejudice to the applicants because of the application being made just prior to the hearing of the substantive judicial review.  I can deal with the first and third grounds together.

12.  As already noted, the SJ filed the summons for this application on 23 December 2016 and his skeleton argument together with a draft skeleton argument for the substantive hearing on 11 January 2017.[9]

13.  I should point out that an earlier date was sought by the SFC and the SJ for the Court to deal with their respective applications, but because of the unavailability of counsel for the applicants, a later date was fixed to hear the applications.

14.  On 11 July 2016, in a letter from the SFC, the DoJ were informed of the proceedings and asked to consider whether they wish to take part in the proceedings as an interested party.  A copy of the Amended Form 86 was provided.  By this stage, I had granted leave in a decision dated 5 May 2016 which set out in detail the nature of the application and the grounds for review.  It was some time later on 13 December 2016 that the DoJ requested all the relevant papers to further consider whether to intervene.  By letter the next day, the SFC supplied the relevant papers. 

15.  Mr McCoy complains about the delay by the SJ in making the application to intervene.  As I have pointed out that even though the SJ filed and served the summons to make the application on 23 December 2016, a draft skeleton argument in relation to the constitutional issue was filed on 11 January 2017.  This was in compliance with the Practice Directions which was three clear days before the hearing.  Mr McCoy argues that if the application had been made earlier he would have sought directions from the Court as to the basis of the SJ’s intervention.  In my view, the submissions of the SJ will not significantly lengthen the substantive hearing for which three days has been set aside, or disadvantage the applicants that have brought this constitutional challenge in these proceedings. 

16.  During oral submissions, it was accepted by the parties that if the Court was inclined to grant the intervention order, the concerns of the applicants could be appropriately catered for by directing that the constitutional argument be dealt with on the third day set aside to hear the substantive application. This would give the applicants time to consider and address the skeleton argument of the SJ.

17.  I therefore grant the application of the SJ to join as an intervener in these proceedings.  The SJ is therefore entitled to inspect and make copies of documents filed in these proceedings.  As discussed, there are three grounds for judicial review and the section 181 challenge will be dealt with not before the hearing date of 1 February 2017.  I direct that the SJ file and serve its skeleton argument and list of authorities by 16 January 2017 (a draft of the skeleton argument has already been supplied); and that the applicants file and serve any skeleton argument and list of authorities in reply by 26 January 2017. 

18.  The costs order sought by the summons was not pursued by Mr Ho and I make an order that costs be reserved. 

Application for retrospective leave to provide documents by the SFC

19.  This is an unusual application because it seeks a retrospective order from the Court. 

20.  On 11 July 2016, the SFC informed the DoJ of the present proceedings and invited the DoJ to consider whether they wished to take part as an interested party.  To assist the DoJ in its consideration, a copy of the Amended Form 86 was provided to it by the SFC. 

21.  It was not until sometime later, on 13 December 2016, the DoJ informed the SFC that they would like to be provided with copies of all documents filed by the parties in the proceedings before they sought leave to intervene in the proceedings.  The next day, the SFC provided the affirmations filed by the parties, the leave decision dated 5 May 2016 (this was a published decision), the originating summons and various court orders to the DoJ. 

22.  The SFC has explained that it provided the court documents to the DoJ in the belief that it was entitled to do so under section 378(3)(f)(iii) and (5) of the SFO in circumstances where it is desirable or expedient that such documents be disclosed to the DoJ to enable or assist the DoJ, in discharge of its public duty, to consider whether to intervene in these proceedings, and that such disclosure is not contrary to the interest of the investing public or to the public interest.[10]

23.  It would appear that the SFC did not take into account the anonymity order of Au J dated 12 February 2016 before releasing the court documents to the DoJ for the purpose of enabling it to consider whether to intervene.  As pointed out by the SFC, it was only when the applicants’ solicitors wrote on 30 December 2016 to complain about the disclosure to the DoJ that the SFC realised that leave from the Court was required. 

24.  Au J in granting the anonymity order “ordered that until further order of the Court:-

1.  The Court File not be open for search and inspection by the public. This to include the Form 86 and supporting Affirmation, when filed, together with all documents relating to this anonymity application.

2.  The 1^st and 2^nd Applicants be granted anonymity, unless and until a court orders otherwise, and be referred to as “AA” and “EA” respectively.  No report of these proceedings shall directly or indirectly identify them.

3.  This order applies to all parties including interested parties and to the public including the media.  Failure to comply with this order could lead to a contempt of court.  Failure to comply with any of the above orders could lead to a contempt of court.”

25.  Mr Benjamin Yu, SC,[11] for the SFC, submits that the provision of the court documents by the SFC to the DoJ was an inadvertent error on its part and that no harm had been done as a consequence. He argues that the spirit of the order had not been breached as the purpose of it was to protect the identity of the applicants.  It clearly provides that the terms of the anonymity order are maintained until and when an order is made otherwise sometime in the future.  It is to be noted that it was not argued before me that the SFC in supplying the court documents to the DoJ did not breach the order, or did so because it was outside the terms of the order.

26.  The applicants contend that the Court has no jurisdiction to grant retrospective leave to release court documents to the DoJ, and the only course open to the SFC is to apply for relief from sanctions. 

27.  Mr Yu disagrees with the applicant’s contentions.  He makes two points. 

28.  First, Mr Yu submits that the anonymity order provided that the orders made thereunder are subject to “further Order of the Court”.  He further submits the Court thus has the power to make a further order to direct the release of court documents to third parties when circumstances warrant such a course to be taken.  I do not see how an order of the type sought by Mr Yu comes within the terms of the anonymity order. 

29.  Secondly, Mr Yu submits that the Court has inherent jurisdiction to regularise the possession of irregularly obtained documents.  He refers me to the case of Wong Kwok Hin v Wong Lai Fan & Anor (No 1).[12] In that case, the plaintiff was in possession of an affirmation of means filed by the 1^st defendant in his divorce proceedings with the 2^nd defendant, and he obtained the affirmation from the 2^nd defendant when it was confidential to non-parties to the divorce proceedings, including the plaintiff.  He sought to rely on the affirmation to cross-examine the 1^st defendant in a separate property dispute, and he applied for leave to use the document.  It was not as suggested that leave was applied for and granted to regularise his possession of the affirmation.  As Mr McCoy has rightfully pointed out, the court in that case was concerned with whether to grant leave to use the affirmation in those proceedings, not to validate the obtaining of it in the past.  The court in granting the application to use the affirmation, said that the true test is, if the plaintiff had applied for leave in the first place to obtain the affirmation, would leave be granted?[13]  The court was addressing a question of admissibility, and not as urged upon me the making of a retrospective order regularising the previous conduct of the parties in the absence of an order that should have been made. 

30.  It was at this stage in oral submissions, that Mr Yu sought to amend the terms of the application by adding the following highlighted words to the order sought: “Without prejudice to the applicants’ right of action for any alleged breach of the order of Au J, retrospective leave be granted to the Respondent to provide all court documents and affirmations in these proceedings to the Department of Justice.” 

31.  Mr McCoy opposed the amendment for two very good reasons.  First, it had been acknowledged that there had been a breach of the order.  Secondly, the amendment still sought a retrospective order to regularise the conduct of the SFC in the face of a possible action for contempt of court which was open to the applicants to make.

32.  I accept the explanation from the SFC that what has occurred was an innocent oversight on its part.  I am of the view that if an application for leave to supply the court documents to the DoJ had been previously applied for by the SFC, it would have been granted for the purpose of enabling the DoJ to consider whether to intervene.  This is in light of the circumstances that the SJ had a clear interest to intervene in the proceedings because of the constitutional and public importance of the challenge to section 181.  I do not consider that there has been any wilful or serious infraction of the order.  As far as I can ascertain, no prejudice or inconvenience has been caused as a result of the provision of the court documents by the SFC to the DoJ. 

33.  It is also of significance that the Court in allowing the joinder of the SJ as an intervener, it would as a party to the proceedings have full access to the court documents in any event. 

34.  In light of the foregoing, I do not consider that the order sought, even in its amended form, is an appropriate order for this Court to make.  I refuse the application.  I order that the SFC pay the applicants’ costs in relation to the application, with a certificate for two counsel.