HKSAR v. MA HON KIT SAMMY AND ANOTHER

FAMC No. 82 of 2010

IN THE COURT OF FINAL APPEAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO. 82 OF 2010 (CRIMINAL)

(ON APPLICATION FOR LEAVE TO APPEAL

FROM CACC NO. 148 OF 2009)

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DETERMINATION

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Mr Justice Ribeiro PJ:

1.  On 15 March 2011, we dismissed this application for leave to appeal with reasons to be delivered later.  We now provide our reasons.

2.  This application arises out of an insider dealing prosecution.   Ma Hon Yeung (“ the 1st defendant”), was employed as a Vice-President of BNP Peregrine, an investment bank involved in the privatisation of a listed company called Egana Jewellery and Pearls Limited (“Egana”). He was found to have had the price sensitive information that Egana was going to be privatised and that trading in its shares would be suspended on 7 July 2006.  He was convicted (among other things) of counselling the present applicants to deal in Egana shares, using that information. 

3.  The present applicants were the 3rd and 4th defendants at the trial.  The 3rd defendant is the 1st defendant’s brother and the 4th defendant is the 3rd defendant’s wife.  They were both convicted of insider dealing contrary to section 291(5)(a) and (8) of the Securities and Futures Ordinance.[1]

4.  It is not disputed that they each bought 500,000 Egana shares on 6 July 2006, the day before trading in them was suspended and the proposed privatisation announced.  Neither gave evidence.  The challenges they make relate to the inferences drawn by the Judge.[2]  His Honour found that the only reasonable inference was that these two defendants had traded with the benefit of price sensitive information (relating to the privatisation and suspension of trading) from the 1st defendant; that they knew the latter was connected with Egana; and that they had reasonable cause to believe that such information was obtained as a result of his being so connected.  The Court of Appeal dismissed the appeal after reviewing in detail the Judge’s findings and the inferences they supported.[3]

5.  Leave to appeal was sought on the substantial and grave injustice ground.   Mr Peter Duncan SC, appearing for the applicants, submitted that those inferences were not the only reasonable inferences to be drawn and that the Judge had seriously departed from established legal norms by failing to identify alternative, innocent inferences put forward or to explain why such alternatives did not prevent him from drawing the culpable inferences.  He added that the Court of Appeal did not, by its analysis, cure the aforesaid deficiency. 

6.  Mr Duncan submitted that it is reasonably arguable that guilty knowledge could not be inferred, in particular, knowledge that the 1^st defendant had acquired the relevant information about Egana by virtue of his position; or knowledge that it was an intended privatisation that was to be announced.   He submitted that the evidence justified inferring that the applicants might have acted as they did without such knowledge.  

7.  We note in parenthesis that the case has throughout been argued and dealt with on the basis that proof of such detailed knowledge in relation to the price-sensitive transaction is required.  Whether that is or is not correct does not call for decision since the Judge and the Court of Appeal held that such detailed knowledge was in any event properly to be inferred.  We wish, however, expressly to leave open the proper interpretation of the definition of the offences in question.

8.  Returning to the question at hand, our view is that the evidence provided an ample basis for the Judge’s inferences.  His findings included the following:

(a) That in the course of his employment, the 1st defendant had learned about the Egana privatisation and the intended suspension of trading.  In particular, an e-mail copied to him at 10:43h on 6 July 2006 contained information about board meetings to be convened after the close of trading on that day, and attached a draft announcement to be submitted to the regulators on the following day.

(b) That there was a close family relationship between the 1st defendant and the 3rd and 4th defendants who knew that he was working for BNP Peregrine.

(c) That at 14:44h on 6 July, the 1st defendant called the 3rd defendant and five minutes later, at 14:49, the 4th defendant, in the presence of the 3rd defendant, placed an order with her brokers to buy 500,000 Egana shares, stressing to the brokers that it should be executed in stages so that the price would not be driven up and that the order had to be completed that day. 

(d) That at 15.04h, the 3rd defendant placed his own order to buy 500,000 shares, also stressing to his brokers that it should be done in stages to avoid inflating the price; that it had to be executed on that day and that they should report the status of his order by 15:40h or 15:45h on that day.

(e) That these were significant transactions, worth about $800,000 each, neither defendant having ever traded in Egana shares before.

(f) That earlier on that day (6 July), the 3rd defendant had rung his brokers asking for general information about Egana, indicating that he knew very little about the company, but that he did not place an order until after receiving the call from his brother.

(g) That the purchases made by the 3rd and 4th defendants (and by their son the 5^th defendant, who had bought 60,000 shares but was acquitted) made up 93% of the turnover in Egana shares on that day.

9.  As Lunn J (who gave the judgment of the Court of Appeal) points out,[4] the trial judge had “both full written submissions and lengthy oral submissions by counsel on behalf of the applicants” and was obviously aware of the alternative inferences that he was invited to draw.  In the light of the evidence which compellingly supported the culpable inferences, we respectfully agree with the Court of Appeal that the Judge obviously rejected the alternative inferences even though they were “not merely fanciful”, and concluded that the inferences drawn were irresistible.

10.  A judge is not bound expressly to refute each and every rejected argument put forward by each side.  The Judge plainly evaluated the evidence and the defendants’ submissions and, as Lunn J points out:

“... having noted that all three applicants commenced purchasing their shares within a short time of a telephone conversation that afternoon between the 1^st defendant and the 3^rd defendant, the judge rejected as ‘too coincidental to be true’ the possibility that they had determined to buy their shares on information other than that received from the 1^st defendant.”[5]

11.  In our view, the Judge was fully entitled to regard the inferences drawn as irresistible, as the Court of Appeal demonstrated.  It is self-evident that His Honour rejected the various suggested alternative inferences on that basis.  It is not reasonably arguable that the applicants’ conviction involves any substantial and grave injustice. The application therefore had to be refused.