TITAN PETROCHEMICALS GROUP LTD v. THE STOCK EXCHANGE OF HONG KONG LTD

HCAL 1484/2023

[2023] HKCFI 2935

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST NO 1484 OF 2023

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J U D G M E N T

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A. Introduction

1.  As Judges like to say, “in law, context is everything”. This case raises the questions as to what, in the present context, is the proper meaning to the word “promptly” and the phrase “exceptional circumstances”.

2.  By a Form 86 dated 22 August 2023 (amended on 26 September 2023), the applicant company (“Company”) seeks leave to apply for judicial review, in order to challenge the 11 July 2023 decision (“LRC Decision”) made by the Listing Review Committee (“LRC”) of the putative respondent (“Exchange”), upholding the decision of the Listing Committee to cancel the listing of the Company by reason of the long suspension of trading in its shares.

3.  I gave directions for, and to bring the matter to, a ‘rolled-up’ hearing, which I fixed for 16 November 2023. At that hearing, the Company was represented by Ms Audrey Eu SC leading Mr Anson Wong Yu Yat, and the Exchange was represented by Mr Victor Dawes SC leading Mr Joshua Chan.

4.  At the end of the hearing, I reserved my decision. This is my Judgment.

B.  Regulatory Context

5.  The relevant regulatory context has been traversed and considered by me in numerous recent decisions, to which reference can be made if further contextual detail is required. For present purposes, the following context suffices.

6.  Where the Exchange considers it necessary for the protection of investors or the maintenance of an orderly market, the Exchange is empowered by the Listing Rules to suspend trading in, and cancel the listing of, a listed issuer’s securities in such circumstances and subject to such conditions as the Exchange thinks fit. The Exchange may also suspend trading in, and cancel the listing of, a listed issuer’s securities where the Exchange considers that the issuer does not carry on a business as required under Rule 13.24, or the issuer or its business is no longer suitable for listing.

7.  Rule 6.01 states as follows:

Listing is always granted subject to the condition that where the Exchange considers it necessary for the protection of the investor or the maintenance of an orderly market, it may at any time direct a trading halt or suspend dealings in any securities or cancel the listing of any securities in such circumstances and subject to such conditions as it thinks fit, whether requested by the issuer or not. The Exchange may also do so where:

(2) the Exchange considers there are insufficient securities in the hands of the public (see rule 8.08(1)); or

(3) the Exchange considers that the issuer does not carry on a business as required under rule 13.24; or

(4) the Exchange considers that the issuer or its business is no longer suitable for listing.

8.  In the period leading up to September 2017, prolonged suspensions of trading became a significant issue for the Exchange. Hence, the Exchange commenced a market consultation exercise on the introduction of a prescribed period for issuers to resolve issues which had led to a suspension and to satisfy any resumption conditions imposed by the Exchange, failing which the issuers would be delisted. The purpose of the proposed rule amendments and the objectives of the consultation were set out in the ‘Consultation Paper – Delisting and Other Rule Amendments’ published by the Exchange in September 2017 (“DORA Consultation”).

9.  After the DORA Consultation, the Exchange resolved (1) to add a separate delisting criterion to allow the Exchange to delist an issuer after its continuous suspension for a prescribed period; and (2) to allow the Exchange to publish a delisting notice and give the issuer a period of time to remedy the issues or be delisted. For issuers whose securities are listed on the Main Board, the prescribed period is 18 months.

10.  The Exchange’s rationale for the 18-month remedial period, and the intention that the period would only be extended in exceptional circumstances, was explained in §§23-25 of the DORA Consultation’s Conclusions:

23. As noted in the Consultation Paper, the fixed period delisting criterion is aimed at delisting issuers which remain unable to resolve the issues requiring their suspensions after a continuous period of suspension. It would give suspended issuers a clear deadline, incentivizing them to look into the issues and to develop a viable action plan to ensure that it will have remedied the relevant issues to the Exchange’s satisfaction and resumed trading before the end of the prescribed fixed period.

24. With this additional criterion, the Exchange will be able to delist an issuer where it does not have a clear basis to do so under MB Rule 6.01. This will provide certainty for the delisting process and address the issue of prolonged suspension in the interests of market quality and reputation, while reasonable opportunities are given to suspended issuers to take remedial actions with a view to resuming trading.

25. The Listing Committee may only extend the prescribed fixed period in exceptional circumstances to ensure the effectiveness and credibility of the delisting framework and prevent undue delay of the delisting process. It may do so where an issuer has substantially implemented the steps that, it has shown with sufficient certainty, will lead to resumption but, due to factors outside its control, it becomes unable to meet its planned timeframe and requires a short extension of time to finalize the matters. Guidance on the circumstances when an extension of time may be given is set out in the new Guidance Letter on Long Suspension and Delisting, which is published together with this consultation conclusions paper.

11.  The 18-month period had also received most support amongst the various proposed periods, on the basis that it would strike a balance between giving suspended issuers the necessary time to remedy issues while at the same time incentivising them to act promptly towards resumption and giving certainty to the market (see §33(a)).

12.  The Exchange also made it clear that the new delisting framework was not intended to promote resumption of trading. Instead, it was intended to be an effective delisting framework to enable the Exchange to meet its statutory obligation to maintain a fair, orderly and informed market for the trading of securities, by delisting issuers that no longer meet the continuing listing criteria in a timely manner, incentivizing suspended issuers to act promptly towards resumption and deterring issuers from committing material Rule breaches (see §28 and §39 of the DORA Consultation Conclusions).

13.  Therefore, the passages at §§33 and 39 of the DORA Consultation Conclusions should not be taken to suggest that an issuer should be given uncertain and indefinite extensions of time in the event that it has been affected by impediments beyond its control.

14.  On 1 August 2018, the Exchange introduced Rule 6.01A(1), which states as follows:

Without prejudice to its power under rule 6.01, the Exchange may cancel the listing of any securities that have been suspended from trading for a continuous period of 18 months.

15.  The Exchange also published a Guidance Letter (HKEX-GL95-18) in May 2018 – which, as at the date of hearing before the LRC, had been updated in September 2019, October 2019 and June 2022 – on the subject of ‘Guidance on long suspension and delisting’ (“Guidance Letter”). That document provides guidance to long suspended issuers on the operation of the amended delisting Rules, their general obligations and the Exchange’s regulatory actions during the resumption process. The Guidance Letter makes clear that the Exchange’s powers under Rule 6.01A(1) may be exercised without prejudice to the rights under Rules 6.01 and 6.10.

16.  For present purposes, the following provision – appearing under the heading ‘Extension of Remedial Period’ – is of particular relevance:

22. To ensure the effectiveness and credibility of the delisting framework and prevent undue delay of the delisting process, the Listing Committee may only extend the remedial period in exceptional circumstances. It may do so where:

(a) an issuer has substantially implemented the steps that, it has shown with sufficient certainty, will lead to resumption of trading; but

(b) due to factors outside its control, it becomes unable to meet its planned timeframe and requires a short extension of time to finalize the matters. The factors outside the issuer’s control are generally expected to be procedural in nature only.

This may happen where, for example, an A1 application has been approved by the Exchange but, due to a delay in the court hearing for approving a scheme of arrangement, the issuer requires additional time to implement the relevant transactions. The Exchange envisages that if an extension of time is given on the expiry of the remedial period, the Listing Committee would not normally extend the remedial period for a second time.

17.  I have previously identified – see, for example, Cai Zhenrong v The Stock Exchange of Hong Kong Ltd [2021] HKCFI 1899 at §45 – the approach to delisting in cases of long suspended issuers as set out in the Guidance Letter might be summarised as follows:

(1)  First, the Exchange will generally cancel the listing of a long suspended issuer upon the expiry of the remedial period if the issuer has not remedied the issues leading to suspension. The remedial period sets a deadline for resolution of the relevant issues and resumption of trading, as opposed to submission of a resumption proposal.

(2)  Second, the issuer bears the responsibility to devise a resumption plan accompanied with a clear timeframe in respect of each stage of work to ensure that the relevant issues can be remedied before the end of the remedial period.

(3)  Third, the issuer bears the responsibility to assess the impact of any delay, and to make appropriate adjustments to the timetable, nevertheless to ensure trading to resume before the end of the remedial period.

(4)  Fourth, the issuer may consult the Exchange at any stage, and in particular when it considers it has remedied the issues and re-complied with the Rules. In such circumstances, the Exchange will swiftly respond to a request for consultation or confirmation that the remedy has been achieved.

(5)  Fifth, a failure by the issuer to fulfil the resumption conditions/guidance before the remedial period ends will result in a recommendation to the Listing Committee to delist the issuer.

(6)  Sixth, to ensure the effectiveness and credibility of the delisting framework and prevent undue delay of the delisting process, the Listing Committee may only extend the remedial period in “exceptional circumstances”. It may do so where:

(a)  an issuer has substantially implemented the steps that, it has shown with sufficient certainty, will lead to resumption of trading, but

(b)  due to factors outside its control, it becomes unable to meet its planned timeframe and requires a short extension of time to finalise the matters. The factors outside the issuer’s control are generally expected to be procedural in nature only.

(7)  Seventh, the Exchange envisages that if an extension of time is given on the expiry of the remedial period, the Listing Committee would not normally extend the remedial period for a second time

(8)  Lastly, whether the circumstances are “exceptional” for the purpose of extending the remedial period is primarily a matter for the Exchange, not the court, to decide.

18.  I have also previously held – see China Wood Optimisation (Holding) Ltd v The Stock Exchange of Hong Kong Ltd [2023] HKCFI 1000 at §87 – that “exceptional circumstances” are not solely restricted to the situation expressly provided in §22 of the Guidance Letter, and the circumstances which might also be capable of amounting to “exceptional circumstances” would include where a company’s failing substantially to implement remedial steps was caused by matters out of its control.

C.  Factual Background

19.  The factual background is not controversial. The controversy giving rise to these proceedings is what should have been made of that background by the LRC, and in essence whether the facts of the Company’s position could only rationally have been regarded as “exceptional circumstances” within §22 of the Guidance Letter.

20.  The Company is incorporated in Bermuda, and its two main areas of business are shipbuilding and commodity trading (though the commodities business had been suspended for over two years by the date of the LRC hearing).

21.  The Company’s shares have been listed on the Main Board of the Exchange since 17 June 1998, though there was a prior suspension of trading between June 2012 and July 2016 as a result of financial difficulty and insufficient operations.

22.  Despite resuming trading in 2016, the Company’s financial results for the financial years 2017 to 2020 showed declining revenue, losses and continuing net current liabilities. As at 30 June 2020, the Company had net current liabilities of HK$934 million and net liabilities of HK$796.6 million, as against cash of only HK$1.6 million.

23.  In April 2017, the Company issued a convertible bond of HK$78 million (“Bond”) to Sino Charm International Ltd (“Sino Charm”). On 20 September 2019, Sino Charm filed a winding up petition in the Supreme Court of Bermuda, on the basis of the Company’s failure to repay the Bond on maturity. On 21 October 2019, the Company initiated legal proceedings in Hong Kong to dispute the validity of the Bond (“HK Proceedings”).

24.  On 1 April 2021, trading in the Company’s shares was suspended as a result of delay in publishing the Company’s FY2020 annual results.

25.  As a result of the suspension in trading, the Company was required to resume trading by 30 September 2022, i.e. within the 18-month remedial period provided for under Rule 6.01A of the Listing Rules.

26.  Shortly thereafter, on 11 August 2021, the Supreme Court of Bermuda ordered that the Applicant be wound up (“Winding-Up Order”) and appointed joint and several provisional liquidators to take over control of the Applicant. The provisional liquidators were later appointed as the Applicant’s liquidators on 2 December 2021 (the provisional liquidators and liquidators together, “Liquidators”).

27.  In its decision, the Bermuda Court considered but rejected the Company’s argument that there was a bona fide dispute as to the validity of the Bond. The Court also raised questions as to the rationale behind the Company’s disposals (“Disposals”) of a number of subsidiaries shortly after presentation of the winding-up petition in December 2019, for nominal consideration, two companies potentially related to (1) Mr Zhang QD, the Company’s executive director and substantial shareholder and/or (2) his father.

28.  As is emphasised by the Company on the present application, the Company’s management at the commencement of the remedial period was replaced by the Liquidators around only four months into the remedial period.

29.  Further, the Exchange imposed the following resumption guidance (“Resumption Guidance”):

(1)  publish all outstanding financial results required under the Listing Rules and address any audit modifications (“RG1”);

(2)  demonstrate a sufficient level of operations and assets under Rule 13.24 of the Listing Rules (“RG2”) – where that rule requires that an issuer shall carry out, directly or indirectly, a business with a sufficient level of operations and assets of sufficient value to support its operations to warrant the continued listing of the issuer’s securities;

(3)  have the Winding-Up Order against the Company withdrawn or dismissed and the Liquidators discharged (“RG3”);

(4)  conduct an independent forensic examination into the Company’s disposals of a number of subsidiaries for nominal considerations (i.e. the Disposals), announce the investigation findings, assess and announce the impact on the Group’s financial and operational position and take appropriate remedial actions (“RG4”);

(5)  demonstrate there is no regulatory concern about management integrity and/or the integrity of any person with substantial influence over the Company’s management and operations, which may pose a risk to investors and damage market confidence (“RG5”);

(6)  inform the market of all material information for the Company’s shareholders and other investors to appraise the Company’s position (“RG6”).

30.  On 9 August 2022 – 12 months after the Winding-Up Order was made – the Bermuda Court of Appeal (“Bermuda CA”) set aside the Winding-Up Order and discharged the Company’s Liquidators.

31.  The Bermuda CA’s Judgment and subsequent Ruling on Costs identified that it was the Company’s case that Sino Charm had acted in collusion with the then Chairman and CEO in control of the Applicant, to siphon off funds in a round-robin to lend to the Company and Sino Charm’s debt was void and bona fide disputed. The Bermuda CA held that the debt forming the basis of the demand underpinning the petition was bona fide disputed on substantial grounds and comfortably crossed the low threshold provided by that test. It also held that the factors referred to by the first instance decision did not negate bona, or establish mala, fides or lack of substance in the defence. The first instance judge had failed to analyse properly the entirety of the evidence, in particular that of one of the deponents which was wrongly treated as being without material significance, meaning that a building block of the reasoned judicial process was missing. Hence, the Liquidators should never have been appointed in the first place.

32.  As is emphasised by the Company on the present application, by the date when the Liquidators were discharged, there remained only around two months of the remedial period (though the Company has also stressed that it took even longer for the current management to complete the process of regaining control: see below).

33.  On 19 September 2022, the Company applied to the Exchange for a 13-month extension to the remedial period, namely to 31 October 2023.

34.  The Exchange sought clarification of the Company’s resumption progress. The communications with the Company revealed that:

(1)  The Company did not have sufficient funds to procure its auditors to resume the audit of its outstanding financial results.

(2)  The unaudited financial information of the two subsidiaries responsible for the Company’s shipbuilding business – being Jiangsu Hongqiang Vessels Manufacturing Co Ltd (“OPCO”) and Jiangsu Jionqiang Ocean Equipment Co Ltd (“Jionqiang”) – showed that both companies had suffered substantial losses for three consecutive financial years.

(3)  The PRC Court had accepted an application to wind up OPCO and had ordered the setting up of a liquidation group.

(4)  The HK Proceedings had become dormant.

(5)  The Company had been looking for potential investors and developing a scheme of arrangement to settle its outstanding debts, but did not have a clear timeline for the proposed re-structuring.

35.  On 30 March 2023, the Listing Division prepared its Listing Division Report in relation to the cancellation of listing of the Company’s shares under Rule 6.01A. For present purposes, focus can be on the Listing Division’s noting that the Company requested extending the remedial period to 31 October 2023 on the ground that its resumption work was interrupted by the Winding-Up Order and the appointment of the Liquidators when that order was in force, but the Listing Division did not consider the time extension justified by any valid reason because:

(1)  The Guidance Letter at §22 stated that an extension of time may be given only in “exceptional circumstances”, generally limited to a scenario where a company has resolved all the substantive issues and has implemented all the relevant steps towards trading resumption, but for factors outside its control (generally expected to be administrative in nature), it requires a short extension of time to finalise matters. But the Company had not addressed the substantive issues underlying the outstanding Resumption Guidance, and its situation did not fall within “exceptional circumstances”.

(2)  In any event, the Company’s request was not otherwise justified because it had failed to establish that its failure to meet all the Resumption Guidance by the resumption deadline was caused by the Winding-Up Order and the appointment of the Liquidators, and not by other factors. In particular:

(a)  The Company did not appear to have made substantive resumption progress before the appointment of Liquidators in August 2021, as reflected in the Company’s generic update announcements on its audit progress and other resumption work. Even after the Winding-Up Order was set aside, the Company did not provide any substantive update on its resumption progress.

(b)  The Company had acknowledged the reason for being unable to proceed with the audit was attributed to the lack of financial resources to pay the audit fees.

(c)  The Company had failed to demonstrate that it had sufficient operations and assets, a matter unrelated to the Winding-Up Order and the appointment of the Liquidators.

(d)  The Company had failed to demonstrate that, but for the Winding-Up Order, the Company would have fulfilled the Resumption Guidance by the resumption deadline.

(3)  In any case, the Company had not demonstrated any prospect that if the requested time extension were to be granted, it would then be able to meet all the Resumption Guidance and resume trading within the requested time extension.

36.  On 4 April 2023, the Listing Committee considered the Company’s case and decided to cancel the Company’s listing.

37.  The Company says it took until late April 2023 for it to resolve further legal proceedings in the Bermuda Courts, including dismissing the application for a stay of any order arising from the Bermuda CA’s Judgment pending the determination by the Privy Council of the petitioner’s application for permission to appeal to it, a potential further appeal and application for legal costs.

38.  On 25 May 2023, the current management of the Company signed a funding agreement with an investor, Roff Oil & Gas Ltd, which agreed to grant a credit facility of up to HK$20 million to the Company for the purpose of supporting a potential restructuring and for compliance with the Resumption Guidance.

D.  The LRC Decision

39.  The Company applied to review the Listing Committee’s Decision to delist the Company. The review application was heard by the LRC on 30 June 2023.

40.  The LRC Decision and its reasoning was given by its letter dated 11 July 2023 – though it also states that the reasons for decision necessarily represent only a summary of the LRC’s analysis, and do not purport to set out exhaustively the facts or address all of the arguments presented.

41.  The LRC Decision then sets out some of the background facts, and the applicable Listing Rules and Guidance, before a summary of the Listing Committee’s Decision. Then there are sections dealing each with the submissions made by the Company and the Listing Division.

42.  What might be described as the core of the Company’s submissions was set out in the LRC Decision at §§38-39, as follows:

38. The Company submitted that its situation fell within the exceptional circumstances under GL95-18 as the Company was involuntarily and mistakenly wound up and its directors and management were deprived of their power and the ability to represent the Company to carry on any resumption work.

39. The Company submitted that “exceptional circumstances” are not solely restricted to the situation expressly provided in §22 of GL95-18, but that a situation such as its own where an issuer failed substantially to implement remedial steps due to matters out of its control might also be capable of amounting to exceptional circumstances. The Company submitted that in its case, it was inhibited from taking remedial steps for 12 out of the 18 months of the remedial period due to the Winding-Up Order which it claimed was granted wrongfully. According to the Company, a fair balance should be struck between giving an issuer sufficient time to remedy issues and providing certainty to the market. The Company argued that in its case, it did not have reasonable time to remedy the issues identified by the Resumption Guidance. The Company further argued that it would be unfair to require the Company to have substantially implemented all relevant steps towards a resumption of trading within the short period of time from the discharge of the Winding-Up Order and the deadline of the remedial period on 30 September 2022. Relying on the meaning of exceptional as “out of the ordinary course, or unusual or special, or uncommon” rather than “unique or unprecedented”, the Company argued that its situation was failing within the scope of exceptional circumstances under GL95-18 and the remedial period should therefore be extended to April 2024. The Company submitted further that finding the Company’s case to be one of “exceptional circumstances” under GL95-18 would not result in its case becoming a floodgate, as the Company’s case was sufficiently “unique” and “unprecedented”.

43.  What might be described as the summary of the Listing Division’s submissions as regards any extension of resumption deadline was set out in the LRC decision at §§51-54, as follows:

51. The Listing Division noted that the Company had requested an extension of time till April 2024 which was a full 19 months more that the resumption deadline which expired on 30 September 2022. The Listing Division submitted that for the question of whether such extension could be granted, GL95-18 was to be interpreted for what constituted “exceptional circumstances”, namely in scenarios where a company had resolved all the substantive issues of the Resumption Guidance and had substantially implemented all relevant steps towards a trading resumption, but for factors outside its control (generally expected to be administrative in nature), required a short extension of time. The Listing Division submitted that in the Company’s case, there were no exceptional circumstances.

52. The Listing Division clarified that the Resumption Guidance was addressed to the Company and not to the Company’s present management. Even in a situation where the Company argued that the Winding-Up Order was wrongfully made, the Listing Division noted that the Liquidators were appointed to take proper control of the Company during the time the Winding-Up Order remained in place. The Liquidators had full control of the Company, and, as officers of the court, were bound to act honestly and in the best interest of creditors. The Listing Division submitted that the appointment of the Liquidators was therefore not a situation where the Company’s compliance with the Resumption Guidance had become out of the Company’s control.

53. The Listing Division submitted that the Company had not been able to demonstrate that, but for the wrongful Winding-Up Order, it would have been able to fulfil the Resumption Guidance, as, according to the Listing Division, the Company had not made meaningful progress in complying with the Resumption Guidance both for the several months prior to the appointment of Liquidators in August 2021, and, for the time since the Winding-Up Order was set aside. The Company had not provided substantive updates on its resumption progress which, according to the Listing Division, appeared to be attributable to, among other things, the lack of financial resources. Finally, the Listing Division submitted that the Company had insufficient operations and assets which was a situation unrelated to the Winding-Up Order and the appointment of the Liquidators.

54. The Listing Division further submitted that the Company had failed to demonstrate that even with a very long extension such as the present one being sought, it could provide any assurances that it could meet the Resumption Guidance.

44.  For the purposes of the present application, focus can be put on the Listing Division’s submission (§52) that, in the circumstances of this case, the appointment of the Liquidators was not a situation where the Company’s compliance with the Resumption Guidance had become out of the Company’s control.

45.  The LRC’s views and conclusion were set out in the LRC Decision at §§55-60, as follows:

55. The Listing Review Committee noted that trading in the Company’s shares had not resumed by the resumption deadline of 30 September 2022 or indeed by the date of the Hearing, nine months after the expiry of the resumption deadline. The Company’s listing could therefore be cancelled under Rule 6.01A(1).

56. As trading had not resumed, the Listing Review Committee needed to consider whether sufficient grounds existed to grant the Company’s application for an extension of the remedial period. Paragraph 22 of GL95-18 provides that to ensure the credibility of the delisting framework and prevent undue delay of the delisting process, the Listing Review Committee may only extend remedial periods in exceptional circumstances. It may do so where an issuer has substantially implemented steps that it has shown with sufficient certainty will lead to resumption of trading, but that due to factors outside its control (usually procedural in nature) it requires a short extension of time to finalize matters.

57. The Listing Review Committee further noted that the objective of the current delisting regime was to provide certainty to the market on the delisting process by keeping the necessary trading suspensions to a minimum, and by facilitating timely delisting of issuers that no longer met the continuing listing criteria. The current delisting regime was therefore designed to ensure that long suspended issuers would be delisted in a timely manner irrespective of whether the issuer had taken reasonable steps to achieve a resumption of trading. Finally, as GL95-18 confirmed at paragraph 12, the remedial period set by the Exchange represents a deadline for the resolution of the relevant issues and resumption of trading, as opposed to submission of a resumption proposal as in the previous delisting regime.

58. Ultimately, while recognizing its discretion under paragraph 22 of GL95-18, the Listing Review Committee did not consider the circumstances in the present case to be exceptional, thereby warranting an extension of the remedial period. The Listing Review Committee took into account the following circumstances (among others):

a. Trading in the Company’s shares had been suspended since 1 April 2021. The remedial period ended on 30 September 2022. At the time of the Hearing, the Company had therefore been suspended for roughly 27 months which was a full nine months after the expiry of the remedial period.

b. Despite such considerable passage of time, which was well beyond the 18-month period granted to suspended issuers to resume trading, it was not disputed that the Company had failed to comply with the Resumption Guidance.

c. In fact, the Company’s present status suggested that it was not close to meeting the Resumption Guidance.

d. For RG1, the Company had further delayed the publication of the outstanding audited results to the end of October 2023, i.e. a further 4 months from the Hearing. No assurances had been given that audited results, once published, would be free from audit issues (or that any possible audit issues encountered could be resolved quickly).

e. For RG2, the current status of the Company could not be ascertained, as no audited results had been published since before FY2020. In the absence of audited results, the Listing Review Committee noted that the status of both of the Company’s operating subsidiaries remained unclear. The Company appeared to have lost control of OPCO, and while the Company had submitted it was still in control of Jiongqiang, the Listing Review Committee noted and shared the Listing Division’s concerns as to i) the fact that Jiongqiang’s shares were upheld by a third party, and ii) the continued ability for Jiongqiang to make use of OPCO’s facilities when the outcome of OPCO’s restructuring remained unclear and the Lease Agreement may have been cancelled in the meantime. While the Company had submitted that the Shipbuilding Business was profitable and that there were ongoing contract orders, the Listing Review Committee noted that it was difficult to assess the same without audited results. Further, the Listing Review Committee noted that the Company had acknowledged that its operators still incurred a high level of expenses and costs, including very high finance costs. These would only decrease once the Company had completed the proposed restructuring. In terms of the restructuring, the Listing Review Committee noted that while the Company had submitted it had secured investors, steps to effect such restructuring remained outstanding and no clear timeline or assurances had been given for when such restructuring could be successfully completed. In terms of available assets, the Listing Review Committee noted that while no assessment could be conducted in the absence of audited results, it appeared clear that the Company was completely reliant on funding provided by the investors, as the Company had so far been unable to pay its auditors up and until the Funding Agreement was executed. The Listing Review Committee was concerned that the Company would have sufficient funds to complete all the steps that remained outstanding and to support its Shipbuilding Business going forward.

f. For completeness, the Listing Review Committee noted that while the Company had submitted compliance with RG4 and RG5 could be achieved quickly, it had not yet published relevant reports which meant that compliance with these conditions of the Resumption Guidance remained outstanding.

g. The Listing Review Committee noted the Listing Division’s submission that the Resumption Guidance was addressed to the Company, and considered that the appointment of the Liquidators was therefore not a situation where the Company was inhibited from complying the Resumption Condition due to factors outside its control. The Liquidators, from a reputable firm and as officers of the court, would have been under a duty to act honestly and in the best interest of creditors for the time that they took over control of the Company. In that context, the Listing Review Committee noted that while the Company had argued that the Winding-Up Order had been made wrongfully, it had also acknowledged at the Hearing that while appointed, the Liquidators would have exercised their professional judgment in operating the Company. The Listing Review Committee therefore did not take the view that the period during which the Liquidators were appointed was a period where compliance with the Resumption Guidance was out of the Company’s control.

59. The Listing Review Committee found that pursuant to the objectives of ensuring the integrity of and providing certainty to the delisting process, it was necessary to keep trading suspension to a minimum. In the present case, the Company had already been suspended for 27 months, and had asked for a further extension of the remedial period of 10 months which would mean that if such extension was to be granted, the Company’s shares would have been suspended from trading for over 3 years. The Listing Review Committee further noted that the Company at the present stage had neither been able to demonstrate that it had substantially implemented steps that would lead to a resumption of trading nor that, with the requested extension of time, it would be in a position to resume trading with sufficient certainty. In fact, the Company’s status at the Hearing was closer to a presentation of a resumption proposal than an actual resolution of the conditions of the Resumption Guidance. The Listing Review Committee therefore found that granting an extension of the remedial period in such a situation would be contrary to the objectives of the current delisting regime, as it ran counter to the intention of ensuring the integrity and the certainty of the listing process. The Listing Review Committee therefore did not consider that there were exceptional circumstances that would allow for an extension of the remedial period pursuant to GL95-18.

60. Finally, for the avoidance of doubt, the Listing Review Committee recognized that in assessing whether exceptional circumstances existed, it was not restricted to the description expressly provided in Paragraph 22 of GL95-18. After a full analysis of the Company’s circumstances, the Listing Review Committee came to the conclusion that no exceptional circumstances existed in the present case as set out above. The Listing Review Committee noted, in particular, that even if aspects of the Company’s ability to comply with the Resumption Guidance would have been inhibited due to factors outside of its control (which the Listing Review Committee did not find to be the case in the present circumstances), the Listing Review Committee was not obliged to consider the Company’s situation exceptional purely on such basis. This was particularly so in a situation such as the present where the Company was not close to achieving compliance with the Resumption Guidance and had failed to provide any assurances that even with the very substantive further extension of time beyond the 27 months that had already passed at the time of the Hearing, it would be in a position to achieve resumption of trading with any sufficient degree of certainty.

46.  Hence, that reasoning might be summarised as follows:

(1)  Trading had not resumed by the resumption deadline, or even by the date of the hearing nine months later.

(2)  Therefore, consideration was needed to see whether sufficient grounds existed to grant the Company’s application for an extension of the remedial period.

(3)  It was recognised that in assessing whether exceptional circumstances existed, the LRC was not restricted to the description expressly provided in §22 of the Guidance Letter.

(4)  However, the circumstances of the present case were not considered exceptional, as would warrant an extension of the remedial period.

(5)  This was for various reasons taken into account, including (but not limited to) that (a) the Company’s status suggested that it was not close to meeting the Resumption Guidance and (b) the period in which the Liquidators were appointed was not a period where compliance with the Resumption Guidance was out of the Company’s control.

(6)  If the extension sought were granted, that would mean the Company’s shares would have been suspended from trading for over three years.

(7)  The Company’s status at the hearing was closer to a presentation of a resumption proposal than an actual resolution of the conditions of the Resumption Guidance.

(8)  Even if aspects of the Company’s ability to comply with the Resumption Guidance would have been inhibited due to factors outside of its control, the LRC was not obliged to consider the Company’s situation exceptional purely on that basis.

(9)  This was particularly so where the Company (a) was not close to achieving compliance with the Resumption Guidance, and (b) had failed to provide any assurances that even with the very substantial further extension of time that it would be in a position to achieve resumption of trading with any sufficient degree of certainty.

E.  The Battle Lines

47.  The Company has in essence sought to raise only one intended ground of judicial review. The Company asserts that the LRC’s finding that there were no “exceptional circumstances” warranting an extension of the remedial period was irrational in the public law sense.

48.  The Exchange asserts that (1) the application for leave to apply for judicial review was not made “promptly”, and (2) in any event, the intended sole ground of review has no prospect of success, where it was clearly within the LRC’s discretion not to find “exceptional circumstances” justifying the extension of time sought, when the Company had already been suspended for 27 months at the time of the LRC hearing, but was still a long way from fulfilling the Resumption Guidance.

49.  It is convenient to deal with the timing issue first.

F.  Whether the Application was Made Promptly

50.  It is trite that RHC Order 53 rule 4(1) – which rule is headed “Delay in applying for relief” – imposes an obligation on an applicant by requiring that the application for leave to apply for judicial review shall be:

made promptly and in any event within three months from the date when grounds for the application first arose unless the Court considers that there is good reason for extending the period within which the application shall be made.

51.  It is sometimes thought that, so long as an application is made within three months, that is prompt enough to comply with the requirement of the rule. That is not correct. Filing an application within three months is not in and of itself sufficient to satisfy the requirement of promptitude. Absent an extension granted by the Court upon good reason, the three-month period is merely a long-stop period – or a quantified default time limit – applicable to all cases.

52.  But, public law decisions typically affect a broad range of parties, and there is a significant public interest in ensuring that any challenges to such decisions are brought expeditiously.

53.  Therefore, whether an application has in fact been “made promptly” will depend upon the particular circumstances in that case. Depending on the context of the particular administrative decision sought to be challenged, it is possible that an applicant who commences proceedings even within three months may be guilty of undue delay for not having acted promptly. The circumstances to be taken into consideration include but are not limited to (1) the nature of the relevant statutory or regulatory framework, (2) the reasonableness or unreasonableness of the applicant’s conduct, and (3) the impact of any delay on interested parties.

54.  Ms Eu referred to H v Director of Immigration (2020) 23 HKCFAR 248 at fn 21 to §21, where Fok PJ (with whom all other members of the Court of Final Appeal agreed) offered a footnote as follows (with his citation of authority omitted):

It should be noted that, in England and Wales, doubt was expressed as to whether the promised test was sufficiently certain to meet the requirements of EU law and the ECHR … The ECJ has held that the promised test breaches EU law since it is subject to the discretion of the court and gives rise to uncertainty … But the promptness test continues to apply in domestic law in England and Wales …

55.  Hence, Ms Eu submits that, in light of the inherent uncertainty in the meaning of “promptly” in Order 53 rule 4(1), the Court should construe the “promptness” requirement liberally, especially when this requirement restricts an intended judicial review applicant’s constitutional right of access to the Court.

56.  For myself, I do not see the “promptness” requirement as being insufficiently certain for proper application by the Court. Whether a party has acted promptly is no more difficult to assess than whether a party has acted reasonably, an assessment performed by the Courts day in and day out. Nor does it seem to me that a requirement to make an application “promptly” imposes any more of a restriction to the constitutional right of access to the Court than a requirement to make an application within, say, a certain number of days. Further, in the public law context, there are often other rights and obligations in play, and matters potentially (perhaps usually) affecting far more parties than merely the applicant to the particular case.

57.  I also bear in mind the potential consequences of the failure to act “promptly” or within three months. Whilst the consequence of undue delay is not directly addressed in Order 53 rule 4, it is partly addressed in section 21K(6) and (7) of the High Court Ordinance Cap 4, which provide:

(6) Where the Court of First Instance considers that there has been undue delay in making an application for judicial review, the Court may refuse to grant:

(a) leave for the making of the application; or

(b) any relief sought on the application,

if it considers that the granting of the relief sought would be likely to cause substantial hardship to, or substantially prejudice the rights of, any person or would be detrimental to good administration.

(7) Subsection (6) is without prejudice to any enactment or rule of court which has the effect of limiting the time within which an application for judicial review [which includes an application for leave to apply for judicial review] may be made.

58.  In the H case at §37, Fok J held that, properly construed, Order 53 rule 4(1) and section 21K(6) and (7) can be reconciled and together provide as follows (in my shortened summary):

(1)  Whenever there is a failure to act either “promptly”, or within three months, there is “undue delay” for the purposes of section 21K(6).

(2)  Depending on the context, a failure to challenge a particular administrative decision in a shorter period than three months might constitute undue delay for not having been made “promptly”. But, in any event, an application made outside the three-month period will entail undue delay.

(3)  An applicant commencing judicial review proceedings who has been guilty of undue delay will require an extension of time in which to apply for leave to apply for judicial review. To justify an extension, the applicant must show “good reason” for extending the period.

(4)  The existence of good reason for any undue delay does not automatically lead to the grant of leave to apply, but is but one facet of the question whether leave to apply should be granted.

(5)  Leave may also be refused on the basis that the granting of the relief sought would be likely to cause hardship or prejudice, or be detrimental to good administration – although this conclusion might be less likely to be reached at the leave stage.

(6)  Where the Court considers that there is no good reason for extending the period, it will refuse leave to apply for judicial review.

(7)  Even if leave to apply is granted, the issue of undue delay on the part of the applicant may be raised again at the substantive hearing of the judicial review application. The relevant consideration is whether, on the substantive hearing, relief might or should be refused on the basis that the court thinks that relief would be likely to cause substantial hardship or prejudice to the rights of another or detrimental to good administration.

59.  In the present circumstances, the following chronology is material:

(1)  On 11 July 2023, the LRC Decision was given, upholding the decision to cancel the listing of the Company.

(2)  On 19 July 2023, the Company’s solicitors wrote to the Exchange requesting it to refrain from cancelling the Company’s listing, as the Company would apply for judicial review.

(3)  On 21 July 2023, the Exchange pointed out the policy objective of ensuring that long suspended issuers were delisted in a timely matter, and stated that it was only prepared to refrain from implementing the LRC Decision if the Company proceeded with the leave application promptly, and could identify potentially viable grounds of review. It allowed the Company until 7 August 2023 to do so.

(4)  On 7 August 2023, the Company’s solicitors requested a further 14-day extension to 21 August 2023, for time to seek legal advice from Counsel.

(5)  Also on 7 August 2023, the Exchange replied stating that it was only prepared to extend the time for the Company to prepare and make the leave application to 14 August 2023.

(6)  No application was made by that deadline.

(7)  On 15 August 2023, after expiry of the deadline, the Exchange followed up by telephone with the Company’s solicitors, and were informed that the solicitors had not received instructions to take out a leave application.

(8)  On 16 August 2023, the Exchange wrote to the Company reiterating the above chronology, and gave notice that the Exchange would proceed with effecting the decision to cancel the listing of the Company’s shares, and that in accordance with the 72 hours’ notice period set out in the Exchange’s letter dated 21 July 2023, the Exchange would on 21 August 2023 publish an announcement regarding the cancellation. A draft announcement was enclosed for perusal. The letter also informed that the last day of listing of the Company shares would be 22 August 2023, and listing of the shares would be cancelled with effect from 9am on 23 August 2023.

(9)  The Company and its solicitors did not contact the Exchange between 16 August 2023 and 21 August 2023.

(10)  Accordingly, on 21 August 2023, the Exchange published the announcement, advising the public that the listing of the Company’s shares would be cancelled with effect from 9am on 23 August 2023.

(11)  Only on 22 August 2023 did the Company commence the present proceedings.

(12)  Also on 22 August 2023, the Company requested by email that the Exchange refrain from cancelling the Applicant’s listing pending the outcome of these proceedings. However, the Exchange replied that it was no longer technically possible for it to stop the cancellation, due to the manner in which the Exchange’s systems operate.

(13)  The listing was cancelled on 23 August 2023.

60.  Ms Eu submits that the Company has acted promptly and reasonably in bringing the present application, because:

(1)  The Company commenced the proceedings “merely” 42 days after the date of the LRC Decision, so taking less than half of the 3-month time limit.

(2)  The proceedings were commenced and filed on the day before the formal cancellation of listing.

(3)  The point that “the appointment of the Liquidators … was not a situation where the Company was inhibited from complying with the Resumption Condition due to factors outside its control” only arose in the course of the LRC hearing on 30 June 2023.

(4)  It was only upon receiving the LRC Decision on 11 July 2023 that the Company learned of the LRC’s reasoning in that regard, and considered the need to seek legal advice as regards a potential challenge.

(5)  The Company acted reasonably pre-action because (via its solicitors) it took the initiative to inform the Exchange of the intention to apply for judicial review, and later wrote to request a further time extension to seek legal advice from Counsel.

(6)  Rather than choosing “to maintain silence”, as has been suggested by the Exchange, the Company’s solicitors responsibly informed the Exchange on 15 August 2023 that they had not received instructions to proceed with the leave application.

(7)  The relevant time limit cannot be that set by the Exchange, whether in correspondence or otherwise. If the deadline is drawn simply at the formal cancellation of an issuer’s listing, the Exchange would effectively be empowered to impose the deadline for judicial review applications. The relevant time limit is set by the rules in RHC Order 53.

(8)  The Company does not complain about the steps taken to effect delisting, but the fact that the Company did not commence proceedings before the Exchange began the process does not mean that the proceedings were late.

(9)  There is no prejudice to the Exchange, because it can at any time choose to delist or withhold a decision, and that should not affect the timing by the relevant rules.

(10)  Even if the Exchange has proceeded to formally cancel an issuer’s listing without intervening correspondence, the issuer would still be entitled to bring the challenge if it has acted promptly.

(11)  The Exchange has reserved to itself the right to proceed with cancellation once it has had sight of the grounds for any leave application. Therefore, it is difficult to see why any purported “prejudice” resulting from the listing cancellation alone would militate against the granting of leave.

(12)  Further, even if the LRC Decision is quashed, the Company’s listing would still continue to be suspended. Even if the Listing Committee eventually decides to extend time for compliance with the Resumption Guidance, the Company will only be relisted upon the Exchange being satisfied that all the Listing Rules are complied with by the Company.

61.  Mr Dawes submits that the Company has not acted “promptly”, and therefore that there has been undue delay because:

(1)  Given that the purpose of the regulatory framework is to ensure that long suspended issuers are delisted in a timely manner, it is incumbent upon listed issuers to take out any judicial review application with utmost promptitude, and to justify any request to suspend the cancellation process.

(2)  There is no room for any suggestion that the Exchange should suspend the cancellation of the issuer’s listing for a substantial period (let alone three months) to allow an issuer to consider its options in every case.

(3)  The Exchange gave the Company more than adequate time to take out the present application, where the Company’s listing was cancelled almost a month and a half after the LRC Decision.

(4)  The Company’s conduct was unreasonable. Even if it had considered it had inadequate time, it could have asked the Exchange for further time and provided information to justify its request. However, it instead chose to maintain silence after the Exchange indicated on 15 and 16 August 2023 that it would proceed with the cancellation of the listing.

(5)  Countenancing the Company’s delay would result in prejudice to the Exchange and the investing public:

(a)  As a result of the Company’s delay and conduct, the Exchange has understandably proceeded on the basis that the LRC Decision is valid and cancelled the Company’s listing.

(b)  Since then, the Company has not been subject to the regulatory regime which imposes obligations on listed issuers and persons connected with listed issuers.

(c)  The investing public are also likely to have conducted themselves on the basis that the Company has been delisted. Shareholders or creditors of the Company may have made business decisions in reliance on the fact that the Company is no longer a listed issuer.

(d)  If the leave application is entertained and the Company ultimately obtains the relief sought, each of the interested parties who have acted on the assumption that the LRC Decision is valid will or might suffer prejudice.

(6)  The reputation of the Hong Kong stock markets will be undermined if a delisted issuer is relisted, particularly when it is unclear whether the Company has complied with all of the requirements under the Listing Rules during any “gap”.

62.  I agree that the question of promptness or undue delay must be properly viewed in context, and in particular the relevant statutory or regulatory framework. As Mr Dawes submits, the relevant regulatory framework is to ensure that long suspended issuers are delisted in a timely manner. At the point in time at which a potential application for leave to apply for judicial review to challenge a delisting decision of the LRC arises, the listed issuer will necessarily have had the entire remedial period and any further period of time since that expired to have demonstrated compliance with the resumption guidance given to it. In this particular case, the Listing Committee’s decision to delist the Company was taken in April 2023, over six months after the expiry of the 18-month remedial period, and the LRC Decision was issued more than a further three months later. Keeping firmly in mind that the de novo process of review conducted by the LRC is properly open to the listed issuer under the regulatory regime, the fact is that going through that process necessarily takes time beyond that which, at least at first blush, has been decided as the appropriate maximum period within which a listed issuer should resume trading in its shares.

63.  Further, the LRC Decision marks the end of that process, and listed issuers such as the Company must reasonably expect that such decisions will be put into effect as soon as practicable. If an adverse decision is to be challenged through an intended judicial review (such as in the present proceedings), it only stands to reason that such an application must be pursued with a real sense of urgency.

64.  I take account of the argument that the particular point – that the period when the Liquidators were in place was not one where the Company was inhibited from complying with the Resumption Guidance due to factors outside its control – is said to have first been raised only at the hearing before the LRC. But, with respect, (1) such an argument seems to me to be a relatively obvious one to have arisen, and (2) the argument was at least trailed in the way the Listing Division Report dealt with the appointment of the Liquidators and what happened in that period (see above). In any event, the intended irrationality challenge – the sole intended ground of review identified – is a fairly crisp point, readily formulated and open to reasonably rapid legal assessment of its potential merit. It can also be said that the intended irrationality challenge arises on the central focus of the argument relating to “exceptional circumstances” said to warrant the extension to the remedial period. In other words, this was hardly a totally new point or one arising somewhere on the periphery.

65.  Further, it seems to me that the Exchange is entitled to proceed on the assumption that the LRC Decision is not going to be the subject of a challenge, and that it should therefore be put into effect as soon as possible. Only if it is made clear that there is a potential challenge might the Exchange be expected to provide some window for the opportunity to give reasonable consideration of the potential challenge. If that window of opportunity is given, and the window closes without the challenge having been launched, it would be expected that the Exchange not only would but should put the LRC Decision immediately into effect. It must also be expected that once put into effect, it may be difficult to unwind.

66.  In this case, despite that window having closed without the mooted challenge having been launched, it might be said that the Exchange went ‘above and beyond’ in checking with the Company and its solicitors what was the position. The Exchange was told in clear terms that the solicitors did not have instructions from the Company to take out an application for leave to apply for judicial review. The Company and its solicitors were made aware of the Exchange’s next step, by reference to a specified date when the public announcement would be made and the cancellation would take effect. In the intervening five days – between 16 and 21 August 2023 – there was no further contact from the Company or its solicitors.

67.  At some point before the proceedings were filed on 22 August 2023, the Company must have given clear instructions to its solicitors to launch the application, yet still there was no intimation of that given to the Exchange. The papers as were filed on the application were plainly not drafted within just an hour or two, and even if the drafting started on a provisional basis that fact was not notified to the Exchange. Nor was any further extension of time sought for seeking instructions, raising funds, precisely formulating the intended ground of challenge, etc. In consequence, I do not regard the Company’s conduct as having been reasonable in all the circumstances.

68.  That is not to say that the deadline for the “prompt” launching of an application for leave to apply for judicial review was, or can be, set by the Exchange. But the context and conduct strongly inform whether the application was or was not made promptly.

69.  Also in that context, the Company and its solicitors would have been aware of the fact that if the Exchange were indeed to delist on the timetable it gave, there was a clear potential difference of opinion as to what the parties might regard as acting “promptly”. That point could have been made, and if necessary even an urgent application to Court might have been considered.

70.  As to the impact of any delay on interested parties, there is some force in the Exchange’s concern that it is not able to act in accordance with what would otherwise be its statutory duties under the SFO or Listing Rules regulatory framework in any period that the Company is delisted. This concern is not automatically dissipated upon the Company’s assertion (which it has made) that it has not taken any inappropriate steps in the “gap”, and would not do so. It may also be that other parties act in reliance upon the fact that the Company is no longer the listed issuer, though that seems to me to be a weaker point when, even if relisted, trading in the Company’s shares would in any event remain suspended at least for the time being.

71.  Ultimately, on balance, I am of the view that the Company has not acted promptly in all the circumstances.

72.  Of course, I also take into account the merits of the application itself. This is, obviously, where the potential consequences of undue delay come into play. If there are strong merits in the application, that may of itself provide “good reason” for extending the time, even if it is thought that the application has not been made without undue delay.

G.  Whether the LRC Decision was Irrational

73.  As already identified, the Company’s intended ground of review is that the LRC’s finding that there are no “exceptional circumstances” warranting an extension of the remedial period is irrational in the public law sense.

74.  The thrust of the argument includes that the Company was inhibited from taking any remedial steps for at least 12 months out of the 18-month remedial period due to matters out of its control – namely the wrongly granted Winding-Up Order in force between 11 August 2021 and 9 August 2022 – and beyond. Therefore, it is argued that “in reality” and for factors outside its control, the Company did not have the 18-month remedial period to comply with the Resumption Guidance.

75.  In her submissions, Ms Eu points in particular to the following factors:

(1)  During the period when the Winding-Up Order was in force, the Company’s resumption work was put on hold as the Liquidators did not make resumption progress.

(2)  Indeed, it seems the Liquidators were doing the very opposite of trying to comply with the Resumption Guidance, as it was apparently their professional view that the best interest of the Company was to liquidate or sell off its assets to pay its creditors, rather than to seek resumption of trading.

(3)  The Company’s liquidators were discharged in August 2022, but the majority of the Applicant’s books and records were only handed back to the directors in mid-January 2023. Further, the directors were only able really to exercise power and control over the Company after receiving the sealed order from the Bermuda CA at the end of April 2023.

(4)  Therefore, there was a further eight months’ delay before the Company was able to identify and negotiate with potential investors for funding and preparation for resumption of trading.

(5)  By that time, the 18-month remedial period had already expired.

(6)  Those matters were out of the Company’s control and not due to its fault.

(7)  It would be unfair, if not impossible, to require the Company to have substantially implemented steps that, it has shown with sufficient certainty, will lead to resumption of trading before granting the extension of time.

76.  Ms Eu also submits that a fair balance needs to be struck between giving suspended issuers the necessary time to remedy issues, while at the same time incentivising them to act promptly towards resumption and giving certainty to the market. In this case, she says, the Company was effectively deprived of a reasonable or necessary time, and this was because of the wrongly-brought winding-up petition.

77.  It seems to me that the argument as put almost amounts to an argument that the making of the Winding-Up Order in this case ought in effect to have ‘stopped the clock’ on the remedial period until the order was discharged. But, I think Ms Eu was not suggesting the clock should be treated to have stopped as such, but that the “exceptional circumstances” fully justified the proposed extension to the remedial period by giving back time lost.

78.  As to what amounts to “exceptional circumstances”, Ms Eu submits the phrase should be given its ordinary meaning as, for example, explained in Paton v Todd [2012] EWHC 1248 (Ch) at §67, where it was stated:

“Exceptional” is an ordinary, familiar English adjective. It describes a circumstance which is such as to form an exception, which is out of the ordinary course, or unusual or special, or uncommon; to be exceptional a circumstance need not be unique or unprecedented, or very rare, but it cannot be one that is regularly, or routinely, or normally encountered …

79.  I do not think there is any problem with that explained definition, but it is of course one to be considered in context. Further, the assessor of whether or not there are “exceptional circumstances” in this case is the LRC, whose members are appointed for their relevant knowledge, expertise and experience. Though Ms Eu suggests that no expertise is needed to decide what are “exceptional circumstances”, the members of the LRC are plainly best placed to decide that question in context. As I have already put it above, whether the circumstances are “exceptional” for the purpose of extending the remedial period is primarily a matter for the Exchange, not the Court, to decide.

80.  As part of the irrationality argument, Ms Eu focused on what was said in §58(g) of the LRC Decision. I have set out that paragraph above, but for convenience, I can repeat it here – but with Ms Eu’s emphasis added:

g.  The Listing Review Committee noted the Listing Division’s submission that the Resumption Guidance was addressed to the Company, and considered that the appointment of the Liquidators was therefore not a situation where the Company was inhibited from complying the Resumption Condition due to factors outside its control. The Liquidators, from a reputable firm and as officers of the court, would have been under a duty to act honestly and in the best interest of creditors for the time that they took over control of the Company. In that context, the Listing Review Committee noted that while the Company had argued that the Winding-Up Order had been made wrongfully, it had also acknowledged at the Hearing that while appointed, the Liquidators would have exercised their professional judgment in operating the Company. The Listing Review Committee therefore did not take the view that the period during which the Liquidators were appointed was a period where compliance with the Resumption Guidance was out of the Company’s control.

81.  With respect, Ms Eu appears to have misread that paragraph. The first sentence of the paragraph contains the LRC’s noting the submission made by the Listing Division. Hence the word “therefore” in that sentence is apparently part of the Listing Division’s submission. Anyway, the last sentence of the paragraph is the LRC’s own conclusion, made in response to that submission. But that conclusion is also based upon the other matters set out in the middle sentences of the paragraph. It is for those reasons – “therefore” – that the LRC reached and expressed its view that the period during which the Liquidators were appointed was not a period where compliance with the Resumption Guidance was out of the Company’s control.

82.  Ms Eu also submits that the LRC, in relying on the supposed acknowledgement by the Company at the hearing that the Liquidators would have exercised their professional judgment in operating the Company, misunderstood the Company’s position or took it out of context. She referred to a passage in the transcript of the hearing, where the Company’s representative said he could not speak on the Liquidators’ behalf, but then stated that they make their own professional judgment as to what is right to do. I think that evidence/submission made at the hearing was not misunderstood by the LRC. Indeed, it is perhaps trite that the Liquidators, as officers of the court, would have exercised their professional judgment in operating the Company whilst constituting its management. In other words, the Liquidators might have taken steps to seek to comply with the Resumption Guidelines, but they might have chosen to take an alternative course, in accordance with their own professional judgment.

83.  The Company accepts that the appointment of liquidators does not necessarily inhibit a company from taking steps to resume trading or to comply with the resumption guidance imposed. That is obviously correct. There is a difference between (a) being inhibited from taking steps to resume trading, and (b) choosing not to take those steps. Indeed, any Board of Directors or persons in control of the management from time to time may, for commercial or other reasons, take the view that it would not be in the best interests of the issuer to take steps to resume trading.

84.  But, I accept there is perhaps some force in the point made by Ms Eu that – on the facts of this case – the Liquidator’s role was in effect confined to liquidating (as opposed to restructuring). Hence, the Liquidators would likely have exercised their professional judgment for that purpose, and were never taking steps to comply with the Resumption Guidance (a point made forcefully on behalf of the Company at the LRC hearing). Hence, on one view, there was a period of time when the management of the Company was apparently not seeking to comply with the Resumption Guidance. But that would be only one factor to take into account in the overall assessment as to whether there were “exceptional circumstances” to warrant an extension to the remedial period.

85.  Indeed, it is common ground between Ms Eu and Mr Dawes that (1) the appointment of liquidators to a company does not automatically mean that the company should be entitled to an extension of time for the remedial period, say roughly equivalent to the time when the liquidators are in place, and (2) nor does it automatically mean that the company could not be entitled to an extension of time. Each case is fact specific. However, Ms Eu suggests that the LRC fell into error by adopting the former rigid approach. I disagree. As can be seen from its reasoning, the LRC Decision was adopted by reference to the specific facts of this case, and was not a generic view at one end of the potential extremes of opinion.

86.  As to Ms Eu’s submission that the Company had demonstrated before the LRC the progress it had made in complying with the Resumption Guidance, that seems to me to stray very much into the area of merits. Indeed, she also accepted that the real issue in this judicial review is not so much about fulfilment of the Resumption Guidance, but whether there was any public law error in the LRC Decision refusing to grant the Company an extension of the remedial period. In any event, I see no irrationality or other public law error in the way in which the LRC considered and expressed its view as to the possible future compliance with each of the Resumption Guidance.

87.  But it is that point which also demonstrates the fatal flaw in this application. As the LRC Decision shows, at §60, the LRC proceeded on the basis that even if the appointment of the Liquidators had inhibited the Company from complying with the Resumption Guidance, such that there might be thought to be “exceptional circumstances” in that regard, that was not the end of the analysis. This is so because the Company was not close to achieving compliance with the Resumption Guidance and had failed to provide any assurances that, even with the very substantial further extension of time beyond the 27 months that had already passed at the time of the hearing, it would be in a position to achieve resumption of trading with any sufficient degree of certainty.

88.  In short, even if the LRC were to “give back” to the Company the period of time of which it claimed to have been “robbed” (to use Ms Eu’s word), there was an insufficient degree of certainty that the Company would comply with the Resumption Guidance even within the extended remedial period sought.

89.  Ms Eu’s submission that it remained open to the Exchange to delist the Company if in fact it did fail to comply with the Resumption Guidance at the end of the extended period – whilst a truism – is no answer. Against the regulatory framework, the LRC was not required to take a ‘wait and see’ approach, but rather to consider whether at the date of the hearing – and even assuming establishing some “exceptional circumstances” arising from the imposition of the Liquidators – the Company had demonstrated with a sufficient degree of certainty that it would be in a position to achieve resumption of trading within the requested extended remedial period. On the materials, and “after a full analysis of the Company’s circumstances”, the LRC decided the Company had not demonstrated that fact. That decision is not reasonably arguable a decision made irrationally in the public law sense.

90.  The LRC expressly noted that, in assessing whether exceptional circumstances existed, it was not restricted to the circumstances set out in §22 of the Guidance Letter. It does not seem to me to matter whether the LRC took the view that (1) even if the period when the Liquidators were in control of the Company amounted to “exceptional circumstances”, nevertheless (on the other facts) the discretion to grant an extension to the remedial period should not be granted, or (2) the overall circumstances including the period when the Liquidators were in control and the significant doubts as to the Company’s ability to comply with the Resumption Guidance even if an extension is granted meant the case fell outside “exceptional circumstances”. The LRC ultimately found that the circumstances of the present case are not sufficiently exceptional to warrant the extension to the remedial period as was being sought by the Company.

91.  The sole intended ground of judicial review, based upon the argument of irrationality, is not reasonably arguable with any reasonable prospect of success.

H.  Result

92.  The Company’s application for leave to apply for judicial review is dismissed.

93.  The application was not made promptly in all the circumstances. Further, I see no good reason for extending time. But in any event, there are no merits as to warrant the grant of leave to apply for judicial review.

94.  Lastly, even were I to have thought there was a proper basis to grant leave, in the exercise of the discretion then arising I would refuse the substantive application.

95.  I see no reason why the costs should not follow the event. Therefore, I order the Exchange’s costs of these proceedings to be paid by the Company with certificate for two Counsel. I will summarily assess those costs by reference to the statement of costs already provided by the Exchange, with the benefit of any objections to that statement as may be provided by the Company within the next 14 days.