BRIGHTOIL PETROLEUM (HOLDINGS) LTD v. THE STOCK EXCHANGE OF HONG KONG LTD

HCAL 825/2020

[2020] HKCFI 1601

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST NO 825 OF 2020

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REASONS FOR JUDGMENT

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A. Introduction

1.  These proceedings were commenced by Notice of Application for Leave to Apply for Judicial Review (Form 86) dated 6 May 2020.

2.  The Applicant is a company incorporated in Bermuda, and was listed on the Main Board of the putative respondent, The Stock Exchange of Hong Kong Limited (“Exchange”) from 16 November 1995. However, trading of the Applicant’s stock on the Exchange has been suspended since 3 October 2017.

3.  The Applicant commenced the proceedings to challenge decisions (together “Decisions”) made on 28 February 2020 by the Listing Committee of the Exchange.  The main decision made by the Listing Committee on that date was to cancel the listing of the Applicant (“Cancellation Decision”).  But in reaching that decision, the Listing Committee also made decisions rejecting the Applicant’s request for an oral hearing (“Oral Hearing Decision”) and the Applicant’s request for an extension of time within which to fulfil the conditions/guidance previously imposed as conditions/guidance for resumption of trading (“Extension of Time Decision”).

4.  The Form 86 summarised the grounds of review as being that:

(1)  the Oral Hearing Decision is illegal in that the Listing Committee misdirected itself in law by not having regard to its duty to act fairly under common law; and

(2)  the Extension of Time Decision and the Cancellation Decision are tainted by procedural impropriety in that the Applicant was not afforded the opportunity to make worthwhile representation.

5.  It is to be noted that the Form 86 recognised that there is an alternative remedy, because decisions of the Listing Committee are open to review by the Listing Review Committee.  However, the Applicant asserted that such reviews are not an adequate or safe alternative remedy, and that the manner in which the Listing Committee made the Cancellation Decision suggests that there is a systemic procedural unfairness, which is not capable of being cured by a “re-hearing” of the Cancellation Decision which was not itself based on a “hearing” at all.  Nevertheless, the Form 86 suggested that there should be a stay pending the outcome of the review by the Listing Review Committee of the Cancellation Decision.

6.  On 19 May 2020, I directed that there should be a ‘rolled-up’ hearing of the application for leave to apply for judicial review and the substantive application for judicial review, and I set the date of the hearing as 14 July 2020.  I also set a timetable for the filing of evidence and the service of skeleton submissions.

7.  By letter dated 26 June 2020, the Applicant requested a slight delay in the timetable for the Applicant and the Exchange to file and serve their skeleton submissions, originally set for 7 and 10 July 2020 respectively.  The basis of the request was because the Applicant had applied by summons for a stay of the proceedings, pending the review of the Listing Committee’s decisions by the Listing Review Committee of the Exchange. That stay application was listed to be heard on 6 July 2020.  In those circumstances, I varied the timetable to permit filing of the skeletons by 5pm on 8 and 10 July 2020 respectively.

8.  On 6 July 2020, I heard and dismissed the stay application.  I gave reasons for so doing in a short oral ruling.  Those reasons were based on case management, and amongst other things included that (a) it was appropriate to deal with the argument from the Exchange that precisely because there is an available alternative remedy, the application was bound to fail, and (b) where the Applicant’s challenge included an allegation of systemic unfairness to the whole de-listing process including that alternative remedy, that argument could and should take place.

9.  The next day, on 7 July 2020, the Applicant notified the Exchange that it intended to discontinue its application for leave to apply for judicial review.  There followed inconclusive correspondence between the parties, and the Applicant issued a summons dated 9 July 2020 seeking leave for it to discontinue the application for leave to apply for judicial review, and for vacation of the scheduled ‘rolled-up’ hearing on 14 July 2020.  The summons accepted that, subject to the costs of the application itself, the costs of the proceedings should be to the Exchange, to be taxed if not agreed.

10.  The summons was returnable at 10am on 14 July 2020, and I dealt with the summons at that time.  I did so with the benefit of skeleton arguments filed by Mr Anson Wong Yu Yat, Counsel for the Applicant and Mr Victor Dawes SC and Mr Martin Ho, Counsel for the Exchange.  The Applicant had previously stated that it would not make submissions on the application for leave to apply for judicial review, as it intended not to pursue the application.

11.  At the conclusion of the hearing, and for reasons to be handed down later: (1) I dismissed the application seeking leave to discontinue; (2) I dismissed the application for leave to apply for judicial review; and (3) I said I would in my reasons make costs orders nisi to deal with the costs consequences of those decisions.

12.  These are my Reasons.

B.   Refusal of Leave to Discontinue

13.  As indicated above, following my dismissal on 6 July 2020 of the Applicant’s application for a stay of these proceedings pending the decision of the Listing Review Committee, on 7 July 2020 the Applicant indicated to the Exchange that it had decided to discontinue its application for leave to apply for judicial review, and that it was prepared to pay costs to the Exchange, to be taxed if not agreed.

14.  On 8 July 2020, the Exchange wrote on a ‘without prejudice save as to costs’ basis (though the claim of privilege was later expressly withdrawn) stating that the Exchange was prepared to agree to a discontinuance, but on the condition that the Applicant pay its costs in the total sum of $920,000 (comprising Counsel’s fees of $570,000 and solicitors’ costs of $350,000) by the end of the week, ie. by 10 July 2020. Though the letter did not use the precise terms, that seems to me to have been a letter essentially indicating agreement to discontinuance but only upon the immediate agreement to and payment of, in effect, indemnity costs.

15.  That was unacceptable to the Applicant, which on 9 July 2020 took out the Summons seeking leave to discontinue.

16.  On the basis of the exchange of correspondence, I do not think it is correct for Mr Wong to have suggested that the only outstanding issue between the parties was one of costs.  The costs proposal having been rejected, and it having been a condition of any agreement for discontinuation, there was no effective agreement to the grant of leave to discontinue.

17.  Mr Wong submitted, by reference to the decision of Chow J in Yeung Kam Wah v The Medical Council of Hong Kong [2018] HKCFI 1805 at §19, that prima facie there is no good reason why the Court should insist on a substantive hearing of the application when the Applicant no longer wishes to pursue the relief sought in the application.  The situation might be contrasted with one in which the Court is being asked to make an order to quash the underlying decision, where the Court must be satisfied that there are proper grounds.  But where the Court is being asked to grant leave to discontinue an application for judicial review, the Court may properly do so provided that no injustice is caused to any party.

18.  Of course, in that case, the position was factually rather different.  There, the Medical Council had in effect agreed to ‘go back to square one’, and to ignore its previous decision (which needed neither to be quashed nor upheld).  Nevertheless, Mr Wong submitted that the Court should not engage in providing an academic advisory opinion, which he suggested was what the Exchange was now seeking.  Mr Wong also submitted that it would run counter to the objectives of the CJR to insist on a full hearing.

19.  However, first, I do not accept that the decision on the questions raised in the Form 86 are “academic”.  As the Exchange points out by reference to the evidence filed by the Applicant itself (in support of the stay application), there is at least one other case in which the same argument is being run (with the involvement of the same financial adviser). There are also a number of cases in which delisting applications will be dealt with in accordance with the procedure which the Form 86 alleges to be systemically unfair.  As Mr Dawes submits, this is also not a typical civil action between just two parties; here, there is a clear public interest element when dealing with the matter of listing and delisting of public companies.

20.  Secondly, where the Form 86 sets out a reasonably detailed argument in challenge to the Decisions and the alleged systemic unfairness of the delisting process, and where the Exchange has (in accordance with my direction) filed its skeleton submissions, I think it is consistent with the objectives of CJR that there should be a determination of the issues raised.

21.  I also do not accept Mr Wong’s suggestion that there is some ‘tension’ in this case between (a) the requirement for promptitude in challenging any decision by way of judicial review and (b) the requirement first to exhaust alternative remedies.  There is no requirement for making a prompt challenge to a decision which itself is subject to an alternative remedy.

22.  At least, that is so unless there is a systemic challenge to the whole process, of the nature which the Form 86 raises. In those circumstances, I agree with Mr Dawes that the application and the way in which it has been conducted by making a challenge and seeking a stay, then an attempt to abandon it when the stay is refused, is an abuse.  If there was a genuine intention to challenge the fairness of the system, that challenge is maintainable without the need for any stay.  If that challenge is not to be maintained, there was no basis in the first place for having launched the proceedings challenging an intermediate decision with an alternative remedy.

23.  Mr Dawes also referred to three cases in support of his submission that it was appropriate for the Court to give a reasoned judgment in dismissing the application for leave to apply for judicial review, notwithstanding the Applicant’s concession.

24.  The first two cases were Zhang Hong Li v DBS Bank (Hong Kong) Ltd (2019) 22 HKCFAR 392 at §§1-6 and Ng Christina v Capella Capital Limited [2020] 2 HKLRD 274 at §96. In those cases, the matters were settled after argument but before a judgment was delivered, but the Court in each case felt it appropriate for the decision nevertheless to be handed down.  Mr Dawes accepts those cases are not on all fours with the current situation, in that the full argument was in this case yet to take place.  But, he submitted that the issue is sufficiently straightforward and important and the Applicant’s contentions are extensively elaborated upon, with reference to case authorities, in the lengthy Form 86.

25.  The third case was R (Shefki Gashi) v Secretary of State for Home Department [2000] EWHC Admin 356 at §1.  That case involved two out of some 200 applications, where neither applicant intended to pursue the application but the respondent opposed the proposed withdrawal because the other 200 applications raised similar points to those likely to be argued, and the two cases seemed an obvious and convenient vehicle for disposing of those arguments (and thereby the other cases). Submissions were not made on behalf of any of the applicants, but the Court felt their interests were in no way prejudiced because Counsel for the respondent covered all possible arguments in dealing with the cases in which he appeared.

26.  Mr Wong said all three cases are to be distinguished from the present situation.  By reference to the third case, he pointed out that the Court in this case will not have full argument, and others who may be affected by the decision will not be heard.  As I have indicated, I think the detail in the Form 86, and the usual fairness of Mr Dawes’ arguments, permit effective and full argument.  It is also not at all unusual for decisions to be made in a case between some parties which will have an effect on other parties, because of a decision as to a point of law, and I see nothing objectionable in that.

27.  As to the first two cases, I accept that it has been pointed out that it would be a highly questionable use of judicial time to prepare a judgment on an issue which was no longer live between the parties to the case.  But that principle seems to me to have rather less force where the issue is one of wider public importance.  Further, although I had of course not prepared a judgment in advance of argument, I had necessarily read into the case sufficiently to deal with the stay application, and further read into the case for the purpose of dealing with the substantive hearing listed.  It can certainly be said it would be a retrospective waste of judicial time and effort if the matter is not dealt with in a judgment.

28.  Ultimately, I have been persuaded that a reasoned judgment should follow on the substantive matters raised by the Form 86, for the benefit of future cases or situations where the Listing Committee and Listing Review Committee are considering the possibility of cancelling the listing status of a publicly listed company.  As Mr Dawes submitted, authoritative guidance from the Court one way or the other would assist.  If the allegations of systemic unfairness hold no water, it would be conducive to the Exchange’s proper administration for such unwarranted assertions to be dispelled sooner rather than later.  Conversely, if there is merit in the contentions, it would be preferable for the Exchange to be guided away from any unfair process.

29.  The systemic challenge having been raised, it seems to me that it would be a prejudice to the Exchange for that challenge not to be resolved as soon as it can be resolved.  That can fairly be achieved within these proceedings.

30.  I have taken into account the fact impressed upon me by Mr Wong that in other proceedings whereby delisting decisions have been the subject of challenges, the Court (differently constituted) has been prepared to adjourn the judicial review application of the delisting decision pending the result of the review by the relevant review body.  However, I am not privy to the various reasons by which the parties to those actions, and the Court, might have taken that course.  Those situations do not affect my own analysis.

C.Refusal of Leave to Apply for Judicial Review – Facts

31.  The Applicant was listed on the Main Board of the Exchange in 1995.  On 3 October 2017, trading in the securities of the Applicant on the Exchange was suspended.  The reason for the suspension is explained in the Applicant’s Form 86, essentially flowing from its auditor’s concerns in relation to certain back-to-back trading of oil between an indirect wholly-owned Singapore subsidiary of the Applicant with 12 customers. As a result of those concerns, on 26 September 2017, the Applicant announced that it was unable to publish an announcement in respect of its consolidated results of the group for the year ended 30 June 2017 by 30 September 2017 as required under the Listing Rules.  The Board of the Applicant had also requested its Audit Committee to conduct an independent review of matters leading to the delay.

32.  On 18 December 2017, the Listing Division of the Exchange imposed on the Applicant certain trading resumption conditions.  Those conditions included disclosure of the findings of the forensic investigation, its financial results, and audit qualifications.  In the Form 86, the Applicant states that it has since then been working closely with its professional advisers to meet the resumption conditions imposed.

33.  By letter dated 4 July 2018, the Listing Department informed the Applicant that under the amendment to the delisting framework of the Listing Rules, it may cancel the Applicant’s listing if the trading in its shares has remained suspended for 18 months, which would expire on 31 January 2020.

34.  By letter dated 8 November 2019, the Listing Department expressed doubts on the character or integrity of one of the Applicant’s executive directors, and imposed an additional resumption guidance that the Applicant should demonstrate no reasonable regulatory concern about management integrity and/or any persons with substantial influence over the Applicant’s management and operations, which would pose a risk to investors and damage market confidence.

35.  By letter dated 23 December 2019, the Applicant’s financial adviser, Yu Ming Management Ltd (“Yu Ming”), informed the SFC and the Exchange of certain plans of the Applicant in the process of seeking fully to satisfy the resumption conditions and to eliminate the concerns of the Exchange.  On 31 January 2020, the Applicant applied to extend the deadline for the fulfilment of the resumption conditions to 29 May 2020.

36.  However, on 24 February 2020, the Listing Department wrote to Yu Ming stating that: (1) the Applicant had failed to fulfil all the resumption conditions/guidance by the deadline of 31 January 2020, entitling the Exchange to delist the Applicant under Rule 6.01A; (2) the Applicant had not demonstrated that it fell within the exceptional circumstances in which an extension of time might be given; and (3) a recommendation would be given to the Listing Committee to cancel the listing of the Applicant under Rule 6.01A.

37.  On 24 February 2020, the Listing Division issued a Report to the Listing Committee recommending the cancellation of the Applicant’s listing.  In reaching that recommendation, the Listing Division took into account the fact that 31 January 2020 was the deadline for the resumption of trading, as opposed to submission of a resumption proposal.  The resumption deadline is not normally extended in the interest of the effectiveness and credibility of the delisting rules.  Accordingly, a suspended issuer which fails to resume by the deadline will be delisted, unless exceptional circumstances are shown.

38.  On 25 February 2020, Yu Ming wrote to the Listing Department and the Listing Committee, stating that “it is unlawful under trite law for the Listing Department/Listing Committee to deny the Company’s [Applicant’s] right to be heard”.  Yu Ming also made the following demand:

The Company unequivocally demands to read the detailed reasons of the Listing Department’s recommendation, to be present in the Listing Committee, to make written submission against the recommendation, make an opening statement, and to address any questions that the Listing Committee members may have on the Company. Without the presence of the Company, the Listing Committee members are equally deprived of their rights to ask questions even if they feel the need to. As such, the Company demands the Listing Department not to present our case to the Listing Committee unless the above requests are met.

39.  On 28 February 2020, having considered the Listing Division’s report, the Listing Committee made the Cancellation Decision.  By letter of the same date addressed to the Board of Directors of the Applicant, the Head of Listing of the Exchange notified the Applicant of the Decisions.

40.  In respect of the Oral Hearing Decision, it was stated as follows:

1.   Under the Listing Rules, the Listing Committee has reserved to itself the power to decide whether to cancel the listing of a listed issuer.  For such purpose, the Listing Committee may regulate its meeting(s) in such manner as it thinks fit.

2.   The Company is subject to a resumption deadline of 31 January 2020 under Rule 6.01(A).  The process for a cancellation decision under Rule 6.01A is for the listed issuer in question to demonstrate to the Exchange’s satisfaction that it has fulfilled all the resumption conditions/guidance and complied with the Listing Rules and resume trading by the resumption deadline.  If the Listing Division considers that the issuer has failed to do so, the Listing Division will present the matter to the Listing Committee and recommend that the issuer’s listing be cancelled.  The matter will be considered and decided at this stage by the Listing Committee administratively; the process is not adversarial and the Listing Committee will not convene an oral hearing.  The Listing Committee is not required under the Listing Rules to allow a listed issuer to attend the meeting at which the issuer’s cancellation of listing is being considered and decided.  Nor does the issuer have the right to attend the meeting.

41.  In respect of the Extension of Time Decision and the Cancellation Decision, the gist was as follows:

(1)  the Listing Committee does not consider that the Applicant has demonstrated that it falls within the “exceptional circumstances” under paragraph 19 of the Guidance Letter (GL95-18) to extend the time for the Applicant to fulfil the Resumption Conditions and the Additional Resumption Guidance; and

(2)  the Listing Committee considers that the Applicant fails to fulfil the Resumption Conditions and the Additional Resumption Guidance, namely:

(a) disclose the findings of the forensic investigation, assess the impact on the Applicant’s financial and operational position, and take appropriate remedial actions;

(b) publish all outstanding financial results and address any audit qualification; and

(c) demonstrate that there is no reasonable regulatory concern about management integrity, and/or any persons with substantial influence over the Applicant’s management and operations, which will pose a risk to investors and damage market confidence.

42.  As a result, the listing of the Applicant’s shares on the Stock Exchange was cancelled on 16 March 2020.

43.  On 9 March 2020, Yu Ming on behalf of the Applicant requested a review of the Cancellation Decision by the Listing Review Committee, pursuant to Rule 2B.06(2) of the Listing Rules.  A later request for the Listing Committee to reconsider the Applicant’s request for an oral hearing before the Listing Committee and the Extension of Time Request was refused, the Exchange pointing to the fact that the Listing Review Committee (and not the Listing Committee) is the review body in respect of decisions of the Listing Committee under Chapter 2B of the Listing Rules.

44.  According to the evidence filed by the Applicant, the current timetable for the review by the Listing Review Committee is that the parties will provide written submissions and supplemental written submissions by 9 July 2020 and 23 July 2020 respectively.  The hearing date will be fixed by the Listing Review Committee in due course.

D.  The Listing Committee and the Listing Review Committee

45.  In its Form 86, the Applicant sets out the various provisions of the Listing Rules relating to cancellation procedures, and to the involvement of the Listing Committee and the Listing Review Committee.  Those matters can usefully be rehearsed.

46.  Rule 2A.08 of the Listing Rules provides for the cancellation procedures as follows:

The Listing Committee has reserved to itself the power to cancel the listing of a listed issuer. This means that a listed issuer will not have its listing cancelled unless the Listing Committee has considered the matter.

47.  Rule 2A.27 of the Listing Rules provides for the functions and powers of the Listing Committee as follows:

The Listing Committee shall exercise all the powers and functions of the Board in relation to all listing matters. The Listing Committee’s exercise of such powers and functions is only subject to the powers of review in the Listing Review Committee.

48.  Rule 2A.28 of the Listing Rules provides for the conduct of meetings of the Listing Committee as follows:

The Listing Committee shall meet for the despatch of business, adjourn and otherwise regulate its meetings in accordance with the provisions of the rules made by the Board for this purpose, including rules governing members’ conflicts of interest, subject to the provisions of this rule 2A.28. The quorum necessary for the transaction of any business by the Listing Committee shall be five members present in person. The Chief Executive of the HKEC will not attend meetings of the Listing Committee at which the Listing Committee is determining a matter in the first instance or on review.

49.  Rule 2B.06 of the Listing Rules provides:

(1)  where the Listing Division [ie. the Listing Department] makes a decision on the listed issuer, the listed issuer may request the decision be referred to the Listing Committee for a review by the Listing Committee.

(2)  Subject to rule 2B.04, where the Listing Committee endorses, modifies or varies the Listing Division’s decision or makes its own decision, the listed issuer may request the decision be referred to the Listing Review Committee for a further and final review.

(3)  Subject to rule 2B.16, the decision of the Listing Division or the Listing Committee, as the case may be, shall be conclusive and binding on the listed issuer if the listed issuer does not seek review of the decision of the Listing Division or the Listing Committee, as the case may be; otherwise, the decision of the Listing Review Committee shall be conclusive and binding on the listed issuer.

50.  Rule 2A.37K of the Listing Rules provides for the function and powers of the Listing Review Committee as being the review body in respect of any decision of the Listing Committee.

51.  Rule 2A.37L provides for the conduct of meetings of the Listing Review Committee as follows:

The Listing Review Committee shall meet for the despatch of business, adjourn and otherwise regulate its meetings in accordance with the provisions of the rules made by the Board for this purpose, including rules governing members’ conflicts of interest, subject to the provisions of this rule 2A.37L. The quorum necessary for the transaction of any business of the Listing Review Committee shall be five members present in person. All review hearings shall be heard de novo. The Listing Review Committee will rehear the case and decide it afresh, after considering all the relevant evidence and arguments made at the earlier hearings and any additional evidence or information which may be adduced in accordance with the procedures and regulations for review hearings and any directions made by the Listing Review Committee. The Listing Review Committee will consider the decision of the previous decision making body and state the reasons for its own decision. The Listing Review Committee will also address the prior decision (and the basis therefore) in its own decision, whether it is upholding or overturning that prior decision.

52.  The Applicant’s Form 86 also deals with the Listing Rules and the Guidance Letter relating to matters of Delisting. Reference is made to Rule 6.01A of the Listing Rules, which provides that:

Without prejudice to its powers 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.

53.  The Guidance Letter on Long Suspension and Delisting (GL95-18) provides for the discretion of the Listing Committee to grant extension of time:

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.

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.

54.  From these various rules, it is patently clear that following a decision of the Listing Committee it is possible for a person, such as the Applicant, who is aggrieved by that decision to seek a review by the Listing Review Committee, where:

(1)  the review by the Listing Review Committee is a hearing de novo;

(2)  the Applicant will have the opportunity to make full written and oral submissions before the Listing Review Committee;

(3)  pending the final determination of the matter by the Listing Review Committee, the Listing Committee’s decision to delist the Applicant will be suspended;

(4)  so that, if the Applicant decides to pursue a review before the Listing Review Committee, the Listing Committee’s decision will have no real effect on the Applicant;

(5)  because the Listing Committee’s decision will be superseded by whatever ruling the Listing Review Committee makes.

55.  It is against that background that the Exchange submits that the judicial review application ought to be dismissed, because the Applicant has failed to exhaust an alternative remedy, which is not only effective but in fact addresses the Applicant’s complaints on procedural fairness completely, so as to render the current challenge moot and academic. The Exchange also submits that there is nothing unfair in reserving the right of an issuer to make submissions, oral and written, only at the review stage; the Listing Committee deals with matters on an informal and non-adversarial basis, and the Listing Review Committee conducts a formal adversarial hearing. The two-tier decision-making process (with one level of review) was one adopted and implemented by the Exchange after an overhaul of its delisting regime in August 2018, following extensive public consultation in 2017.

E.   Failure to Exhaust Alternative Remedy is Determinative

56.  It is trite that, generally speaking, an applicant for judicial review must first exhaust all alternative remedies before seeking the Court’s intervention by way of judicial review.

57.  It is only when there are “exceptional circumstances” requiring immediate intervention by the Court that an aggrieved party should not be told to wait and see what happens before the appellate or review tribunal.  It is only if, taking the procedure as a whole (comprising both the original and appellate/review process), that the aggrieved party has not been fairly treated that he would have a remedy in judicial review: see Stock Exchange of Hong Kong Limited v New World Development Co Ltd (2006) 9 HKCFAR 234 at§§114-115, 127-130.

58.  Indeed, it is also trite that the supervisory nature of the Court’s judicial review jurisdiction is not meant for the purpose of micro-managing the activities of subordinate tribunals or administrative decision-makers.  It should hardly ever be exercised to review decisions that go only to procedure rather than to the end result.  It also often happens that the effect of questionable decisions made at an intermediate stage of a process are dissipated or overtaken by subsequent developments, and turn out to have little or no impact by the time the final stage is reached.

59.  Applying those principles to this case, it can be seen that the Applicant is actively pursuing an alternative remedy at the same time as challenging the intermediate decision, which I think – subject to the suggestion that the procedure as a whole (both original and appellate/review) is systemically unfair – is an abuse.

60.  In this case, the complaint about the lack of opportunity to make oral representations before a delisting decision is made is wholly satisfied by the hearing before the Listing Review Committee which allows the Applicant to make such oral submissions, following the exchange of written submissions on a timetable already set.  The review hearing before the Listing Review Committee will render what had happened at the Listing Committee stage academic and irrelevant.  The Applicant will have the full opportunity to make both oral and written submissions prior to any final decision being made by the Exchange on delisting or not.  Again, subject only to the systemic unfairness challenge, there can be no prejudice to the Applicant to require it to wait until the conclusion of its requested review before the Listing Review Committee.  As the rules make clear, the decision of the Listing Committee will be entirely overtaken by the decision of the Listing Review Committee whatever that latter decision is.

F.   Proposed Grounds of Review

61.  However, in the Form 86, the Applicant asserts the two broad grounds of review already set out above.

62.  The first ground is of an alleged illegality in that it is said that, when making the Oral Hearing Decision, the Listing Committee misdirected itself in law by not having regard to its duty to act fairly under common law.  The second ground is that the Extension of Time Decision and the Cancellation Decision are tainted by procedural impropriety in that the Applicant was not afforded the opportunity to make “worthwhile representation”.

63.  In my view, both proposed grounds of review have no merit.

64.  Of course, there can be no dispute that it is now settled law that an administrative or executive authority entrusted with the exercise of discretion must direct itself properly in law.  There is also a presumption that an administrative power will be exercised in a manner which is fair in all the circumstances.  As the Applicant itself identifies, by reference to R v Army Board of the Defence Council, ex p Anderson [1992] QB 169 at 187G-188B, provided that decision-making bodies achieve the degree of fairness appropriate to their task, it is for them to decide how they will proceed and there is no rule that fairness always requires an oral hearing.

65.  I also accept that there may be some circumstances where questions arise in the mind of the decision-maker, which may have to be dealt with orally.  Certainly, I am not one who downplays the benefits and importance of succinct, pinpoint and cogent oral submissions in any forum.  But, whether an oral hearing is necessary will depend on the subject-matter and circumstances of the particular case and upon the nature of the decision to be made.

66.  In this case, the Applicant correctly accepts that the Listing Rules do not mandate the decision-making process of the Listing Committee to be subject to a right of the issuer to make submissions. There is, therefore no question of the Exchange having in any way acted illegally or in contravention of the Listing Rules.  It is also important to remember that the Applicant is given a full opportunity to make oral and written submissions, albeit at the review stage before the Listing Review Committee which conducts a de novo hearing, dealing with matters afresh and making its own determination.

67.  Whether fairness requires an oral hearing before the Listing Committee is not to be determined by reference to whether the Applicant itself saw the need to be heard orally.  Therefore, pointing to the “unequivocal” demand by Yu Ming on behalf of the Applicant that there should be an oral hearing is beside the point.

68.  I also accept the submission from Mr Dawes that the Listing Rules are intended to be administered primarily by the Listing Committee, which is made up of investors and representatives of listed companies and market practitioners, who are well-placed with their relevant knowledge and experience to determine currently acceptable standards in the marketplace.  Those members act on a part-time basis and meet only periodically to make decisions.  The day-to-day administration is delegated to the Listing Division, which is made up of full-time employees of the Exchange.  But in certain cases of significant decision, such as cancellation of listing decisions, the Listing Committee has reserved to itself the relevant power (see above).

69.  In exercising that power, the Listing Committee considers and decides matters administratively, without conducting an adversarial hearing.  This assists in promoting an effective and expeditious determination of whether a listing should be cancelled.  As Mr Dawes submits, the “over-legalisation” of the Listing Committee’s process, with oral hearings held in respect of every delisting decision, would likely make the existing decision-making process unworkable.  It would also undermine many of the Exchange’s objectives unworkable by substantially lengthening and complicating proceedings.  Those matters were taken into account in adopting the current system.

70.  But, the non-adversarial and administrative nature of the Listing Committee’s process is subject to the safeguard of a de novo adversarial hearing on the merits by the Listing Review Committee.  Should the listed issuer, such as the Applicant, require such a form of hearing, it may request one.

71.  That request will be met by the review process. There will be an oral hearing, and the listed issuer is entitled to attend the hearing and make written and oral submissions.  Contrary to the Applicant’s suggestion, it is impossible to describe the opportunity to make such submissions as somehow preventing the listed issuer from making “worthwhile representations” or “effective representations”.  Whatever decision is made by the Listing Review Committee will supersede the previous decision by the Listing Committee.

72.  I agree that the two-tier approach (with one level of review) strikes a fair balance between administrative efficiency and fairness, as was at the heart of the public consultation leading to the revision of the review structure of Listing Committee Decisions.

73.  Reference can be made to chapters 2 and 3 of the Consultation Paper issued by the Exchange entitled ‘Review Structure in relation to Listing Committee Decisions’.  There, it was expressly accepted that there is not necessarily a “correct” answer as regards whether there should be one level or two levels of review in respect of decisions of material significance (such as cancellation decisions) made by the Listing Committee. But, after carefully weighing up the competing considerations, the Exchange proposed to revise the previous review structure so that decisions of material significance made by the Listing Committee would be subject to only one level of review.  That proposal was allied with the proposal to establish an independent review committee consisting entirely of outside market participants with no current Listing Community members or representatives of the SFC or the Exchange.

74.  Those proposals were made, and later adopted, in the context of the point explained that the Listing Rules confer a significant degree of discretion upon the Exchange and are intended to be flexible, and to allow the Exchange to exercise its own judgment in respect of matters such as suitability for listing and cancellation of listing.  It was noted, under the previous procedure most of the decisions made by the Listing Committee, other than decisions of material significance, were subject to only one level of review.  To adopt a one-level review structure for decisions of material significance (including cancellation decisions) would result in a more streamlined process and in more timely regulatory outcomes than a two-level review structure.  The composition of the new Listing Review Committee would ensure a proper independent review, taking the form of a hearing de novo. It was stated that the Listing Review Committee would rehear the case and decide it afresh, after considering all the relevant evidence and arguments made at the earlier hearings and any additional evidence or information at used for the purposes of the review.  The Listing Review Committee would consider the decision of the previous decision making body and state the reasons for its own decision, and would also address the prior decision (and the basis therefor) in its own decision, whether upholding or overturning the prior decision.  As seen above, these points were taken into the Rules.

75.  I also do not accept that the Listing Committee’s refusal of the Extension of Time Request suffered from any facets of procedural irregularity.  But, in any event, the review process before the Listing Review Committee will cure any defect as might have existed.  If there are, as suggested, unresolved factual issues which warrant further exploration and clarification through oral submission, that will occur in the de novo hearing before the Listing Review Committee.  The Applicant is fully cognisant of the concerns of the Listing Committee, and can deal with them, with the benefit of oral submission, after the directed exchange of two rounds of written submissions, and with the presence at a hearing which will provide the further opportunity to respond or clarify.

G.  No Systemic Unfairness

76.  It is in response to the recognised problem that there is an alternative remedy that the Applicant raised the suggestion that there is a systemic procedural unfairness in the way the Listing Committee handles delisting decisions.  Purportedly recognising that the Listing Review Committee is one which would normally be categorised as a de novo hearing, the Applicant has argued in its Form 86 that such a hearing ought not to be regarded as a “re-hearing” in the circumstances that the initial decision of the Listing Committee was not based on a “hearing” of the applicant at all, but merely a hearing of the Listing Department’s presentation without the affected Applicant being heard or allowed to be present.

77.  The Applicant implicitly accepts that the hearing before the Listing Review Committee is a “meaningful hearing”, but complains that that hearing is the only prospect of a meaningful hearing. Hence, the suggestion is made that the Applicant will effectively be deprived of the opportunity of an appeal, as envisaged by the Listing Rules, since the review hearing will in reality be its first instance hearing.  So, it is argued, the breaches of procedural fairness before the Listing Committee could not be cured by a review by the Listing Review Committee.  That is, of course, factually incorrect, as I have held.

78.  But, even also leaving aside the illogic in that last proposition, I have already found that there was no breach of procedural fairness in the context of the delisting procedure as a whole.  In any event, there is nothing inherently unfair for a listed issuer to have one round of adversarial arguments before the Exchange, in the context of a review of a previous administrative decision.  Whilst fairness may require a person adversely affected by a decision to have an opportunity to make representations before the decision is taken – so as to seek to procure a more favourable result, or to overturn a previously less favourable result – that is exactly the function of the de novo hearing before the Listing Review Committee.

79.  Fairness does not require a public body to provide two rounds of adversarial hearings, and there is nothing to support the Applicant’s bare suggestion that it is somehow entitled to two adversarial hearings before the Exchange.  What it is entitled to is an overall fair process before it is (adversely) affected by a decision which would be put into effect, in this case the Cancellation Decision.  As I have held, the two-tier process (including the level of review) plainly meets that requirement.

80.  It is the Exchange which is tasked with making relevant decisions such as the Cancellation Decision.  Of course, if the Listing Review Committee were to make a decision in breach of administrative law requirements for fairness and procedural propriety, such decision might be amenable to judicial review.  Whilst the Court is not tasked with the merits of decisions such as the Cancellation Decision, it remains open to act in a supervisory role to ensure the integrity of the decision-making process.

81.  But, I firmly reject the Applicant’s suggestion that there is a systemic procedural unfairness in the way in which the Exchange handles delisting decisions.

H.  The Result

82.  It was for the above reasons that: (1) I dismissed the Applicant’s application for leave to discontinue its application for leave to apply for judicial review; and (2) I dismissed the Applicant’s application for leave to apply for judicial review.

I.     Costs

83.  In his submissions relating to the application for leave to discontinue, Mr Wong suggested that the costs of the proceedings up to 7 July 2020 should be paid by the Applicant to the Exchange, to be taxed if not agreed, but the costs thereafter (including the costs of the summons seeking leave to discontinue) should be paid by the Exchange to the Applicant, to be taxed if not agreed.

84.  Obviously, in the light of my above decisions, that would not be an appropriate exercise of the discretion on costs.

85.  Instead, it seems to me in the exercise of my discretion that costs should simply follow the event.  Hence, it is for the Applicant to pay to the Exchange its costs of the proceedings (including those costs attributable to the summons seeking leave to discontinue), to be taxed if not agreed, and with certificate for two Counsel.  I so order, but on a nisi basis.  The costs order will become absolute if no variation is sought within 14 days.