WONG SIN HUA FELIX v. THE INSIDER DEALING TRIBUNAL

CACV 96/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 96 OF 2001

(ON APPEAL FROM HCAL NO. 124 OF 1999)

____________________

____________________

____________________

J U D G M E N T

____________________

Hon Rogers VP:

1. This is an appeal from a judgment of Keith JA, sitting as an additional judge of the Court of First Instance, given on 22 December 2000. The matter before the judge was an application to quash a decision of the Insider Dealing Tribunal given on 24 September 1999. That decision was that the evidence taken by the Tribunal in hearings of an inquiry subsists uncontaminated by the wrongful, unfair and/or unlawful procedures it had adopted throughout the course of the Inquiry, which evidence can be used, relied upon and/or revisited by the Tribunal for the purpose of determining whether or not sections 26A(5)(c) or (d) of the Ordinance applies to the applicant. In relation to that decision a declaration is sought that the evidence was contaminated by the illegal, unfair and/or unlawful procedures and for costs.

Background

2. An inquiry was ordered to be held under the Securities (Insider Dealing) Ordinance, Cap. 395 ("the Ordinance") to inquire into dealings in the shares of CNPC (Hong Kong) Limited (formerly Paragon Holdings Limited) between March and May 1993. The Tribunal consisted of a High Court judge, Mr Justice Yam, and two lay members. The present applicant, Mr Wong Sin Hua Felix had been at the centre of the complaints and there is no question but that much of the inquiry centred upon whether he personally had been culpable of insider dealing.

3. The first public sitting of the Tribunal was held on 8 February 1996. Altogether the Tribunal sat on 74 different days up until the middle of August 1996. There was one further public sitting on 25 November 1996. A draft report was sent to the Financial Secretary on 3 June 1997. That document was not a report which complied with the provisions of section 16(3) of the Ordinance since it did not contain any calculations of the profit gained as a result of insider dealing. As a result, as was pointed out by the Court of Appeal in January 1999, the Tribunal never completed its task.

4. In addition to the present applicant, amongst other persons whose activities were the subject of some scrutiny by the Tribunal were Dato Tan Leung Min and Tan Fo King. These persons were at all times resident in Malaysia. In circumstances which are unnecessary to consider in this case, prosecution was brought against Dato Tan Leung Min in the Magistrate's Court in relation to alleged offences connected with the Tribunal's work. The prosecution was unsuccessful. In the course of the prosecution it came to light that there had been considerable involvement of the counsel to the Tribunal in the decision making process. Following that revelation, judicial review proceedings were taken by Dato Tan Leung Min and Tan Fo King. Those proceedings were heard before Mr Justice Sears in March 1998. In the course of those proceedings, the Notes of a large number of meetings between the Tribunal and the counsel were eventually disclosed. Sears J referred to these as secret meetings because everybody else concerned in the inquiry had been unaware of them.

5. In the judgment handed down on 1 April 1998, Sears J expressed his general conclusions in the following terms:

"2. After the public hearing began, the Chairman adopted a procedure deliberately designed to exclude the public and parties from important decisions and discussions relating to the inquiry.

3. The Chairman used the counsel to the Tribunal to such an extent that they became part of the Tribunal.

4. Up to the time when the public hearing substantially finished in August 1996, he was encouraging counsel to draft the report.

5. From the conclusion of the public hearings in August 1996, the Tribunal received evidence which was never disclosed to the parties and he secretly evaluated the evidence with counsel until the end of the year.

6. When the Tribunal began to write the report, it secretly received comments from counsel and evidence from some parties.

7. The Tribunal in effect conducted an inquiry which breached the basic rules of fairness and openness and although the Chairman was warned about his unusual procedures, he nevertheless continued with them."

6. Although the present applicant was not a party to those judicial review proceedings, matters relating to the present applicant were referred to by Sears J during the course of his judgment. For example on page 13A-H Sears J referred to a secret meeting held on 25 March 1996 between the Tribunal and its counsel which was recorded in the relevant Note as follows:

"The Chairman found the opening statement of counsel representing Mr WONG startling in relation to the argument that any price sensitive information about the take-over of Paragon by CNPC was generated by Mr WONG, and was therefore not insider dealing. Mr Davies would write a short analysis to the Chairman pointing out the fallacy of the argument."

It is of interest that the Notes of the same meeting contained the following paragraph immediately preceding that:

"Mr Davies (the Tribunal counsel) said that expert evidence from the Hong Kong Stock Exchange was in favour of Mr Felix WONG. A copy of the evidence would be placed before the Chairman and Members this afternoon. The Chairman said that he would give a gist of the ruling the following day. Full rationale of the ruling would be explained in the Tribunal report."

7. Sears J referred to the Notes of the meeting of 17 May which commenced with the statement that it was a "mid-trial" assessment of the evidence against Mr Felix Wong. The Tribunal counsel was asked for a summary of the evidence. This, indeed, was prior to Mr Wong giving evidence. At that meeting there was considerable discussion about the evidence relating to the present applicant.

8. It appears that the present applicant's evidence commenced on about 10 June. During the course of his evidence there were secret meetings between the Tribunal and its counsel at which Mr Wong's evidence was discussed. For example, on 1 July 1996 there was discussion as to cross-examination of Mr Wong. The Notes of a further secret meeting on 3 July commenced "The chairman said that the purpose of the meeting was to discuss whether there were any other areas which the Tribunal had to make inquiries before or during cross-examination". Later in the Notes it is stated - "The Tribunal discussed at length the role of Mr Felix WONG in the whole issue of the takeover of Paragon. Mr Wong made a profit out of the selling of Paragon shares. He then invested in Hong Kong properties and suffered a heavy loss." On 9 August, at another secret meeting the Tribunal and its counsel discussed whether tapes should be played to Mr Wong with regard to putting discrepancies in tapes to him.

9. It is recorded that at the secret meeting on 19 August 1996,

"The Tribunal discussed whether Mr Felix WONG was connected with Paragon within the definition of section 4, and whether he was within section 4(1)(c)(i) by reason of his business relationship with Sonhan and Paragon. The Tribunal went to considerable lengths to determine how Mr Felix WONG, Sonhan, Paragon and CNPC fitted into sections 4 and 9 of the Ordinance. Counsel would consider whether the takeover approach was made by Sonhan, and how Mr Felix WONG fitted under connected persons and section 9 of the Ordinance."

The following paragraph of the notes refers to a discussion between the Tribunal counsel and the chairman of the Tribunal as to Mr Wong's actions.

10. The appeal to the Court of Appeal in respect of Sears J's judgment was heard in December 1998 and judgment was handed down on 27 January 1999. The appeal was dismissed.

11. As recorded in the judgment below the present applicant applied to the Tribunal for his costs of the inquiry under section 26A of the Ordinance. As a preliminary matter the applicant raised objection to the Tribunal making use of evidence which had been taken by the Tribunal in the course of the inquiry. Following that objection, the Tribunal came to the conclusion that it could use the evidence.

12. When the present application came before Keith JA he dismissed it. Although the decision was some three months after the conclusion of the hearing, the judge below was at pains to state that he regarded the decision as simple. He explained that in the course of preparing his judgment not only had he had to cope with his judicial work but he had taken himself on a fruitless inquiry as to the legal history of certiorari proceedings.

13. The crux of the judge's decision was that although the evidence had been evaluated in a manner which was procedurally unfair and which undermined the findings of fact made on the evidence, the "raw data", constituted by the evidence, survived the quashing of the findings of fact which the Tribunal had made. The judge held that the evidence, in its "unprocessed and pristine form" remained. The judge concluded that since the Tribunal had not been asked to recuse itself it was accepted that its ability to evaluate the evidence fairly for the purpose of deciding whether the applicant had brought the inquiry on himself had not been compromised. He held that "not only was the evidence itself not contaminated, but the Tribunal's ability to evaluate the evidence fairly for the purpose of deciding whether the applicant had brought the inquiry on himself was accepted as not having been undermined."

14. I should observe at the outset that Mr McCoy SC, on behalf of the applicant, stated, very fairly, that although he had not requested the Tribunal to recuse itself he had objected to the Tribunal making use of any of the evidence. He was, as he pointed out, in some difficulties having regard to the fact that it appeared that there was no alternative to the particular tribunal hearing the application for costs. It is invidious for counsel to have to ask any court to recuse itself. In the circumstances of the present case, it was particularly invidious in view of the basis upon which the original order of certiorari had been made and upheld on appeal. The manner in which the evidence had been taken and dealt with by the Tribunal had been heavily criticised. Counsel for the applicant did not need to submit to the Tribunal that it was biased against his client. Indeed, bias against the present applicant was a different matter from procedural unfairness. It was sufficient for counsel to object to the Tribunal referring to evidence in respect of the taking of which it had been so heavily criticised.

15. In my view, it is an unjustified step for the judge below to have concluded that there was no objection to the Tribunal evaluating what it referred to as "raw data", when the objection was as to any use of what seems to have been referred to as "raw data".

16. The matter does not remain there however. It is necessary first to consider briefly the provisions of the Ordinance relating to inquiries.

Inquiries under the Ordinance.

17. Section 15 empowers the Chief Executive (formerly the Governor) to appoint a Tribunal. Section 16(1) allows the Financial Secretary to require the Tribunal to inquire into insider dealing in relation to a listed corporation. Subsection (3) reads:

"The object of an inquiry shall be to determine at the conclusion of the inquiry or as soon as is reasonably practicable thereafter, within the terms of reference of the inquiry as defined under subsection (2) -

(a) whether insider dealing in relation to a listed corporation has taken place;

(b) the identity of every insider dealer; and

(c) the amount of any profit gained or loss avoided as a result of the insider dealing."

18. Section 17 of the Ordinance gives the Tribunal power "for the purpose of an inquiry" to receive material whether by way of oral evidence or written statements, documents or otherwise notwithstanding that the material would not be admissible in evidence in a court of law and it provides for the administration of oaths.

19. Section 22 of the Ordinance provides that:

"(1) Where an inquiry is instituted under section 16 the Tribunal shall conduct the inquiry in accordance with this Ordinance, and shall prepare and issue a written report thereon.

(2) A report prepared and issued by the Tribunal under this section shall contain the reasons for its determinations under section 16(3) and (4) and the reasons for any order made under section 23, 24(1) or 27."

20. Section 23 provides for various penalties which may be ordered by the Tribunal. Subsection (1) reads:

"(1) At the conclusion of an inquiry or as soon as is reasonably practicable thereafter, where a person has been identified in a determination under section 16(3) or in a written report prepared under section 22(1) as an insider dealer, the Tribunal may in respect of such person make any or all of the following orders-

(a) an order that that person shall not, without the leave of the Court of First Instance, be a director or a liquidator or a receiver or manager of the property of a listed company or any other specified company or in any way, whether directly or indirectly, be concerned or take part in the management of a listed company or any other specified company for such period (not exceeding 5 years) as may be specified in the order;

(b) an order that that person pay to the Government an amount not exceeding the amount of any profit gained or loss avoided by that person as a result of the insider dealing;

(d) an order imposing on that person a penalty of an amount not exceeding '300%' 3 times the amount of any profit gained or loss avoided by any person as a result of the insider dealing."

21. Under section 26A it is provided:

"(1) Subject to subsection (5), at the conclusion of an inquiry or as soon as reasonably practicable thereafter, the Tribunal may award to-

(a) any witness;

(b) any person whose conduct is, in whole or in part, the subject of the inquiry,

such sum as it thinks fit in respect of the costs reasonably incurred by him in relation to the inquiry."

Reference to the intervening subsections may be omitted. Subsection (5) reads:

"(5) This section shall not apply to any person referred to in subsection (1) who is-

(a) a person who has been identified as an insider dealer in a determination under section 16(3);

(b) an officer of a corporation who has been identified as such officer in a determination under section 16(4);

(c) a person who and in respect of whom it appears to the Tribunal has by his own acts or omissions caused or brought about (whether wholly or in part) the Tribunal to inquire into his conduct subsequent to the institution of the inquiry under section 16 or during the course of that inquiry; or

(d) any other person who and in respect of whom it appears to the Tribunal has by his own acts or omissions caused or brought about (whether wholly or in part) the institution of the inquiry under section 16."

The effect of the statutory provisions with particular reference to this case

22. In the first place, it seems to me that even though the inquiry may have been concluded, there has never been any determination as required by section 16(3). As stated by Mortimer VP on page 2 of the judgment dated 27 January 1999:

"The report was later said by the Tribunal to be only a draft because of the absence of the calculation of profits. In the event the Tribunal never completed its task."

23. An indication that the inquiry was concluded is that the order of certiorari has been made. It is clear from the Order of Sears J that if the allegations of insider dealing are to be inquired into any further a new Tribunal would have to be appointed to conduct afresh the inquiry: see paragraph 2 of his order.

24. In my view, it is clear from the scheme of the Ordinance and the sections to which I have referred, that it was intended that the steps would be that there would be an inquiry at the conclusion of which, or thereafter, there would be the relevant determinations followed by a report giving reasons. The determinations are therefore not part of the inquiry, as the term is used in the Ordinance, but follow it. Any order made in respect of penalties and specifically any order made in respect of costs would be on the basis of the determination of the Tribunal under section 16(3) which are set out in its report under section 22 which is required to contain its reasons.

25. Since the inquiry has concluded and the applicant was a person falling within section 26A(1)(b) he could apply for costs. Since there had been no determination under section 16(3) the applicant was not debarred under section 26A(5)(a) from seeking costs.

26. Keith JA came to the conclusion that the evidence which had been before the Tribunal could be revisited to determine whether sub-sections 26A(5)(c) or (d) applied to the applicant. A crucial part of his judgment was in the following paragraph:

"In my opinion, this argument blurs the critical distinction between the evidence on the one hand and the evaluation of it on the other. Once the evaluation of the evidence is taken out of the equation, what remains, in its unprocessed and pristine form, is the evidence itself. What was contaminated by the submissions made on the evidence in private by counsel to the Tribunal was not the evidence, but the Tribunal's evaluation of it. The evidence was still what it had always been: the testimony of witnesses about the events to which their evidence related. That testimony remained the same. Where the springs of justice became polluted was after that evidence had been given and in the course of that testimony being evaluated."

27. With all due respect, I regret I cannot agree with what he said or his approach. A court or other tribunal takes evidence. The evidence taking process is all important. If the evidence is written, e.g. on affidavit, specific caution is exercised; a court is most wary of disbelieving a written statement by a witness. Hence the importance of oral testimony. Seeing and hearing the witnesses is an integral part of the fact finding process. To suggest that evidence which has been given orally (in this case over many days) exists in its raw form and can then be "processed" or "evaluated" some time later brings the spectre of a mechanical approach to the fact finding process. A highly important part of the fact finding process is the assessment which the fact finder makes of the evidence at the time it is given and of the way it is given. Sometimes, for example a witness may say things that the court does not accept, but that does not in the particular circumstances affect the overall credibility. The court may have seen that the witness was tired or confused at the time. Any number of other factors may come into play.

28. In the present case, the applicant gave evidence for some considerable time. This court has not seen a transcript of his evidence. It can hardly be supposed, however, that he was giving evidence otherwise than with a view to demonstrating his innocence of insider dealing. It is clear from the extracts of the Notes of the secret meetings to which I have referred that the process of assessing his evidence was going on whilst he was giving his evidence. The submissions of his counsel clearly did not find immediate favour with the Tribunal. It would be wholly unrealistic to suppose that the same Tribunal which had originally evaluated the evidence gathered in the course of an inquiry with a view to determining whether the applicant was an insider dealer, could now evaluate the evidence again uninfluenced by the earlier evaluation. That first process has been held to have been flawed and unfair to the extent that anything resulting from it had to be set aside. The Tribunal was not permitted to redo the task of evaluation. In the light of that decision, it would be absurd to hold that it could re-evaluate the same evidence for a similar task.

29. Neither would it be possible for a differently constituted Tribunal to consider the matter using the evidence gathered by the original Tribunal. It appears to me to be impossible for the applicant's evidence to be treated as "raw data" which can now be processed or evaluated, almost as if it was to inputted into a computer. To attempt to do so would be to deny the applicant the fundamental right of having the evidence, in particular his evidence, properly considered by the Tribunal before which it was given.

30. It is true that history cannot be rewritten and it is clear that evidence was given. Anybody who gave false evidence might be prosecuted for perjury. But that does not mean that the evidence can be used now to determine the matters which the Tribunal had to decide. Sears J. set aside all decisions and findings of the Tribunal because the procedure, in particular the process of receiving evidence, had been fundamentally flawed and unfair. If the conduct of an inquiry had simply been to "process" "raw data" there would have been no need for an order to have been made in the terms of paragraph 2 of the Order of Sears J. That part of the Order made it abundantly clear that if there were to be any determination of whether there had been insider dealing there would have to be a fresh inquiry.

31. To put the point in another way, if a Tribunal could treat the evidence as raw data for the purpose of determining the matters under section 26A(5), there would be nothing to prevent it conducting another inquiry by "processing" the same "raw data" and making another determination thereon.

32. It was suggested that the Tribunal could receive fresh evidence and, in particular, allow the applicant to give or put in evidence relevant to whether he fell within section 26A(5)(c) or (d). This, it was said, would counter any prejudice that might otherwise have been caused. I do not see that it is possible, under the terms of the Ordinance, to hold some sort of mini-inquiry to determine whether the applicant comes within the terms of section 26A(5) (c) or (d)

33. The scheme of the Ordinance is that the inquiry is under Section 16. The object of the inquiry is to determine the matters set out in section 16(3). For present purposes the important points in relation to those objects are whether insider dealing has taken place and the identity of the insider dealers. That determination is only to be made "at the conclusion of the inquiry or as soon as is reasonably practicable thereafter."

34. The inquiry is followed by the "written report thereon" under section 22. Section 22(2) requires that the report shall give the reasons for any determination under section 16(3). In addition the report must contain the reasons for any order made under sections 23, 24(1) or 27.

35. As noted above, section 23 deals with the question of orders that may be made against insider dealers. Again, such orders can only be made "at the conclusion of the inquiry or as soon as is reasonably practicable thereafter." The same is true in respect of an order for costs which can be made under section 27 against a person identified as an insider dealer. By a process of reasoning the same is true in respect of section 24(1). That relates to orders made against officers of corporations. Again that can only be made after a determination under section 16(3) or a report under section 22. As already noted the latter is consequent upon the former. The former follows the conclusion of an inquiry.

36. Although section 22(2) does not require that the report shall contain reasons for an award of costs under section 26A, that latter section is, again, also subject to the condition that the award is to be made "at the conclusion of the inquiry or as soon as is reasonably practicable thereafter."

37. Indeed, in the normal way, any court or tribunal would only make a finding as to the non-eligibility of a person in relation to costs after it has completed its determination of the main matters before it. It would make its determination in the light of whatever findings it came to. To do otherwise would be to risk making an inconsistent or perverse decision. Subsection (5)(a) and (b) could only be considered in the light of determinations under section 16(3) and (4). There would be no scope there for further evidence to be given or considered in addition to any evidence that was before the Tribunal. Subsection (5)(c) would relate to matters that the Tribunal was aware of from its own knowledge, as a result of conducting the inquiry.

38. Similarly, any decision as to whether a person has by his own acts or omissions caused or brought about the institution of the inquiry under section 16 should be consistent with any findings which the Tribunal has made in the course of its inquiry. This must be so for a number of reasons. In the first place it is the normal way of determining issues relating to costs. The particular provision of section 26A(5)(d) is reminiscent of the basis upon which costs are awarded or denied to persons acquitted of criminal offences. The question the Court or tribunal asks itself is, having considered the evidence and decided to acquit the party concerned of a finding of culpability or responsibility, whether the circumstances were such that the party concerned had so conducted itself as to bring about the proceedings. In the second place, and really in reinforcement of the first point, the statutory provision only comes into play at the conclusion of the inquiry or thereafter. In the third place, the powers of the Tribunal with regard to receiving and taking evidence under section 17 of the Ordinance and obtaining information under section 18 of the Ordinance are only exercisable "for the purpose of an inquiry under this Ordinance" and to "assist the conduct of an inquiry". The word inquiry when used in these sections has a clear and definite meaning, it is an inquiry under section 16. The Tribunal has no power, therefore, to conduct some sort of mini- inquiry to determine the applicability of section 26A(5) (c) or (d).

39. As has already been said, the course taken by the Tribunal on the inquiry has been held to have been fundamentally flawed and unfair. That course resulted not only in an evaluation of the evidence but in findings that had to be set aside. I do not see that it would possible for the same Tribunal now to reach conclusions on matters akin to the original inquiry without being influenced by the conclusions to which it had previously arrived. Certainly, in my view, the appearance of fairness cannot be maintained if a Tribunal, which has been so heavily criticized for the manner in which it went about its primary task, were to attempt to adjudicate on the merits of an application, consequential on the result of the primary task, made by a party who has been a subject of the unfair treatment. In those circumstances it follows that the application under section 26 by the applicant cannot be dealt with by the original Tribunal.

40. Nor do I see that it can be correct that the applicant's application for costs should await the outcome of any further inquiry which is ordered. In the first place it is clear that a person is entitled to apply for costs at the conclusion of the relevant inquiry, not some inquiry which has been instigated subsequently because the relevant inquiry has been conducted unfairly and in a flawed manner. In the second place if an inquiry, as in this case has been so flawed that no determinations can be permitted to result from it, it seems to me to be unjust to deprive a person from applying for his wasted costs immediately, particularly when that person has not been responsible for the waste in any way.

41. In my view therefore, this appeal should be allowed. An order of certiorari should go to quash the decision of the Tribunal complained of. There should be an order nisi that the costs here and below should be in favour of the applicant.

Hon Le Pichon JA:

42. I agree with the judgment of Rogers VP and only wish to add a few observations.

43. The issue which arises is whether the evidence taken by the Tribunal in the public hearings of the inquiry subsists notwithstanding the quashing of all decisions (including findings) of the Tribunal by Sears J (whose judgment was upheld by the Court of Appeal) and that such evidence may be used by the Tribunal in determining the application by Wong Sin Hua, Felix ("the applicant") for costs and specifically, whether or not sections 26A(5)(c) or (d) of the Insider Dealing Ordinance, Cap. 395 applies to the applicant. The Tribunal's discretion to award costs under section 26A(1) cannot be exercised in favour of a person falling within subsection (5). Paragraphs (c) and (d) of subsection (5) relates to a person who by his own acts or omissions has caused or brought about the Tribunal to inquire into his conduct. The judgments of Sears J and the Court of Appeal are reported at [1998] 1 HKLRD 630 and [1999] 2 HKC 83 respectively.

Reasons for the granting of certiorari

44. In determining the question, it is necessary to examine the reasons why certiorari was issued. Put shortly, "all decisions (including findings)" of the Tribunal were quashed because of the numerous procedural irregularities in the proceedings of the Tribunal which resulted in a substantial degree of unfairness to the persons whose conduct was the subject of the inquiry or who were implicated in the subject matter of the inquiry. Sears J found (at 635A) that the Tribunal did not hold a public inquiry as required by the Ordinance:

"... What should have been a public inquiry became instead a private and secret hearing between the Tribunal and its counsel. It was justice behind closed doors."

45. The salient features of the proceedings which resulted in that finding may be summarised as follows. A preliminary hearing was held in public on 8 February 1996. The substantive public hearing commenced some six weeks later on 25 March 1996 and took place over 73 different days. On 16 August, after public sittings on 71 different days for the substantive hearing, the inquiry was adjourned sine die. By this time, as Sears J noted, all the evidence was substantively in. Thereafter, there were only two additional public sittings, on 4 and 25 November 1996 respectively. But between 25 March and 16 August when virtually all of the evidence was being taken, the Tribunal and its counsel met in private on 15 different days. Thereafter, up to the last day of the public hearing on 25 November, there were 11 such further meetings. The private sessions held since the commencement of the substantive public hearing total over 33 hours.

46. The minutes of the meetings held in private between the Tribunal and its counsel revealed the extent of the irregularities. Sears J found (at 639 D-E) that most of the irregularities were:

"... significant and substantial as to the use of counsel and the reception of new evidence -

(1) during the taking of the evidence;

(2) after the taking of the evidence and up to the beginning of the writing of the report; and

(3) during the writing of the report."

This conclusion was upheld by the Court of Appeal.

47. Some of the irregularities may usefully be highlighted by reference to the applicant. At the private session held immediately after the first public sitting of the substantive hearing, the Chairman

"found the opening statement of counsel representing [the applicant] startling ... [Counsel to the Tribunal] would write a short analysis to the Chairman pointing out the fallacy of the argument."

On 17 May, there was a "mid-trial" assessment of the evidence against the applicant even before he began giving evidence. During the examination-in-chief of the applicant, his evidence was discussed. The Tribunal also considered "whether there were any other areas which the Tribunal had to make enquiries before ordering cross-examination". There was then a discussion as to his cross-examination. The applicant began giving evidence at public hearings on 10 June. Save for two of the hearing dates in mid-June, it would appear that his evidence occupied the other public sittings up until and including 16 August 1996 when the proceedings were adjourned sine die. The first private meeting after that took place on 19 August. That was the first of a series of meetings to discuss the "list of issues". The issues included whether the applicant was within section 4 of the Ordinance and the minutes recorded that:

"The Tribunal went to considerable lengths to determine how [the applicant] ... fitted into sections 4 and 9 of the Ordinance ..."

His evidence was again discussed "at length" at the private meeting on 22 August with the Tribunal making "major observations" on, inter alia, the applicant's evidence in respect of the management of a company in the takeover of the shares in Paragon:

"(e) [The applicant] intended and put forward a takeover proposal to CNPC."

(Although Sears J noted (at 641J) that to be an instance of a conclusion on the evidence that the Tribunal was arriving at, the Court of Appeal took a different view as will become apparent.) Further discussions on the evidence as to the applicant's involvement took place on 27, 28 and 29 August and 22 and 30 October. At the private sessions after the applicant's evidence had concluded, the Tribunal received new evidence. As noted by Mortimer VP (at 95H), nine instances had been asserted and some had been conceded.

48. The Tribunal also adopted unusual procedures. Written submissions were exchanged between counsel for the Tribunal and counsel for the parties: no oral submissions were heard. Then at the private meeting on 7 August, it is recorded that:

"The Chairman said that he would need counsel's contribution and his assistance in writing the report in October."

As noted above, the last public hearing of the Tribunal took place at the end of November 1996 at which the Chairman stated that he would send a first draft of the report to the implicated persons and the persons likely to be criticised. In March, the first draft was sent, not to the implicated parties but, to counsel for the Tribunal "to check the accuracy of all the basic and primary facts." Suffice to say that detailed submissions were given by counsel to the Tribunal to the Chairman on the draft report sent to him for comment.

The proceedings below on the application for costs

49. On the applicant's application for his costs under section 26A of the Ordinance, the Tribunal ruled that it could use the evidence which had been given in the inquiry in determining whether sections 26A(5)(c) and (d) prevented it from awarding costs to the applicant. Keith JA (sitting as an additional judge of the Court of First Instance) dismissed the applicant's appeal against the Tribunal's ruling. He rejected the notion that the effect in law of the order of certiorari was to treat the evidence as if it had never been given. He held that there was a critical distinction between the evidence on the one hand and the evaluation of it on the other, effectively agreeing with the Chairman of the Tribunal who characterised the evidence adduced at the public hearings as "raw data", which was something that was distinct, separate and separable from the deliberation or evaluation process, such that one could be eliminated leaving the other intact.

Whether the evidence adduced at the public hearings may be used

50. In the present case, given the nature of the private meetings between the Tribunal and its counsel which took place during the period of the public hearings and at which the evidence of the witnesses was reviewed and discussed, the real question is whether the evidence given at the public hearings can still be used for the purpose of deciding whether or not the applicant had by his own acts or omissions caused or brought about the institution of the Tribunal or caused it to inquire into his conduct subsequent to or during the course of the institution of the inquiry. I am firmly of the view that on the facts of the present case, such evidence cannot be used for the purposes of section 26A(5)(c) or (d).

51. It has to be borne in mind that an inquiry is very different in nature from hostile litigation. A tribunal is charged with looking into the question whether insider dealing took place in relation to a listed corporation. It has to inquire into all the pertinent facts and circumstances in order to come to a determination. In hostile litigation, the plaintiff has to adduce evidence to prove his pleaded case. There is no question of his embarking on any fact finding mission which is part of the role of a tribunal under the Ordinance. When therefore counsel for the Tribunal met in private with the Tribunal in order to discuss and review the evidence of the applicant, such discussions would inevitably have shaped or influenced the evidence sought to be elicited and the "direction" of the inquiry. Therefore these private discussions between the Tribunal and its counsel and exchanges of views between them as to any issue in that inquiry cannot otherwise than be objectionable from the perspective of fairness and impartiality as regards the applicant: directly or indirectly, the Tribunal would have been in a position to exert some influence on counsel's conduct of the inquiry and, conversely, the Tribunal's perception of any particular issue could have been coloured by these private discussions, with counsel to the Tribunal making known his perception of the evidence. However imperceptibly and insidiously, the interaction between counsel for the Tribunal and the Tribunal at these private meetings would have had a bearing on the questions asked of the witness subsequently and the matters into which further probing was deemed appropriate or otherwise. It matters not that the Court of Appeal held (see [1999] 2 HKC at 96I - 97A) that there was no pre-judgment of issues by the Tribunal at these private meetings and that the evidence was insufficient for Sears J to have found that the Tribunal had decided some issues before the evidence was complete during some of the private meetings.

52. As noted above, between the commencement of the substantive public hearings on 25 March until 16 August 1996 when the applicant concluded his evidence, there were altogether no less than 15 private meetings. For the reasons stated above, these meetings inevitably tarnished the evidence adduced at the public hearings. The notion that in these circumstances it is permissible to regard the evidence adduced at the substantive hearings as "raw data" wholly unaffected and unconnected with the private sessions that were taking place contemporaneously is far removed from reality. As a practical matter, the record cannot be "sanitised", for example, by obliterating the discussions between the Tribunal and its counsel because the discussions evaluating the evidence and drawing preliminary conclusions therefrom are of their nature incapable of being isolated and compartmentalised in any real sense: rather, they merged into and became part and parcel of the proceedings that took place in public contemporaneously. Once that is appreciated, it will be seen that the dichotomy sought to be drawn to separate the evidence itself from the evaluation of it is wholly artificial and, in my view, intellectually unjustifiable. In the present case, the "data" i.e. the evidence given in public was neither "raw" nor "pristine": rather, it became infected by what took place in the private sessions.

53. The effect of the Tribunal's ruling upheld by the judge below is that for the purposes of deciding section 26A(5)(c) or (d), the transcript of the substantive public hearings alone would suffice. That approach is flawed. It overlooks the reason why viva voce evidence is part of our judicial process. I need say no more on this point other than that I fully agree with what has fallen from the Vice President. There is also the fact that the evidence before the Tribunal was not restricted to that adduced at the public sittings. It would appear that there were nine instances of new evidence being introduced in the private sessions. If one cannot rewrite history, equally one cannot pretend that there was no evidence other than what had been adduced at the public sittings and that the record would not be complete without them. It is simply not permissible to pick and choose parts of the proceedings for the purposes of a section 26A(5)(c) and (d) determination. Finally, the notion of making such a determination when the Tribunal's determination as to the existence of any insider dealing and who was an insider dealer had been quashed is inconsistent with the statutory framework which plainly contemplated that determinations under section 26A(5) be made in the light of all the matters that lay before the Tribunal at the completion of its inquiry.

54. I agree with Rogers VP that the evidence adduced at the public hearings cannot be used for the purposes of section 26A(5)(c) and (d), whether the determination be by the original Tribunal or by a differently constituted tribunal. Were it possible to do so, then logically, there should be no reason why a report could not be written based on that material. That, to me, is the acid test. No one has yet advocated such a course and the second paragraph of the order of Sears J makes it clear that such a determination could only be made by a fresh inquiry. Given the framework of the Ordinance, there is no scope for the holding of any mini-inquiry by adducing evidence afresh for the purposes of section 26A(5)(c) and (d).

Conclusion

55. I would allow the appeal with a costs order nisi as proposed by Rogers VP. The order of Keith JA dated 22 December 2000 should be set aside and an order of certiorari should issue to quash the ruling of the Tribunal made on 24 September 1999.

56. It would follow that the costs hearing before the Tribunal is still pending and ought to be restored for hearing as soon as practicable. In my view, it would be unfair to the applicant if that application were to be heard by the same Tribunal given the manner in which the proceedings have thus far been conducted. I agree that that application should be determined by a differently constituted tribunal. What would fall to be determined would be limited to how the discretion contained in section 26A(1) ought to be exercised, there being no question of the matters in subsection (5) of that section arising. Involving as it does the costs of an inquiry that never completed its statutory task, that had to be aborted because of irregularities in the Tribunal's proceedings which caused substantial injustice to the persons implicated including the applicant and which irregularities were not brought about by the applicant, I do not see that a differently constituted tribunal would be handicapped or disadvantaged in any way in deciding how that discretion should be exercised.

57. Finally, I would add that for the reasons given by the Vice President this applicant's costs application which is pending is not a matter that can be deferred to be dealt with by any newly constituted tribunal which might be appointed by the Financial Secretary to hold a fresh inquiry.

Hon Waung J:

58. Paragon Holding Limited ("Paragon"), now known as CNPC (Hong Kong) Ltd. was a publicly listed company in Hong Kong. In early 1993 unusual dealings in the shares of Paragon took place in a prelude to a contemplated takeover. The Appellant herein, Felix Wong was suspected as being an insider dealer in contravention of Securities (Insider Dealing) Ordinance ("Ordinance"). In late 1995 the Financial Secretary appointed an Insider Dealing Tribunal ("Tribunal") to inquire into insider dealing in relation to Paragon.

59. After a long inquiry (substantive hearings with giving of evidence took place from March to August 1996), the Tribunal determined in 1997 that Felix Wong was an insider dealer. The Report of the Tribunal ("Report") containing the said determination was sent to the Financial Secretary on 3rd June 1997.

60. But before the Report could be published, Judicial Review was applied by Dato Tan Leong Min and Tan Fo King (collectively "Tans"), two persons also identified as insider dealers in the Report. Sears, J. prohibited the publication of the Report pending the hearing of the Tans Judicial Review. By the Judgment of Mr Justice Sears dated 1st April 1998 ("Sears Judgment") upheld by the Judgment of the Court of Appeal dated 27th January 1999 ("Appeal Judgment"), the findings of the inquiry of the Tribunal were quashed on the basis that there were serious unfair procedural irregularities. After the aforesaid Judgments quashing the Tribunal findings, there was no indication from the Financial Secretary whether the inquiry into Paragon insider dealings would resume under a different division of the Insider Dealing Tribunal or that there would be no further inquiry by the Inside Dealing Tribunal into the Paragon insider dealings.

61. Felix Wong did not apply for any Judicial Review nor did he join in the said Judicial Review of Tans. Capitalizing on the success of the Tans under the aforesaid Judgments, Felix Wong applied under Section 26A of the Ordinance to the Tribunal for costs incurred by him in the inquiry. Very high costs had been incurred by Felix Wong as he was represented by a high power legal team led by Mr Ronny Tong, SC. The Tribunal has the discretion to award costs to Felix Wong under section 26A(1). The Tribunal however has no power or discretion to award costs to Felix Wong if section 26A(5)(c) or (d) is found to apply, namely that by his acts and omissions Felix Wong:-

(a) caused or brought about the institution of inquiry [section 26A(5)(d)];

(b) caused or brought about the Tribunal to inquire into his conduct subsequent to the institution of the inquiry or during the course of that inquiry [section 26A(5)(c)].

62. Objection was taken by Felix Wong to the Tribunal taking into consideration in respect of the Section 26A costs application, any material or evidence put before the Tribunal in the inquiry ("Objected Materials") and in particular to all the oral evidence adduced before the Tribunal in 1996. By the Ruling of the Tribunal dated 24th September 1999 ("Ruling") the Tribunal overruled the objection (subject to the exclusion of 9 pieces of evidence not received by the Tribunal in public hearings). Judicial Review was therefore sought by Felix Wong against that Ruling. By the Judgment dated 22nd of December 2000 ("Keith Judgment"), Keith JA (sitting as an additional Judge of the Court of First Instance) dismissed the Judicial Review brought by Felix Wong. Appeal is now brought to this Court.

63. Mr McCoy for the Appellant argued for the exclusion of the Objected Materials on various basis including that:-

(a) the whole inquiry was quashed from beginning to end by the Sears Judgment and by the Appeal Judgment;

(b) the Objected Materials before the Tribunal were quashed by the aforesaid Judgments;

(c) the Objected Materials before the Tribunal were so contaminated by the irregular procedure adopted by the Tribunal that such Objected Materials do not subsist and/or are gone and/or cannot be relied up for all purposes;

(d) the Objected Materials before the Tribunal were seriously contaminated by the irregular procedure adopted by the Tribunal that it was not possible to sever the evidence and materials contaminated from the evidence and materials uncontaminated and that therefore all the Objected Materials could not be relied upon by the Tribunal at the section 26A costs application.

Mr McCoy submits that once the Objected Materials are excluded, there would be nothing left for the Tribunal but to award costs to Felix Wong. Mr Yu for the Financial Secretary disagrees with the contentions of Mr McCoy.

64. An understanding of the statutory scheme is necessary before proper consideration can be given to the rival contentions.

Statutory scheme of the Ordinance

65. Level playing field is essential to the integrity and credibility of an international financial market. The Ordinance aims to curb dealings in securities by a person who is an insider in possession of relevant price sensitive information not available to the public. The inquiry by the Insider Dealing Tribunal is the means intended by the legislature whereby insider dealings can be exposed and the insider dealers can be properly dealt with by suitable penal orders made by the Insider Dealings Tribunal.

66. The starting point of an inquiry is the Financial Secretary receiving representation from the Securities and Futures Commission ("SFC") generally in the form of a SFC report on suspected insider dealings having taken place. Upon the Financial Secretary being satisfied that insider dealings have taken place or might have taken place, he then appoints an Insider Dealing Tribunal ("IDT") to look into the matter [section 16(1)]. But the Financial Secretary can be so satisfied under section 16(1) as result of receiving materials from all sources not just from SFC.

67. The object of the inquiry by the IDT, pursuant to section 16(3) and 16(4), is to determine at the conclusion of the inquiry:-

(a) whether insider dealing has taken place;

(b) the identity of the insider dealers and/or the identity of any culpable officer of an insider dealer corporation and;

(c) the amount of profit gained or loss avoided as result of the insider dealing.

These are the three key findings required to be made by an inquiry and I will for ease of convenience referred to these 3 key findings as "3 Key Determinations".

68. The IDT has power under section 17(a) to receive any material notwithstanding such material would not be admissible in evidence in civil or criminal proceedings in a court of law. The materials which can be received by the IDT under section 17(a) include oral evidence, written statements, documents or otherwise.

69. The power of the IDT under section 17(b) and (d) include compelling any person to give evidence on oath and produce any article, book or other document and answer questions on oath.

70. The IDT has also valuable power under section 18 to have the assistance of the SFC to obtain information required by the IDT. The powers of the SFC under section 18(2) include the right to inspect and take copies of books and documents, to obtain from any person explanations and particulars concerning books and documents etc. Section 18(6) provides for the commission of offence for non compliance with certain requirements of SFC under section 18.

71. Section 19 is a key provision and reads as follows:-

"(1) Evidence given by any person at and for the purpose of an inquiry instituted under section 16 (including any material or document received by, or produced to, the Tribunal under section 17 or any document or information furnished, produced or disclosed to the Tribunal under section 18) shall be admissible for all purposes of this Ordinance but shall, subject to subsection (2), not be admissible against that person in civil or criminal proceedings in a court of law by or against him, except where he is charged with an offence under section 18 or 20 or under Part V (Perjury) of the Crimes Ordinance (Cap. 200), or for perjury in respect of any answers given by that person to questions put to him at the inquiry.

(2) Subsection (1) shall not apply to civil proceedings in a court of law other than such proceedings arising out of the giving of evidence at an inquiry in accordance with that subsection."

72. Section 20 provides for offences when a person refuses or fails to attend to give evidence when required by the IDT or to answer truthfully and fully questions put by the IDT or to produce article, book or document when required by the IDT.

73. By section 23(1)(a), at the conclusion of the inquiry, the IDT may make an order imposing office disqualification on the identified insider dealer, prohibiting him from serving as a responsible officer (director, liquidator, receiver etc.) of any listed company.

74. By section 23(1)(b), at the conclusion of the inquiry, the IDT may make an order that the identified insider dealer shall pay to the Government an amount not exceeding the profit gained or loss avoided by that person as result of his insider dealing.

75. By section 23(1)(c), at the conclusion of the inquiry, the IDT may make an order that the identified insider dealer shall pay a fine in an amount not exceeding three times the profit gained or loss avoided by that person as result of his insider dealing. By section 24, order similar to section 23(1)(a) and (c) could be made by the IDT against a culpable officer of an insider dealer corporation.

76. By section 26A, at the conclusion of the inquiry, the IDT may order costs incurred by a witness or by a person whose conduct was subject of the inquiry to be paid by the Government. But by section 26A(5), no costs could be ordered by the Tribunal if that witness or person was either an insider dealer or culpable officer of insider dealer corporation or whose conduct brought about the inquiry or the Tribunal to inquire into his conduct.

77. By section 27, at the conclusion of the inquiry, the IDT may order any person identified as insider dealer or culpable officer of insider dealer corporation pay to the Government such sums as it thinks fit in respect of the expenses of the inquiry and investigation of his conduct or affairs.

78. By section 22(1), a written report is required to be issued by the IDT at the conclusion of the inquiry.

79. By section 22(2), it is provided that the report of the IDT shall contain (A) the reasons for its 3 Key Determinations under section 16(3) and (4) and (B) the reasons for the penalty orders of office disqualification, profit disgorgement and triple profits fine under sections 23, 24 and 27.

80. By section 15(2) and (3), it is provided that the composition of the IDT is to consist of a chairman (who must be a judge) appointed by the Chief Executive (formerly the Governor) and two other members appointed by the Financial Secretary. By Section 15(6), the IDT may be divided into more than 2 divisions. By Section 15(5), the procedural and other matters concerning the inquiry and the IDT and its sittings shall be as provided in the Schedule to the Ordinance. The Schedule provides inter alia that:-

(a) every sitting of the IDT shall be held in public unless the IDT considers it not in the interests of the public (para.14);

(b) a person implicated is entitled to be present in person and by barrister/solicitor at any sitting of the IDT (para.16) and;

(c) the IDT may appoint a legal officer/barrister/solicitor to act as counsel for the IDT (para.18) but the Schedule is silent as to the exact role which is to be played by Counsel for the Tribunal.

Judicial review does not quash evidence

81. The procedural irregularities of the inquiry in the form of various breaches of the procedural provisions of the Schedule to the Ordinance (para. 14, 16) and the misuse of counsel for the IDT appointed under para. 18 were the reasons for the quashing of the findings of the Tribunal by the Sears Judgment and the Appeal Judgment. The determination by the Tribunal that Tans were insider dealers under section 16(3) therefore was also quashed. Strictly Tans were the only beneficiaries of the Tans Judicial Review but the Financial Secretary did not seek to contend that Felix Wong could not benefit from the result of such Tans Judicial Review. But does that mean all the evidence in the inquiry were also quashed by the Judicial Review as contended by the Appellant.

82. Historically certiorari did not quash the evidence, only the result of the evaluation of the evidence in the form of findings of facts and decision based on such findings of facts. The old form of certiorari was a writ by which the King commanded the judges of any inferior court of record to certify the record of any matter in their court and to send it to the King's court to be examined. The evidence would not be part of the record so sent up. Lord Denning described the old procedure in R v Northumberland Compensation Appeal Tribunal ex parte Shaw [1952] 1 K.B. 338 at page 352-3 thus:

"... Certiorari is only available to quash a decision for error of law if the error appears on the face of the record. What then is the record? It has been said to consist of all those documents which are kept by the tribunal for a permanent memorial and testimony of their proceedings ... It appears that the Court of King's Bench always insisted that the record should contain, or recite, the document or information which initiated the proceedings and thus gave the tribunal its jurisdiction; and also the document which contained their adjudication. ... The record had also to set out the adjudication, but it was never necessary to set out the reasons nor the evidence, save in the case of convictions. Following these cases, I think the record must contain at least the document which initiates the proceedings; the pleadings, if any; and the adjudication; but not the evidence, nor the reasons, unless the tribunal chooses to incorporate them. If the tribunal does state its reasons, and those reasons are wrong in law, certiorari lies to quash the decision."

83. Certiorari therefore did not extend to quashing the evidence of the inferior court and despite the wide submission made by Mr McCoy no case has been cited to show that it was the practice of certiorari or of modern Judicial Review to quash the evidence as opposed to quashing the findings of facts and the determination or decision complained of. The Appellant therefore started with a position of Judicial Reviews not quashing the evidence. The question then is did the Sears Judgment and the Appeal Judgment depart from this principle.

Sears & appeal judgments not quashed evidence

84. In the Judicial Review before Sears, J. and in the subsequent appeal to the Court of Appeal, the Courts were not asked to consider the quashing of evidence in the inquiry and their judgments and orders did not relate to any question of quashing the evidence or even tainting of evidence. The quality of evidence or the survival of the evidence simply did not feature in the Sears Judgment and in the Appeal Judgment.

85. The Sears Judgment made specific references to quashing the findings of facts. At page 542, this was said "I must not permit the findings of the Tribunal to stand. I therefore quash them ... but essentially I quash all the findings of the report given by the Tribunal." There was simply no reference at all in the Sears Judgment to quashing evidence or quashing the inquiry.

86. The Appeal Judgment again referred only to quashing the findings of the Tribunal. At page 560, there was first reference to "The issue for our determination is whether the judge was right to quash the findings ..." and then later down the page there was reference to Mr Ma submitting that "the judge was wrong to quash the findings ...". The conclusion of Mortimer V-P at page 564 is therefore "the judge's conclusion was justified as was his order to quash the Tribunal's findings." Again there was simply no reference in the Appeal Judgment to quashing the evidence or quashing the inquiry.

87. The Appellant's attempt to exclude all evidence before the inquiry cannot succeed by resorting to any purported quashing of evidence in the Sears Judgment and the Appeal Judgment. There was no such quashing of evidence in these Judgments. There was an attempt by Mr McCoy to suggest that there was an implied quashing of the whole inquiry by the Judgments. Quashing by a Court is such an important act that it can only be done explicitly, expressly and with certainty of the exact identity and scope of what had been quashed. There is no room in public law for quashing by "implication." as it is likely to be a formula for uncertainty and confusion.

Wholesale exclusion of evidence because of contamination

88. A careful reading of the Sears Judgment and Appeal Judgment will clearly show that the question of the quality of the evidence as result of (a) the irregular contacts between the Tribunal and Counsel for the Tribunal ("Counsel") and (b) the misuse of Counsel by the Tribunal was simply not addressed by the Courts. There was no discussion at the hearing or in the Judgments of whether and to what extent any evidence might be said to be "contaminated" by the procedural irregularities (a) and (b) above (hereinafter referred to collectively as the "Procedural Irregularities"). Of course the Tans could ask for a declaration on the status of the evidence, for example that all the evidence in 1996 hearings would be considered illegal or inadmissible for all purposes or for limited stated purpose. But the Tans did not ask. As for Felix Wong, he did not even challenge by way of Judicial Review in 1998 and he is now clearly too late to make such challenge, e.g. that all evidence adduced in the inquiry be quashed or declared illegal or inadmissible because of the Procedural Irregularities or "contamination".

89. In considering the argument that the evidence is excluded for all time by reason of the alleged "contamination", three relevant and important matters must not be overlooked. First, there is the principle that evidence given in public cannot be excluded. History cannot be rewritten. Second is the principle that there is no justification for wholesale exclusion by reason of procedural irregularity. Third consideration is that wholesale exclusion of evidence would be in breach of section 19 of the Ordinance which expressly provide that all evidence given at the inquiry is admissible.

No obliteration of public evidence

90. The giving of evidence on oath in public in a public court or tribunal or inquiry or parliament is a cornerstone of the common law system. Evidence once given on oath in public belongs to the public and is in the public domain and cannot be retracted or covered up or obliterated. It attracts consequences such as liability for perjury and it also attracts protection such as immunity from defamation. Whether in a criminal proceeding or in a civil proceeding or in special tribunal or parliament or inquiry, evidence given on oath will be there for all time to be used in future in such way as may be necessary including against the maker of the oral evidence for perjury or for previous inconsistent testimony. I am not aware of any principle in law which permits even a court to invalidate wholesale such evidence or to nullify such evidence as though it never existed. It is of course different if the body which holds the hearing and therefore administers the oath has no jurisdiction to hear the sworn evidence and therefore any evidence given to that body can be treated as of no effect whatsoever. But if the body holding the hearing has the jurisdiction and the power to administer oath or to take the evidence of a witness then it is difficult to understand in what way the evidence so given can be treated as naught or having no legal effect. Procedural irregularity or even impropriety do not destroy the evidence. It is of course different if the evidence was obtained illegally or fraudulently. There are many situations where appeal is allowed by a higher court for a number of reasons but the evidence below remains nevertheless valid. It cannot be suggested that in any criminal trial where on appeal a defendant is held to be wrongly convicted that the same defendant or others who gave knowingly false evidence are immune from prosecution for perjury. The validity and sanctity and value of evidence given in public is not in anyway diminished or impeached by the wrong conclusion of law or wrong findings of facts based on the evidence so given. No authority has been cited establishing this alleged principle of nullity of evidence.

Contaminated evidence illegal

91. The other way the Appellant seeks to exclude the evidence given to the Tribunal is by the route of alleged principle of contamination by procedural irregularities destroys all evidence. What is suggested is that because the inquiry process was flawed and the Procedural Irregularities were so serious and fragrant as described in the Judgments and in the Appellant's Skeleton Argument, all evidence adduced at the Tribunal from beginning to end must be considered as illegal evidence and therefore of no legal validity or effect. The argument is attractively put and appeals to the emotion but there is no warrant for such sweeping principle. For my part, I find that there is no jurisprudential basis for Mr McCoy's contention of procedural unfairness rendering illegal the "tainted" or "contaminated" evidence. (the passage at page 189G-H in London & Clydeside v Aberdeen [1980] 183 referred to by Mr McCoy in his reply does not help him.) The oral evidence given to the Tribunal (leaving aside materials such as tape recordings, books, documents, answers to questions etc.) at the public hearings detailed in the List of Sitting Times [486-489] came from many persons apart from Felix Wong. Much of the evidence could not possibly be "contaminated". Some might be merely formal evidence. But if the Appellant's case is to be accepted, then all evidence must be wiped out in total from beginning to the end and for all purposes and against all persons. A hearing can go wrong for a number of reasons and one example could be a judge having an undeclared personal interest in the case. Another example might be some procedural steps not properly taken. But evidence in such cases are still public sworn evidence and person giving such evidence can still be prosecuted for perjury. Examples such as these help to demonstrate that the bold principle submitted by the Appellant of procedural irregularity rendering the evidence illegal has no legal basis.

Section 19

92. So far, in concluding there is no exclusion of evidence, no account has been taken of Section 19 which expressly provides for the admissibility of all evidence given by any person to the Tribunal including all materials produced under section 17 and section 18 of the Ordinance.

93. The present form of Section 19 of the Ordinance was amended in 1995 by Ord. 61 of 1995. The previous section 19 under the heading "Incriminating answers" provided for the obligation of a witness to answer questions put at an inquiry with the consequence that his answers are admissible for all purposes of the Ordinance, except on criminal charges (perjury excluded) against that person when there was a claim at the inquiry for non self-incrimination but he was forced nevertheless by the Tribunal to answer. The old section 19 was in these terms:-

"A person shall be obliged to answer questions put to him at an inquiry, but if the answers might tend to incriminate him, and he so claims before answering the question, neither the question nor the answer shall be admissible in evidence against him in criminal proceedings other than proceedings for an offence under section 20 or under section 36 of the Crimes Ordinance (Cap. 200), or for perjury in respect of the answer but shall be admissible for all the purposes of this Ordinance; the chairman of the Tribunal shall explain to every person giving evidence before the Tribunal the limitation imposed by this section in respect of the admissibility in evidence of any question and any answer given by him."

94. The present new Section 19 is in very different terms, as set out earlier in full. It is important to note that the statute provides in the present section 19 that the evidence given by any person to the Tribunal is "admissible for all the purposes of this Ordinance". Admissibility is not confined to a particular inquiry or to a particular Tribunal but is wider "for all the purposes of the Ordinance". In the face of these express words, it is very doubtful even if the Tans had argued before Sears, J. or the Court of Appeal that there should be total wiping out of all evidence, these Courts on a mere Judicial Review (in the absence of the Secretary of Justice who has an interest in the general application of Section 19) would agree to override the express words of section 19. For my part, I am doubtful that this Court on this hearing has such power. But I have certainly no doubt that for the Procedural Irregularities in this case, there is no justification to override the express provisions of section 19.

95. Let us imagine that Miss Helen Qiu, referred to in the Notes of Meeting of 31st May 1996 [page 60, para. 9 and 12], gave deliberately false evidence to the Tribunal. By section 19 it is expressly provided that her false evidence to the Tribunal shall be admissible against her for:-

(a) offence committed under section 20(1)(a)(iii);

(b) perjury under the Part V of the Crimes Ordinance (e.g. section 31);

(c) perjury in respect of answers given by her to questions put to her at the inquiry.

I cannot see any justification or reason why the Tans Judicial Review or the Procedural Irregularities could give immunity to Helen Qui from the express consequences set out in section 19.

96. Another example can be a situation which is quite likely, namely that the Financial Secretary decides that in the public interest this inquiry into insider dealing of Paragon shares should not be abandoned but should be resumed in the form of another division of the Insider Dealing Tribunal holding the inquiry. Felix Wong or Helen Qui will most likely have to give evidence again. Can they give evidence wholly at variance with their previous sworn evidence in 1996 without being at risk of being cross-examined on their previous inconsistent evidence given in 1996. Examples such as these tend to show the absurdity of the contentions that history can be re-written and the evidence given to the Tribunal can be forgotten and wiped out. For me, section 19 (not referred to the Tribunal Ruling or the Keith Judgment) provides the paramount guide to the Court. In my judgment, there can be no such thing as wholesale exclusion of 1996 Tribunal evidence at the hearing of section 26A application for costs. Section 26A is one of the relevant "purposes of the Ordinance" in the words of section 19.

97. I am therefore of the view that for the purpose of considering whether exceptions of section 26A(5)(c) and/or (d) apply to Felix Wong, there can be no wholesale exclusion of the evidence given to the Tribunal in 1996.

S. 26A(5) Restriction to award costs

98. Before considering the final objection based on the non-severability of the tainted evidence, it will be relevant to study closely the provisions of Section 26A(5) which remove the jurisdiction or power of the Tribunal to award courts. The legislative intention of Section 26A, having regard to the whole of the Ordinance is that the institution of inquiry for insider dealing of public securities is a matter of public interest and for the protection of public interest, specially in a place like Hong Kong where the integrity of our financial system is the foundation of our financial system. The balance struck between Section 27 and Section 26A is important. When a person who has been found by the Tribunal to be an insider dealer or culpable officer of insider dealer corporation, that person may be ordered under section 27 to pay to the Government such sums for the costs of inquiry as the Tribunal considers appropriate. There is no restriction or limitation or statutory fetter on the power of the Tribunal to order the sum in favour of the Government.

99. The contrary position however is different. When the general revenue of the Government is required to pay out costs incurred by any witness or any person whose conduct is, in whole or in part, the subject of the inquiry ("costs applicant"), then although under section 26A(1) the Tribunal has the discretion to order such sums in respect of costs reasonably incurred by that costs applicant, the power to order costs is removed from the Tribunal if any of the 4 conditions set out in paragraph (5) is satisfied. Section 26A(5) reads:-

"This section shall not apply to any person referred to in subsection (1) who is-

(a) a person who has been identified as an insider dealer in a determination under section 16(3);

(b) an officer of a corporation who has been identified as such officer in a determination under section 16(4);

(c) a person who and in respect of whom it appears to the Tribunal has by his own acts or omissions caused or brought about (whether wholly or in part) the Tribunal to inquire into his conduct subsequent to the institution of the inquiry under section 16 or during the course of that inquiry; or

(d) a person who and in respect of whom it appears to the Tribunal has by his own acts or omissions caused or brought about (whether wholly or in part) the institutions of the inquiry under section 16."

100. The four instances where the legislature intended that there should be no power to visit costs against the general revenue of Hong Kong are the two categories of the costs applicant being found to be:-

(A) an insider dealer [s. 26A(5)(a)] or culpable officer of insider dealer corporation [s. 26A(5)(b)] or;

(B) a person who (wholly or partly) has brought about the institution of inquiry [s. 26A(5)(d)] or who (wholly or partly) has brought about the Tribunal:-

(i) subsequent to the institution of the inquiry or;

(ii) during the course of that inquiry

to inquire into his conduct [s. 26A(5)(c)]. (I underlined wholly partly for emphasis.)

101. The rationale behind the denial of ability of the Tribunal to award costs to a first category costs applicant who is found to be an insider dealer or culpable officer of insider dealer corporation is obvious and is easy to understand. The rationale of denial of ability of the Tribunal to award costs to a second category costs applicant who wholly or partly by what I will call misleading conduct, brought about either the inquiry ("misleading pre-inquiry conduct") or brought about, post institution of inquiry, the Tribunal to inquire into his conduct ("misleading inquiry conduct") is less obvious but is perfectly justified on the ground of necessity to protect the public purse. I use the expression misleading pre-inquiry conduct and misleading inquiry conduct because (d) and (c) of Section 26A(5) have in mind those conduct which are misleading and therefore it could be said that the person has brought it upon himself the inquiry and on the Tribunal inquiring into his conduct.

102. In The Report of The Insider Dealing Tribunal into Chinese Estates Holdings Ltd.(Chairman Mr. Justice Hartmann) dated 25th June 1999 (referred to in Mr McCoy's Submissions to the Tribunal dated 12th August 1999 [692, para. 3]), the misleading conduct I referred to earlier, was discussed thus at page 109:-

"... How then are such acts or omissions to be considered? Silke V.P. in R v Kwok Moon-yan [1989] 2 HKLR 396 held that costs may be refused where the conduct of the individual has brought suspicion on himself and/or has misled the investigating authorities into thinking that the case against him is stronger than it is. In this regard, the Vice President said:

"We do not view this as meaning that there must be both a bringing of suspicion and a misleading before a successful [party] will be deprived of his costs. If it is the view of the Court that a man has brought suspicion on himself, or having done that, he has also misled the prosecution, either by the very bringing of that suspicion, or some other matter, into thinking the case against him is stronger than it is then these, either separately or combined, are factors which lie for the consideration..."

The collegiate principles laid down in R. v Kwok Moon-yan (which have been applied in criminal matters since 1989 and continue to be applied) would appear to provide the jurisprudential genesis for the working of subsection (5) of section 26A of the Ordinance. The Tribunal is satisfied that those principles offer the most appropriate guidance to it in interpreting subsection (5)..."

103. The legislature decided by the scheme of Section 26A(5) that the second category of misleading conduct of the costs applicant even if partially causative would nevertheless be undeserving for him to receive costs from the public purse. That statutory balancing of the desire to do justice to an individual person (witness or subject of inquiry) who has incurred costs and therefore deserving of being paid out of public funds against the necessity to protect public funds from being given to a person incurring costs but who has caused even partly, the inquiry to be instituted [s. 26A(5)(d)] or the Tribunal to look into his conduct in the inquiry [s. 26A(5)(c)] is a matter which the Courts must respect. The Tribunal therefore is required to obey the strict provisions of Section 26A(5)(d) and (c).

104. In obeying the law, what can the Tribunal take into account in its consideration of what is misleading pre-inquiry conduct under section 26A(5)(d) and what is misleading inquiry conduct under section 26A(5)(c).

Non-severability of tainted evidence

105. Mr Yu in his very helpful submission for the Financial Secretary referred to the acts of omissions of Felix Wong which caused or brought about the inquiry under section 26A(5)(d) as being possibly the primary focus of the Financial Secretary in resisting the costs application of Felix Wong. Obviously when reliance is placed on section 26A(5)(d), then prima facie it is the act and omissions of Felix Wong prior to the institution of the inquiry, namely prior to the 28th December 1995 [144] which is important. The Report on Chinese Estates Holdings again can provide an illuminating example of how that question was approached. By a majority decision, Joseph Lau was held not to have been an insider dealer [page 103 of that Report]. On Joseph Lau's application for costs under section 26A, the Report in refusing the application and in holding that it was a case of section 26A(5)(d), namely of Joseph Lau bringing about the inquiry by reason of his suspicious conduct, said at page 112 and 115 of that Report:-

"In the final analysis, the Tribunal concluded that the dealings by Mr. Joseph Lau did not constitute insider dealing. But that is a different matter from finding that his conduct was nevertheless imprudent and at worst perhaps foolhardy; that it was conduct of the kind that - when scrutinised by the regulatory authorities - would give rise to reasonable suspicion."

"It is not the finding of the Tribunal that Mr. Joseph Lau's conduct was the sole cause of the institution of the inquiry. ...... Nevertheless the Tribunal is satisfied that positive reasons exist to find that Mr. Jospeh Lau to a material degree, by his acts and/or omissions, brought suspicion upon himself and/or misled the investigating authorities to believe the case to reveal him to be an insider dealer was stronger than it proved in the final analysis."

106. In the application for costs by Felix Wong, the material which the Tribunal will probably look at under section 26A(5)(d) might include statements, documents, records etc. Statements given by Felix Wong to the SFC prior to the Financial Secretary instituting the inquiry will of course be very important. But other material such as the evidence given from March to August 1996 could also be relevant in the Tribunal's consideration of section 26A(5)(d). It is of course not possible to speculate the precise basis which would be advanced by the Financial Secretary under either section 26A(5)(d) or section 26A(5)(c). The Financial Secretary (following the example given by Mr Yu at the hearing) might rely on 10 pieces of material ranging from documents seized at the home of Felix Wong [60, para. 9] to statements given to the SFC prior to the institution of the inquiry (including tapes of the interview referred to at page 26) to oral evidence given by Felix Wong or others in 1996. If any of those materials are objected to on the ground of alleged contamination caused by Procedural Irregularities then no doubt the Tribunal will fairly adjudicate on the objection but I cannot understand why it is said that it would be impossible to sever the contaminated materials from the uncontaminated materials. (Mr McCoy referred us to the DPP v Hutchinson [1990] 2 AC 783 (HL) which is a case on textual severability of statute and lays down no proposition of non-severability of tainted evidence from untainted evidence.) It is important to bear in mind that the issues to be decided under section 26A(5)(d) and (c) are very different from the issues to be decided by the inquiry under section 16(3) although there might be overlaps in terms of the evidence. As Mr Yu correctly pointed out, it is the duty of the Tribunal to satisfy itself on section 26A(5)(d) and (c) and even if there is contamination of some evidence, it is nevertheless the duty of the Tribunal (with the assistance of all the lawyers) to decide what material can be relied upon and what had to be severed or excluded. Even if the task is difficult it has to be done. I therefore decide also against the Appellant's submission that all the Objected Materials should be excluded because of alleged impossibility of severance of contaminated evidence. It should also be pointed out that on this question of whether in respect of any individual piece of evidence (as opposed to wholesale) there can be contamination, I do not share the view of Mr Justice Keith (see page 710R-T).

107. The possibility of a "mini-trial" on the costs application of Felix Wong was raised at the hearing of the appeal. But the Tribunal cannot be relieved of the discharge of its statutory duty by the spectre of a possible "mini-trial". It must be left to the good sense and management of the Tribunal to deal properly with the section 26A application.

Bias of tribunal

108. What has caused me particular concern is whether the Tribunal is the proper division of the Insider Dealer Tribunal to decide this section 26A application. In the first Submission of Mr Alan Leong SC, Counsel for the Tribunal dated 2nd September 1999 [684-6], it was pointed out to the Tribunal that by reason of appearance of bias, it was not appropriate for the Tribunal to hear the costs application. Reliance was placed in particular on the passage in De Smith at 12-002 thus:-

"... The third requirement is for public confidence in the decision-making process. Even though the decision-maker may in fact be scrupulously impartial, the appearance of bias can itself call into question the legitimacy of the decision-making process ... that it was conduct of the kind that - when scrutinised by the regulatory authorities - would give rise to reasonable suspicion."

109. That first Submission went on to say that "while the Tribunal's own conduct is being closely scrutinized, analysed and evaluated, the Tribunal would just not be accepted as being (even if it actually is) completely impartial and totally disinterested ...". Then it concluded by saying that the waiver by Felix Wong of bias objections was "insufficient to address the public interest involved and the need to maintain public confidence in the decision-making process of the Tribunal".

110. In an unfortunate change of stance, Mr Leong as Counsel for the Tribunal in his Further Submission dated 2nd September 1999 said that upon more mature reflection "... public confidence in the decision-making process of the Tribunal would be maintained so long as the Tribunal is alerted to the possible appearance of bias and approaches the problem with extra care. In this regard, the fact that the Tribunal is presided over by a professional judge is not to be ignored."

111. The change of position by Counsel for the Tribunal resulted in there being no issue of bias before the Tribunal since Felix Wong was taking a position of the appropriateness of the Tribunal (notwithstanding what happened) to hear the costs application. Regrettably, the Tribunal consisting of two lay members (not professionally trained to forget or put aside material) and a Chairman who was a Judge did not see fit to say it was inappropriate in the circumstances for the Tribunal to hear the costs application.

112. We can now see what is the scope of inquiry under section 26A(5)(d) and (c). Of the issues to be decided there would likely be question as to whether:-

(a) a document or oral evidence might be considered contaminated by reason of an alleged procedural irregularity;

(b) such document or oral evidence should be excluded by the Tribunal for the purpose of the costs application by reason of such contamination.

The question is whether, following the R. v Gough test, there is a real danger of the Tribunal being biased (applying the higher test of UK rather than the more liberal real suspicion of the Tribunal will be biased test adopted by Australia, South Africa, Scotland, European Court of Human Rights, see page 476G of Locabail v Bayfield [2000] Q.B. 451). It is worth pointing out that question (a) above entails two issues namely firstly whether a particular act of the Tribunal might be considered a procedural irregularity and if so secondly whether that particular irregularity contaminated the document or oral evidence the Financial Secretary wishes to rely on. Question (b) involves of course a judgment or decision of whether the alleged contamination was such as to call for the exclusion of the document or oral evidence. These are all difficult questions and the difficulties are compounded by the mixing of questions of law and fact. The question of law will be decided alone by the Chairman [para. 13 of Schedule] but questions of fact will be decided by a majority [para. 13 of Schedule].

113. It seems to me that the role played by the Tribunal in 1996 will be constantly revisited in the decision-making process of whether certain objected material should be excluded or not and this extraordinary situation will give rise to (a) the strong danger of the Tribunal not being able to act fairly and (b) certainly of the Tribunal being seen to be unable to act fairly. In both situations the disability of the Tribunal because of bias would be a disaster for Felix Wong, for the Financial Secretary and for the tax-payers of Hong Kong who contribute to the general revenue of Hong Kong. A third Judicial Review based on bias of the decision made under section 26A will really be a major tragedy.

114. The costs application sought by Felix Wong will be contested and this will require skill and patience to resolve. In my view a different division of the Inside Dealer Tribunal should be given the task of deciding this application. It may be (on the basis that the inquiry has not been successfully and effectively concluded as the 3 Key Determinations have not been successfully and effectively made) that the Financial Secretary will decide, having regard to what took place, to ask a new division of the Inside Dealer Tribunal to continue the inquiry into the insider dealing and to make a new report, in which case that new division may well decide that the hearing of the costs application under section 26A does not arise until the inquiry has been effectively and successfully concluded and the 3 Key Determinations have also been successfully and effectively made. If Felix Wong is totally exonerated, the Financial Secretary might decide not to oppose any application for the costs of inquiry (both rounds). But even if the Financial Secretary should decide to oppose there will not be the same kind of invidiousness in the decision making and the strong danger of bias. Alternatively, in the light of what has happened, the Financial Secretary might decide that no further inquiry will be held and that the only issue left will be for the new division to decide on the costs application in which case, although the problem of exclusion of contaminated material will still have to be resolved, at the least it will be resolved by a new body which does not have to look over its own conduct every time there was an attack by the Appellant about contamination caused by procedural irregularities of the Tribunal. Members of the Tribunal will be spared of making decision on their past conduct and on its connection with the objected material. The possibility will also be eliminated of the costs application being aborted at some stage due to the gross embarrassment and conflicts of interests of members of the Tribunal.

115. I am therefore in agreement with the Vice President and Le Pichon JA that the costs application if it has to be dealt with should be considered by another division of the Tribunal but this is on the basis of the inquiry having been concluded. What is illogical in this dispute on costs is that the costs application which (as described by the Vice President) the Ordinance intends to be entertained by the Tribunal after a successful and effective conclusion of inquiry (and section 26A(5) consideration to be given only after the effective making of the 3 Key Determinations) is in this case sought even though there was no successful or effective conclusion of the inquiry. There was so to speak a miscarriage and the baby was stillborn. In reality the inquiry could not be said to have been concluded. However, the parties are content to regard the inquiry has having been concluded and thereby giving rise to the asserted right of Felix Wong to apply for costs under section 26A.

116. On the basis that Felix Wong is now entitled to assert such right, then I regret for reasons given above that I am unable to agree with the judgment of the Vice President and of Le Pichon JA. I am of the view, subject to a new division of the Inside Dealing Tribunal hearing the section 26A application, that this Appeal should be dismissed with costs.

Hon Rogers VP:

117. The appeal will be allowed accordingly. There will be an order for certiorari. There will be an order nisi that the costs here and below should be to the applicant. The form of order should be agreed between the parties and in default the matter should be restored to court.

Remarks: