KOON WING YEE v. THE SECURITIES & FUTURES COMMISSION

HCAL 7/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST

NO. 7 OF 2007

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D E C I S I O N

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1.  In a reserved judgement handed down on 2 November 2007, I rejected an application for judicial review by Mr Koon in which he sought various declarations, the effect of which, in simple terms, would have prevented the SFC from requiring Mr Koon to give answers to questions put to him at interview by the SFC.  The effect of the judgment is that Mr Koon must attend for interview and answer questions under pain of penalty.  He may not refuse to answer questions up on the grounds that the answer may incriminate him.

2.  Mr Koon has lodged an appeal to the Court of Appeal against that decision.  The appeal is due to be heard in July.

3.  Before the appeal is heard the SFC, in reliance upon the judgement, have demanded that Mr Koon now attend for interview.  Consequently Mr Koon applies for a stay of the judgment pending the appeal.

4.  On 28 February 2008, I heard argument from counsel, and following that argument ordered that there should be a stay of the judgment, and that I would give my reasons for that decision later.  This I now do.

5.  I draw the relevant principles to be applied from the decision of Ma J, as he then was, in Star Play Development Ltd v Bess Fashion Management Company Ltd, (unreported, HCA 4726/2001, 7 June 2002).  In the context of this case the following principles are relevant:

(i)	In determining the question whether or not an appeal will be rendered nugatory, in the absence of the stay, the court must have regard to the nature of the order that is the subject matter of the appeal;
(ii)	An appeal being rendered nugatory does not mean in all cases, that without a stay, the appellant faces ruin or the loss of all his property.  Demonstrating that the failure to grant a stay would have a serious deleterious effect is enough;
(iii)	However exceptional circumstances may otherwise justify a stay, if the court is not convinced that there exist arguable grounds of appeal, no stay will be granted.

6.  Mr Westbrook sensibly accepts that if there is not a stay, the appeal will be rendered irredeemably nugatory.  Mr Koon will have been required to attend for interview, and will have been compelled to give answers, and nothing can change or remedy that situation.  Mr Westbrook contends that there simply are no arguable grounds of appeal and that accordingly the stay should not be granted.

7.  At first sight, I was clearly of the view that the stay could not be resisted.  The rights which Mr Koon seeks to protect are fundamental rights, enshrined in the Bill of Rights Ordinance.  I have no doubt that I must exercise the greatest caution in taking a step which might result in the erosion of such a fundamental right.

8.  Mr Westbrook says that the application for judicial review was not merely premature, as I found, but was totally misconceived.  Consequently, he said there could be no basis upon which an appeal might succeed.  He pointed to ample authority, binding upon me, that the legislature has the power to remove the common law right to silence.  He drew my attention to the fact that while the court has in the past interfered with the use to which compulsorily obtained answers can be put, there is no authority in which it had ever been held that once the privilege against self-incrimination has been removed by legislation, then the person being interviewed retains the right, lawfully to refuse to answer questions.

9.  The question as to whether the application for judicial review was premature goes both to the jurisdiction and substance in the present case.  There can be no doubt, subsequent to Leung v Secretary for Justice [2006] 4 HKLRD 211, that it is appropriate for a court to consider fundamental rights in judicial review in anticipation of a potential breach, as well as after an alleged breach.  In this sense, Mr Koon’s application was not premature.

10.  The issue as to prematurity also arises within the question as to whether or not Market Misconduct Tribunal proceedings constitute criminal proceedings or not.  Earlier this week that this same issue was brought directly before the Court of Final Appeal in relation to the Insider Dealing Tribunal.  The judgement of the CFA is awaited, and may have a considerable impact on Mr Koon’s position.

11.  Mr Koon’s case on appeal is merely arguable, it cannot be accorded any higher status.  But I cannot say that it has no prospect of success whatsoever. However, I am very concerned at the risk that there may be an erosion of a fundamental right contained in the Bill of Rights Ordinance that may not be capable of remedy.   Such a situation goes beyond a mere a serious deleterious effect

12.  Having regard to the fact that if there is no stay the appeal will be rendered irredeemably nugatory, on the whole of the circumstances, I granted the stay.

13.  I should add that I have done so with some real reluctance.  That reluctance arises because it is becoming apparent that there is a practice developing on the part of  persons subject to enquiry by the SFC, to challenge every step of the way by judicial review, and to appeal as far as possible, any decision that goes against such a person.  Few of these challenges have had any success.  It may well soon arise that a robust attitude will have to be taken by the courts in respect of these satellite challenges to SFC investigations, which are causing serious delays to proper proceedings being brought before either the courts or the Market Misconduct Tribunal.

14.  Costs on the application for the stay in the cause in the appeal.  There will be a certificate for two counsel.