LAU LUEN HUNG THOMAS v. INSIDER DEALING TRIBUNAL AND ANOTHER

HCMP 1161/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO. 1161 OF 2007

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Reasons for Decision

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1. The applicant applied for extension of time to appeal against the decision of the 1^st respondent.  I granted the extension and these are my reasons. 

The orders

2. On 8 September 2006 the Insider Dealing Tribunal (‘the Tribunal’) at the conclusion of an enquiry identified the applicant as an insider dealer. 

3. On 14 December 2006 the Tribunal imposed the following penalty against the applicant (‘the penalty order’) :

(1)	he was to be banned from being a director of a listed company for a period of 12 months commencing from 22 December 2006;
(2)	he was required to disgorge profits in sum of $15,301,676 to the Government;
(3)	he was required to pay a penalty of $15,000,000 to the Government; and
(4)	he was also required to pay costs of $3,860,506.33 to the Government.

4. The penalty order was registered as a court order on 19 December 2007.  The applicant had complied with the penalty order by making the relevant payments.  He also ceased to be a director.  The period of disqualification will expire in three months’ time. 

5. On 18 June 2007 the applicant applied for an extension of time to appeal against the decision of the Tribunal. 

The four factors

6. In considering whether extension of time should be granted to the applicant, I proceeded under the four recognised considerations :

(1)	the length of the delay;
(2)	the reason for the delay;
(3)	the merits of the prospective appeal; and
(4)	prejudice to the respondent.

7. In considering these four factors I also bear in mind that the modern approach on extension of time is that the Court will not take a mechanistic approach in that any delay or a delay which was not adequately explained would preclude the applicant from obtaining an extension of time. 

The length of delay

8. The delay in this case is 157 days.  The time to appeal expired on 16 January 2007 which was 28 days after the sealed order of 19 December 2007.  The Chairman of the Tribunal, namely Saunders J., had on 9 October 2006 ordered that the time for appealing against the identification of the applicant as an insider dealer be extended to 28 days following the decision on penalty.

9. A delay of about five months is a substantive delay.  While I accept that delays that had occurred prior to the decision of the Tribunal are not relevant factors to be taken into account in the exercise of my discretion, in terms of background information, there had been substantial delay in bringing forward the enquiry against the applicant.  The transaction in which the applicant was accused to be engaged in insider trading occurred between 14 and 20 September 1999.  On two occasions in 2000, namely 23 May and 27 October the applicant was compulsorily interviewed by the Securities and Futures Commission under the Securities (Insider Dealing) Ordinance, Cap 395 (‘the Ordinance’).  However, it was only three years after the first interview that the Financial Secretary instituted an insider dealing enquiry pursuant to section 16(2) of the Ordinance.  The applicant was only notified of the enquiry on 28 January 2005.

10. The first public hearing of the Tribunal was held on 28 February 2005.  Thereafter the hearing was adjourned by reason of a judicial review application lodged by the applicant.  The application was dismissed by the High Court on 4 January 2006.  Thereafter from 5 June to 6 July 2006 the enquiry was held by the Tribunal. 

11. From this brief chronology one can see that there was substantial delay in proceeding against the applicant between January 2000 and February 2005.  The delay of five months after the decision of the Tribunal should be viewed in this context.

Reason for the delay

12. It is apparent that the applicant had taken a considered decision of not pursuing with the appeal prior to the issuance of his present application.  In his 2^nd affirmation he stated this :

‘

After the Tribunal had identified me to be an insider dealer and had imposed a penalty on me, I sought and received advice from my legal advisers (including Senior Counsel), amongst other things, on the prospect of an appeal against the finding that I was an insider dealer.  I was advised that based on the evidence before the Tribunal it would have been unlikely that I could have been found to be an insider dealer if the criminal standard of proof had been applied by the Tribunal.  I was also advised that an appeal on that particular point alone, although viable, was more unlikely than likely to succeed especially given the fact that successive Chairmen of the Tribunal had for the past 15 years ruled that the applicable standard was the civil standard of proof not the criminal standard.  I was told that in this regard the Tribunal appeared to have some support for its approach from the Court of Appeal in analogous situations, although the point had not been ruled on by that Court.  It was also pointed out to me that the Tribunal was very soon to go out of existence and that this may mean that there was less incentive for the Court to overrule longstanding law on the issue.’

13. The decision was based on an advice on a point of law which at that time was more or less well established by authority.  What prompted the applicant to change his mind was a recent decision of this Court (Ma CJHC, Tang VP and Stone J) in Koon Wing Yee v. Insider Dealing Tribunal and another (CACV 358 of 2005 and CACV 360 of 2005) given on 30 May 2007.  By this judgment this Court overruled a longstanding practice of the Tribunal.  It held, among other things, that the nature of the proceedings before the Tribunal was criminal and an implicated person was not compelled to testify against himself. 

14. The applicant was out of Hong Kong between 30 May to 12 June 2007.  Upon his return instructions were given to his lawyers and on 18 June 2007 the summons for extension of time to appeal was issued.

15. It should be pointed out that subsequent to the decision in Koon Wing Yee, other implicated persons found by the Tribunal in that enquiry to be insider dealers had obtained leave to appeal out of time from Rogers VP.  However, the respondents applied to set aside the order and that application is to be heard in December 2007.  The Court of Final Appeal has also granted leave to appeal in Koon Wing Yee.

Merits of the appeal

16. In this case the applicant had taken the objection before the Tribunal that the nature of the proceedings was criminal in nature and had invited the Chairman to adopt the criminal standard of proof.  This, however, was overruled by the Chairman.  Although it is not clear whether counsel had also objected to the applicant being compelled to testify, it should be noted that this point was mentioned by counsel in his closing submission.  However, there was no objection to the admission of the statements of the compulsory interviews that had taken place prior to the enquiry.

17. This Court is bound by its own decisions.  If Koon Wing Kee is to be applied then the applicant has demonstrated that he has a meritorious appeal.

18. However, this factor alone is not the deciding factor because the change of law by a subsequent decision will not by itself justify an extension of time to appeal.  Both the civil and criminal cases emphasized the importance of finality of judgment.  The civil cases referred to the need for special or strong circumstances before an extension of time would be granted, see : e.g. Craig v Phillips (1887) 7 Ch D 249, Esdaile v Payne (1889) 40 Ch D 520, In Re Wigfull [1919] 1 Ch 52 and Birkenhead Properties & Investments Ltd v Leung Yiu and others [1998] 1 HKLRD 527.  As far as the criminal approach is concerned, recently Li CJ in HKSAR v Hung Chan Wa and another [2006] 9 HKCFAR 614, after reviewing the jurisprudence from overseas, held that,

‘

However, overseas jurisprudence does not exclude the possibility that there could be exceptional circumstances in a particular case which would justify the Court in extending time for appeal against conviction on the ground that a subsequent judgment has held the previous understanding of the law to be incorrect.  Especially as the court does not have before it an appeal raising a question relating to extension of time is not a principle for the court on this occasion to attempt to define what constitute exceptional circumstances except to say that the circumstances must be so exceptional that the occasions when they would be held to exist would be very rare.’

19. Subsequent to that case the Court of Final Appeal in Chiu Wing Nam, Dick v. HKSAR (Date of determination 11 December 2006) (FAMC No. 50/2004) granted an extension of time to an applicant whose legal position was the same as that of the applicant in Hung Chan Wa.  The application was four months and 10 days out of time. 

20. Whether the circumstance which would justify an extension is described as strong, special or exceptional, I am satisfied that this requirement has been satisfied in the present case.  When the change of law is so fundamental as a change in the standard of proof and the compellability of an implicated person to testify against himself, the applicant clearly should be given a chance to pursue his appeal and rely on this new development of law.  This is particularly so when the misconduct of the insider dealers of the case of Koon Wing Yee occurred at about the same time as that of the applicant and that the Insider Dealing enquiries of the two cases were also conducted at about the same time. 

21. Mr. Bruce S. C., counsel for the 2^nd respondent, submitted that the nature of the change of law is unimportant.  He relied on the case of R v Ballinger [2005] 2 Cr. App. R. 433 in which an applicant was convicted at a Court Martial and there was a change in law since the conviction whereby the Court Martial procedure was said to be unfair and in breach of the rights of a fair trial guaranteed by Article 6 of the European Convention on Human Rights. 

22. The English Court of Appeal held that no substantial injustice or injury to the applicant had been shown which would justify an extension of time to be granted.  In that case the delay was about 15 months, in particular there was a further delay of three months after the law had been clarified.  In my view Ballinger, apart from being a decision which is not binding on me, clearly can be explained on its own facts by reference to the substantial delay. 

Prejudice

23. Mr. Bruce S.C. conceded that there was no prejudice to the Tribunal as such but he argued that the prejudice was to the community at large if this matter is to be re-opened.  While I recognise the importance of finality of judgment, it is equally important that an individual should in the appropriate circumstance avail himself of a development in the law and should not suffer any injustice. 

24. Mr. Bruce S.C. also referred to the ‘flood-gate’ argument in that some 20 other enquiries of similar situation in which differently constituted divisions of the Tribunal had found the implicated persons concerned to be insider dealers and have imposed penalty orders against them.  He questioned where should the Court draw the line in respect of the other cases if an extension of time was granted in the present case. 

25. I agree with the submission of Mr. McCoy S.C., counsel for the applicant, that each case has to be dealt with individually.  I am not dealing with an application to extend time generally to the other cases.  On the facts of the present case I am satisfied that an extension of time should be granted. 

Conclusion

26. Accordingly I granted an extension of time to appeal to the applicant and ordered that the costs of the application to be in the cause of the appeal.