RE Mr DAVID PERRY QC

HCMP 1830/2015

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1830 OF 2015

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REASONS FOR DECISION

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Introduction

1.  The applicant, Mr David Perry QC, applies for admission as a Barrister of the High Court of the Hong Kong Special Administrative Region pursuant section 27 of the Legal Practitioners Ordinance, Cap 159.  The applicant seeks admission for the purposes of advising and appearing on behalf of two appellants in their appeals against conviction in Eastern Magistracy on 9 April 2014 and on behalf of them as respondents in respect of a case stated appeal of acquittals arising out of the same prosecution.

2.  This application was opposed by the Hong Kong Bar Association and by the Secretary for Justice.  At the hearing of the application I refused it and said I would give my reasons for doing so at a later time.  This I now do.

The underlying legal proceedings

3.  The applicant seeks admission in order to represent C.L. Management Services Limited (“CLMS”) and Au Suet Ming Clarea (“Au”) in an appeal they have lodged in the Court of First Instance in HCMA 382/2014 and in an appeal by way of case stated in respect of their acquittals in the same proceedings that is now HCMA 288/2015.  CLMS was convicted on two summonses of holding itself out to three client companies as carrying on a business in a regulated activity, namely advising on corporate finance, contrary to section 114(1)(b) of the Securities and Futures Ordinance, Cap 571 (“SFO”).  Au’s liability was based on a provision making officers of corporations liable for offences committed by corporations.  This provision is section 390(1) of the SFO and, by virtue of it, Au was convicted of aiding, abetting, counselling, procuring or inducing CLMS to commit the above offences, alternatively these offences were committed by CLMS with the consent and connivance of Au.

4.  These section 114(1)(b) charges were pleaded as alternatives to two charges of carrying on a business in a regulated activity, namely advising on corporate finance, in contravention of section 114(1)(a). The appellants were acquitted of the section 114(1)(a) charges.

5.  Section 114(1) of the SFO is as follows:

“(1) Subject to subsections (2), (5) and (6), no person shall-

(a) carry on a business in a regulated activity; or

(b) hold himself out as carrying on a business in a regulated activity.”

6.  The offences of which the appellants were convicted are the subject of an appeal by them and the offences of which they were acquitted are the subject of a case stated appeal being brought by the Secretary for Justice.

7.  At issue in the trial was the mens rea of these offences and whether they were offences of strict liability.  The magistrate ruled that the presumption of mens rea had been displaced and that the offence were offences of strict liability.

8.  One of the amended perfected grounds of appeal, ground 5A, attacks this finding by the magistrate as follows:

“The wording of Section 114(1)(b) of the Securities and Futures Ordinance, Cap 571 ‘holding himself (sic) as carrying on a business in a regulated activity’ connotes a representation intentionally made and which was intended to be relied upon. Although this point was not advanced before the Learned Magistrate, it concerns the true construction of section 114(1)(b) and, if correct, the conviction is unsafe.”

The application for admission

9.  The applicant relies on the legal issue contained in ground 5A of the amended perfected grounds of appeal and on procedural difficulties said to arise from the case stated cross-appeal in order to establish that the appeal involves principles which might impact substantially on the development of Hong Kong law.

10.  Mr C Grossman SC, for the applicant, argues that this is not a simple matter of statutory construction but a complex legal issue that involves a legislative provision whose construction would have ramifications for many other provisions in other ordinances and would impact significantly upon the practices of those working in the financial services sector.

11.  The procedural issue in relation to the case stated cross-appeal concerns how the court should dispose of the charges faced by the appellants and whether or not the appellants are at risk of conviction in respect of the charges of which they were acquitted and if so what would then happen in respect of the charges of which they have been convicted.  On behalf of the applicant it is accepted that the procedural issues arising from the cross-appeal are not, on their own, sufficient justification for the applicant’s admission.  Rather, it is submittedthat when taken together with the issues raised within ground 5A of the amended perfected grounds of appeal, and all the ramifications associated with it, the two legal issues justify the applicant’s admission.

12.  The applicant also refers to the potential for this case to go to the Court of Final Appeal.

13.  In advancing these arguments on behalf of the applicant it was submitted that the resolution of the legal issues would have a significant impact on the financial services sector as the legal issues have an importance that goes beyond the appellants.  It was said that the appeal could provide guidance to those working in the financial services sector as to what they can and cannot do without breaching the law.

14.  Mr Harris SC, for the Hong KongBar Association, accepted that from Mr Grossman’s lay client’s point of view the issues are important ones and of course he accepted that there was no question as to the personal and professional credentials of the applicant. The applicant has an established reputation in Hong Kong and his personal integrity, legal expertise and professional skills cannot be doubted.

15.  Mr Harris submitted that in determining the application the court should ask itself 5 questions.  They were:

(1) Is this case factually, one of unusual complexity or difficulty?

(2) Does this case involve issues of law that are legally complex or difficult?

(3) Is there a significant possibility that this case would have jurisprudential impact for Hong Kong?

(4) Is the application premature insofar as it is only an application for admission to appear on behalf of the appellants in a magistracy appeal in the Court of First Instance?

(5) Is there some procedural difficulty in the determination of the cross-appeal?

16.  Mr Harris went on to answer the questions he posed and said that in the circumstances of this particular case the answers to each of the questions was an unequivocal “no”.

17.  In respect of the first question of whether the case involved factual complexity it was conceded by the applicant that it in fact did not have such complexity.

18.  In respect of the second question, Mr Harris said that the appeal involved an exercise of statutory construction and the legal principles underlying such an exercise were well established in this jurisdiction so that it was only a matter of applying established principles to the particular piece of legislation under consideration.  In this respect he said that Mr Perry has nothing special to contribute to this legal exercise.

19.  As to the third question he argued that this is a magistrate’s appeal that is likely to turn on the magistrate’s findings of fact and credibility of witnesses and would involve a relatively straightforward legal issue to the resolution of which he again argued Mr Perry would not be able to make any special contribution.

20.  As to whether the application was premature he submitted that at this stage there is only the possibility of the case going to the Court of Final Appeal and should that possibility eventuate an application can be made at that time for the admission of Mr Perry to appear in the Court of Final Appeal.

21.  In respect of the fourth question he said there was nothing particularly unusual in cross‑appeals and the resolution of the issues raised by the cross-appeal are perfectly able to be addressed by local counsel.

22.  Although Mr Harris accepted that ultimately the court’s decision involved a balancing act and an exercise of discretion, he put his case strongly, arguing that the application does not “get past first base”.  He foreshadowed that should it be refused he would be applying for costs.

23.  Mr Pao, for the Secretary for Justice, opposed the application and adopted a similar stand to Mr Harris in respect of the significance of the legal issues that were raised.  He said that the current legal team was a very experienced one in the criminal law and in the practice of regulatory offences and would be more than adequate to address the court on the construction of the particular provision in the SFO.  He argued that there was no real explanation by the applicant as to why the construction of this particular statutory provision was one of special difficulty and complexity. He also mentioned that should Mr Perry have a special contribution to make in terms of the legal argument then that can always be communicated to the local counsel from outside the jurisdiction so that all that the existing legal team would be deprived of would be Mr Perry’s advocacy skills.  Mr Pao said that the Secretary for Justice was not seeking the costs of the application should the applicant be unsuccessful.

Discussion

24.  The legal principles applicable to the exercise of the discretion to admit overseas counsel for particular cases under section 27(2) of the Legal Practitioners Ordinance, Cap 159 are now well settled.  It has to be in the public interest to admit overseas counsel and in determining in a particular case where the public interest lies the courts have developed guiding principles.  I have distilled from the authorities the following guiding principles and grouped them under various headings:

Applying the guiding principles

(i) a flexible approach has to be adopted to the application of these guiding principles;[1]

(ii) the exercise of the court’s discretion might involve a balancing exercise between sometimes conflicting factors or aspects of the public interest;[2]

The public interest

(iii) there are many aspects or facets of the public interest.  In any particular case they may conflict with one another.  New aspects may emerge or one aspect may become more important than others;[3]

(iv) the following aspects or facets of the public interest have been identified in the authorities:

(a) the maintenance of a strong and independent local bar and thus, unless otherwise justified by countervailing public interest considerations, overseas counsel should not be admitted;[4]

(b) the need of Hong Kong people to have adequate representation and the right to instruct counsel of their own choice.  This aspect of the public interest may, at times, conflict with the aspect of the public interest of maintaining a strong and independent local bar;^[5]

(c) the proper administration of justice.  The importance of the courts being adequately assisted by lawyers in the cases over which they have to adjudicate cannot be over-emphasized;^[6]

(d) the need for the local courts to develop Hong Kong’s jurisprudence to the level where it enjoys international recognition and reputation;[7]

(v) ultimately, the court must have regard to all aspects of the public interest relevant to the application before it and perform a balancing exercise;[8]

The level of court in which overseas counsel would appear

(vi) if the hearing is to be before the Court of Final Appeal that is an important factor as that court should stand in no less advantageous position than the Privy Council prior to 1 July 1997;[9]

(vii) where a hearing before the Court of Final Appeal is involved, the court will be more, rather than less, inclined than at any other level to admit overseas counsel.  This is provided that the matter is one that is substantial and in which overseas counsel is able to contribute significantly by reason of his expertise;[10]

(viii) for courts other than the Court of Final Appeal, the level of court is a material factor.  For these courts the quality of assistance that can be rendered to the court rubs up against the public interest of maintaining and developing a strong independent bar.  Everything else being equal, when an issue of law is to be argued in a case before the Court of First Instance, suitable and available local counsel should be preferred to overseas counsel, notwithstanding that overseas counsel may be relatively more specialised or experienced.  It should be left to a later day, when the case reaches a higher court or the Court of Final Appeal, to decide whether overseas counsel should be brought in.[11]

The importance of the legal issues to Hong Kong’s jurisprudence

(ix) under this heading the court is concerned with the aspect or facet of the public interest relating to the development of Hong Kong’s jurisprudence and looks to see whether the case for which admission is sought involves the determination of legal principles which might impact substantially upon the development of our jurisprudence.  Such cases would be those that are likely to go all the way up the appellate hierarchy to the Court of Final Appeal for the determination of principles of law;[12]

(x) however, the fact that the case involves a novel legal point does not, by itself, make it one the resolution of which might have a substantial impact on local (or international) jurisprudence;[13]

The complexity and difficulty of the case in which overseas counsel would appear

(xi) under this heading the court is concerned with that aspect or facet of the public interest relating to the proper administration of justice and so it focuses on the benefit the court would receive, in terms of assistance in resolving the issues before it, from the admission of overseas counsel.  In doing so it look to see if the case is one of unusual difficulty and complexity such that a specialist counsel would be highly desirable because of the special dimension he could add to the case;[14]

(xii) however, the fact that:

(a) a case appears to be the first case of the type of situation in question and would carry with it some implications for future cases or, even more generally, on how some people might wish to arrange their affairs, does not, by itself, turn the case into an unusually difficult or complex one;[15]

(b) there is no direct legal authority on the legal issue in question does not, by itself, make that legal issue one of unusual difficulty or complexity;[16]

(xiii) if the case for which admission of overseas counsel is sought involves a point of pure law, it may be that overseas counsel’s input can be obtained whilst leaving the actual advocacy to local counsel.  This is particularly relevant when admission is sought in respect of a case before the Court of First Instance or other trial court;[17]

The availability of suitable local counsel

(xiv) here, the court is concerned with the public interest of maintaining a strong and independent bar.  In considering this aspect or facet of the public interest the court may have to balance it with the other aspects or facets of the public interest such as Hong Kong people having the right to instruct counsel of their own choice and the importance of the court receiving adequate legal assistance.  There are two separate issues in relation to the availability of suitable local counsel.  They are:

(a) whether suitable Hong Kong counsel are available. In answering this question the court does not require an applicant to demonstrate that there are no local counsel competent to do the case.[18]  It only has to consider whether reasonable efforts have been genuinely made in good time to instruct suitable local counsel of the requisite experience and standing and that such counsel are unavailable.  The fact that the case is of unusual complexity and difficulty would only reduce the size of the pool of suitable local counsel and so it does not absolve solicitors of the obligation to approach local counsel first before turning to overseas counsel;[19] and

(b) whether available Hong Kong counsel are suitable.  In answering this question the court must bear in mind that the suitability of Hong Kong counsel is not to be gauged by a comparative assessment against the rest of the common law world or a comparison with the overseas counsel whose admission is sought.  It is to be done by reference to the level of competence and ability that is required in order to provide the court with professional assistance and the litigant with proper legal representation commensurate with the case concerned.  Relevant to a determination of this issue includes the nature and importance of the issues involved, the complexity and difficulty of the issues, the monetary amount, the right or relief at stake, the level of court concerned and the availability and standard of local counsel[20].  Where the competence of local counsel is not in doubt the issue becomes whether, given that the case raises issues of unusual complexity and difficulty, it would be highly desirable to have specialist counsel from overseas because they can add a significant dimension to the case;[21]

(xv) it would be extremely rare for the court to consider an application where no local counsel or only a nominal local counsel was briefed together with overseas counsel;[22]

The suitability of the overseas counsel

(xvi) is the counsel whose admission is sought of sufficiently high quality and standing to make a useful contribution or add a significant dimension to the case in which, if admitted, he would appear.[23]

25.  When one has regard to how these guiding principles apply to the present application it becomes readily apparent, in my view, that there are insufficient countervailing aspects of the public interest to balance out the public interest of maintaining a strong and independent local bar. 

26.  As the applicant is seeking admission for the purpose of appearing in the Court of First Instance, he bears a burden of showing that the public interest aspect of maintaining and developing a strong and independent bar should not be determinative of his application, for this public interest would normally prevail in respect of a hearing before the Court of First Instance, or lower court.  For it not to prevail the applicant must be able to point to the presence of other countervailing aspects or facets of the public interest of a sufficiently strong nature to balance out the public interest of maintaining a strong and independent local bar. 

27.  For this purpose the applicant points to those aspects or facets of the public interest concerned with developing Hong Kong’s jurisprudence and the assistance that the applicant can provide to the court because of the unusual complexity of the legal issues involved in the case in which he applies to appear.  The applicant argues that the legal issues:

(i) will impact substantially on Hong Kong law;

(ii) are issues of unusual complexity and difficulty and reasonable efforts have been made in good time to instruct suitable local counsel; and

(iii) are such that overseas counsel may well add a significant dimension to the case and to local jurisprudence.

28.  This case is a magistracy appeal which means that there will be a rehearing of the case on the papers in front of a Court of First Instance judge.  Should there be a further appeal it will be direct to the Court of Final Appeal.  Counsel for the applicant conceded that there is no factual complexity to the case and relies solely on the legal issues. 

29.  Counsel for the applicant also conceded that, on their own, the legal issues raised in the prosecution’s case stated appeal would not justify the admission of overseas counsel.  But, he submits, when taken together with the legal issues raised in the appellants’ own appeal, the cumulative effect or impact justifies the applicant’s admission.

30.  The specific legal issue in the appellants’ appeal is the construction of section 114(1)(b) of the SFO with a view to determining the mens rea element of the regulatory offence that section creates.  But when the court is considering the aspect or facet of the public interest concerned with developing Hong Kong’s jurisprudence it does not usually focus narrowly on the specific legal issue that will be adjudicated upon by the court, that is the construction of section 114(1)(b) of the SFO, but rather on the broader legal principles relevant to that issue. Here, the broader legal principles relate to statutory construction, the mens rea of regulatory offences and the importance of mens rea in the criminal law and how to determine whether it has been displaced and if so what form of mens rea, if any, takes its place.  

31.  All of these broader legal issues have already been addressed by the Court of Final Appeal and for the purpose of resolving the construction of section 114(1)(b) of the SFO the court will be called upon to apply the existing legal principles as set out in the case law of the Court of Final Appeal.  I agree with Mr Pao that the process of statutory construction is context and statute specific.  Given that is so and given that the broad underlying legal principles are now settled, I do not believe that, at this stage of the judicial process, it can be said that this case is likely to lead to the development of new jurisprudence.  In my view, it is premature to assume that this case will raise substantial issues of importance to the development of Hong Kong’s jurisprudence that will proceed to the Court of Final Appeal. 

32.  I am not persuaded, therefore, that the issues in this case are likely to impact substantially on Hong Kong law.  The aspect or facet of the public interest concerned with the development of Hong Kong’s jurisprudence is not, at this stage, engaged.

33.  For the same reasons I do not agree that the case is one of unusual difficulty and complexity such that the court, in its role of administering justice, would need the benefit that overseas counsel could bring to the case.  The issues in the case may be novel but that does not mean they are, necessarily, of unusual complexity or difficulty.  They are not.  The involvement of overseas counsel in the case as advocate cannot be said to be highly desirable because of his ability to add a special dimension to the case or to offer a special or unique level of assistance to the court.  In my view, this aspect or facet of the public interest has not been made out. 

34.  I am confident that the appellants will have available to them an adequate pool of suitable local counsel from which to choose his legal representation.  The appellants will not be deprived of competent legal representation.  That being so, the aspect or facet of the public interest concerned with the right of Hong Kong persons to counsel of their choice is outweighed in the balance by the facet of the public interest concerned with maintaining a strong and independent bar. 

35.  Should the input of overseas counsel be desired on a discrete legal issue then the appellants can obtain that by other means.  I take this latter consideration into account not just for the purpose of determining whether the court would be prejudiced by being deprived of the applicant’s assistance but also in considering the impact on that aspect of the public interest concerned with the appellants’ right to counsel of their choice.

36.  For these reasons I refused the application.

The application for costs

37.  As he indicated in his submission on the application for admission, Mr Harris made an application for the costs of the hearing.  After hearing argument on this application I reserved my decision which I now hand down.

38.  Mr Harris based his application on the grounds that this was a wholly unmeritorious application and that the Bar Association should not have to bear a costs burden when the application was so lacking in merit. He referred me to a letter dated 7 August 2015 from the Chairman of the Hong Kong Bar Association to the solicitors for the applicant where the Chairman said:

“The Bar Council is in agreement with the Special Committee that it is an application that does not begin to meet the ad hoc admission criteria established in the line of cases setting out the relevant principles. Your client’s insistence on taking the matter to court will amount to an unjustifiable waste of legal costs and the court’s time. We urge you to reconsider the merits of the application carefully against the relevant authorities before advising your client to press ahead.

Further, we are unable to justify the involvement of a legal team on a pro bono basis just to resist wholly unmeritorious applications of this nature.  We hereby put you on notice that the Bar Council will seek an appropriate costs order against your client should the application be unsuccessful, as we believe it will be.  The Bar Council will also reserve its right to apply for a higher level of costs against your client or against such party as may be responsible for the wastage of costs, if so advised.”

39.  However, the costs power in Rule 3(2)(b) of the Barristers (Admission) Rules is somewhat unusual in that it is a one-sided power.  The court may make a costs order against an unsuccessful applicant for admission but not against the Bar in favour of a successful applicant whose admission the Bar has opposed.[24]

40.  Another feature of the costs discretion is that it is not being made in a lis inter partes proceeding.  Admission Proceedings are not an adversarial jurisdiction.  They are sui generis with disciplinary proceedings and in respect of local admissions are concerned with the protection of the public and in respect of overseas admissions are concerned with the safeguarding of the public interest.  Thus, when the Secretary for Justice and the Bar Association appear on an overseas admission under section 27(4) of the LPO they do so for the purpose of assisting the court determine where the public interest lies in respect of the particular applicant before it.

41.  Providing this assistance is regarded as the performance of a public duty and consequently neither the Secretary for Justice nor the Bar Association, as a matter of course, apply for costs against an unsuccessful applicant.  Nevertheless, the power is there and on this occasion the Bar Association seeks the benefit of it; the Secretary for Justice does not, but equally does not say that he would never have recourse to it.

42.  The Secretary’s position on the use that should be made of the costs power is that, given these features of an admission proceeding, and given the one-sided nature of the costs power, and given the public duty nature of his and the Bar’s involvement in the proceedings, a costs order should only be made in exceptional circumstances.  To come within the exceptional circumstances category the application must, he submits, be more than merely unmeritorious; it must be so lacking in merit as to be bordering on the vexatious.  Mr Pao says that as long as the applicant has an arguable case then no costs order should be made.

43.  Mr Harris’s argument is that the Bar Council’s assessment that the application was without merit was correct and that it acted fairly and properly by forewarning the applicant that if he persisted in the application, and was unsuccessful, the Bar Association would seek a costs order against him.

44.  I agree with Mr Harris that the Bar Association has acted fairly and properly in its dealings with the applicant.  But the fact that he was forewarned and the fact that despite that, he persisted with his application, do not, by themselves, justify the making of a costs order against him.  However, these matters will certainly incline the court towards making a costs order where, because of a lack of merit in the application or other relevant circumstance, it would be otherwise appropriate to do so.

45.  I agree with Mr Pao that the exercise of this special costs power should not be in the usual civil litigation way of following the event.  It is a power that should only be exercised against an unsuccessful applicant when there are present features to, or circumstances surrounding the making of, the application that justify the making of a costs order.  Such features or circumstances, which includes a lack of merit, will cause the application to be regarded by the court as one that should never have been made as no applicant could reasonably view the application as having a reasonable prospect of success.

46.  I accept that the present application may come close to possessing the features which would qualify it for an adverse costs order but I do not think it crosses the line of so lacking in any merit whatsoever that no applicant could reasonably view the application as not having a reasonable prospect of success.

47.  Accordingly, I refuse the Bar Association’s application for the costs of the hearing.

[1]  Re Flesch QC & Another [1999] 1 HKLRD 506; Re McGregor QC [2003] 3 HKLRD 585.

[2]  Re Flesch QC & Another [1999] 1 HKLRD 506; Re McGregor QC [2003] 3 HKLRD 585.

[3]  Re Flesch QC & Another [1999] 1 HKLRD 506.

[4]  Re Flesch QC & Another [1999] 1 HKLRD 506; Re Dicker QC [2013] 2 HKLRD 245.

[5] Re Flesch QC & Another [1999] 1 HKLRD 506.

[6]  Re Dicker QC [2013]2 HKLRD 245.

[7]  Re Pointer QC [2012] 2 HKC 241.

[8]  Re Flesch QC & Another [1999] 1 HKLRD 506; Re Pannick QC [2004] 1 HKLRD 950.

[9]  Ibid.

[10]  Re Pannick QC [2004] 1 HKLRD 950.

[11]  Re Parsons QC [2015] 4 HKLRD 781.

[12]  Re Flesch QC & Another [1999] 1 HKLRD 506; Re McGregor QC [2003] 3 HKLRD 585.

[13]  Re Parsons QC [2015] 4 HKLRD 781.

[14]  Re Parsons QC [2015] 4 HKLRD 781.

[15]  Re Lord QC HCMP 1397/2013, unreported, 6 August 2013.

[16]  Ibid.

[17]  Re Parsons QC [2015] 4 HKLRD 781.

[18]  Re McGregor QC [2003] 3 HKLRD 585.

[19]  Re Kosmin QC & Another [1999] 1 HKLRD 641; Re McGregor QC [2003] 3 HKLRD 585.

[20]  Re Lord QC HCMP 1397/2013, unreported, 6 August 2013.

[21] Re Parsons QC [2015] 4 HKLRD 781; Re McGregor QC [2003] 3 HKLRD 585.

[22]  Re Flesch QC & Another [1999] 1 HKLRD 506.

[23]  Re McGregor QC [2003] 3 HKLRD 585.

[24]  See the decision of Lam JA, as he then was, in Re Youh Alan Chuen Po (Opposed Admission) [2013] 2 HKLRD 485.