In re Sir Patrick Neill , Q.C.

1995, M.P. No. 2533

IN THE SUPREME COURT OF HONG KONG

MISCELLANEOUS PROCEEDINGS

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J U D G M E N T

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The Application

1. This is an application made by Sir Patrick Neill, Q.C., for admission as a barrister of the Supreme Court of Hong Kong for the purpose of representing Killenny Limited, Commercial Success Limited and La Fayette Limited in Miscellaneous Proceedings No.3870 of 1993 and Civil Appeal No.157 of 1995 and any appeals therefrom. The application is necessary as the Bar Association has refused its consent. The Attorney General, who is a party to the action, has indicated that he is neutral.

The Facts

2. The three companies, to whom I shall refer as the claimants, are incorporated in the British Virgin Islands and have no place of business in Hong Kong. Their principal assets in Hong Kong are their entitlements to the proceeds of the sale of shares in the World Trade Centre Group Ltd. ("WTCG").

3. In mid 1990 Tomson Pacific Ltd. ("Tomson") acquired 34.5% of the issued shares of WTCG and a further 31.5% of the shares was placed with 14 placees. The claimants received 179,400,000 of those shares and there was suspicion, which led to considerable public comment, as to whether they were properly independent of Tomson. In consequence Mr. John Robert Lees of Ferrier Hodgson & Marfan, Certified Public Accountants, was, on 28th August 1992, appointed as an inspector by the Financial Secretary under s.143(1)(c) of the Companies Ordinance to investigate the affairs of WTCG and Tomson and the relationship between WTCG and the placees.

4. On 2nd June 1993, he accepted a further appointment by the Financial Secretary under s.33 of the Securities (Disclosure of Interests) Ordinance Cap.296 ("the Ordinance") to investigate and report on the membership of WTCG for the purpose of determining the persons who are or have been financially interested in the success or failure of WTCG or materially influence its policy. Despite exhaustive inquiries over many months in the outcome he could say no more than:

"I have been unable to ascertain the identity of two persons who, at the relevant time, controlled the subject shares and I am, therefore, unable to form any conclusion, based on my investigation, as the beneficial ownership of the subject shares.

No impropriety was established by the investigation but it is correct to say that the grave suspicions originally aroused had not been laid to rest.

5. On 15th November 1993, Rogers J., an application having been made under s.46(4) of the Ordinance, ordered that the shares be sold. The shares were sold and the proceeds paid into court. The claimants, by a summons dated 28th June 1994, sought an order under s.47 for payment out of court of the whole of the proceeds of sale on the ground that they were the persons who had "a beneficial interest in the shares at the time of their sale ....". Mr. Registrar Betts on 6th July 1994 made an order granting the application. The total proceeds amounted to approximately $400,000,000. The Attorney General appealed against that order by a notice of appeal dated 11th July 1994. On 19th July a stay of the order for payment out was made and the proceeds remain in court.

6. The appeal, together with an application to strike out the notice of appeal on the ground that the Attorney General had no locus standi, was heard on 15th and 16th September 1994 by Rogers J. At this hearing Rogers J. taking a robust approach indicated that, even if the applications to strike out the notice of appeal on the basis that the Attorney General had no locus standi was successful, he would invite the Attorney General to participate as amicus curiae. The judge having so indicated, the application to strike out was not proceeded with.

7. So that the issues of fact involved in the appeal could be properly identified, the claimants and the Attorney General placed agreed directions before the judge which were embodied in a consent order. Although the order was by consent, the judge, on 11th October 1994, handed down reasons for it. In these he stated, inter alia:

"I consider that the Financial Secretary would be failing in his duty if the Claimants' case was not examined to the full and (sic) he did not use these proceedings to attempt to obtain that information which the publicly funded enquiries have failed to elicit. In other words I consider that the Financial Secretary can and should use these proceedings as a 'lever to prise open the casket' as Nourse L.J. has said."

Pursuant to the consent order, pleadings were filed and a request for Further and Better Particulars was made by the claimants. It is the claimants' case that the defence of the Attorney General and the answers to the Further and Better Particulars make it clear that the Attorney General has no positive case that any persons other than the claimants contend that they have a beneficial interest in the shares.

8. The claimants then took out a summons dated 9th May seeking, inter alia,

(i) a direction that the question falling for determination in the appeal was whether the Attorney General could demonstrate that the Registrar was wrong in concluding that the claimants were, at the date of the sale of the shares in WTCG, the persons beneficially interested in those shares;

(ii) a direction that "these appeal proceedings cannot be used as a forum to continue the statutory investigations originally undertaken by Mr. John Robert Lees under the Companies Ordinance...."

This was heard before Rogers J. on 31st May 1995 who refused to give any further directions.

9. A Notice of Appeal against the refusal by Rogers J. to make the order sought was filed on 17th July. This notice contends that the orders sought are necessary and desirable for the disposal of the appeal and that the judge

"manifested such hostility to the Claimants' case as to render it unlikely that on a further hearing of this matter by him justice will be, alternatively, will be seen to be, done."

To establish the latter contention reliance is placed upon a note of the proceedings taken by the applicant's solicitors. Although it is not expressly so stated this contention is, in effect, a request for a direction by the Court of Appeal that the matter be heard by another judge.

10. It is for the purpose of arguing that to the Court of Appeal and of appearing thereafter in the appeal from the Registrar's decision and in any subsequent proceedings that Sir Patrick Neill seeks admission to the Hong Kong Bar.

The Applicant's Contentions

11. The principles upon which a court acts in deciding applications for admissions of overseas counsel are laid down in R. v. Re Kay Coles Q.C. 1985 HKLR 480. The application of those principles to the present case produces the following questions:

(1) Is it manifestly in the public interest that Sir Patrick Neill be admitted because of the importance of this decision to the reputation of Hong Kong as an international financial centre?

12. I do not intend to recite the facts and figures presented to establish that Hong Kong is a world financial centre. Suffice it to say that I am satisfied that it has achieved that status, and that it is a matter of very considerable public interest that it maintain a reputation for propriety and fairness in its regulation of finance and trade.

13. Mr. Mills-Owens Q.C., with him Ms Maria Yuen, for the applicant also pointed out that in order to establish Hong Kong as a financial centre the Government had considered it necessary to have recourse to overseas expertise. He referred, in particular, to the appointment of Mr. Ian Hay Davison who was brought from London to head the Securities Review Committee after the stock market crash of 1987 and to that of Mr. Robert Fell who was brought, also from London, to take over as Commissioner of Banking.

(2) Are there no local counsel of appropriate skill and experience available?

14. Mr. Mills-Owens stated that it is his view, that of his junior and that of his instructing solicitors, that Sir Patrick Neill has a depth of experience in financial matters which could not be matched for any of the claimants' present legal advisors nor by any other Hong Kong practitioners. I have no hesitation in accepting that Sir Patrick Neill has a particular depth of experience in the law relating to finance and securities.

(3) Is this a case of unusual difficulty and complexity?

15. Mr. Mills-Owens pointed out that this is very recent legislation, and that, as to s.46 of the Ordinance, there are no decided cases. He added that this is the first case where shares in a listed company have been frozen by order of the Financial Secretary; where the role under the Ordinance of the Attorney General has had to be scrutinised; and where the nature and extent of the investigation into "beneficial ownership" under s.47 has had to be examined. He referred also to view of the solicitors for the claimants, to which, it is accepted, considerable weight must be given, that it is a matter of difficulty and complexity. He submitted in passing that the complexity of the investigation already undertaken itself gives some indication of the difficulties involved.

(4) Is the case one which requires special knowledge of a kind not available from the local Bar.?

16. Mr. Mills-Owens submitted that such knowledge is required and that Sir Patrick Neill, by virtue of his long experience in the law relating to financial matters, has such knowledge. He pointed out that Hong Kong practitioners, given the comparative youth of much of our financial legislation, have never had the opportunity to acquire the depth of experience gained by counsel practising in long established financial centres.

(5) Is it a case of a nature where it is desirable for overseas counsel to appear?

17. Given the attack alleging partiality and the request that the judge be removed from further conduct of hearing Mr. Mill-Owens submitted that it clearly was a case in which it was desirable for overseas counsel to appear.

The Respondent's Contentions

18. Mr. Sarony, Q.C., with him Mr. Ismail, for the Hong Kong Bar Association submits that the matter involves two issues - the establishment of beneficial ownership and the proper role of the Attorney General acting on behalf of the Financial Secretary. He submits that these are issues of procedure and interpretation and that whatever the depth of experience of counsel it can only be applied in argument on the issues before the court. As to the suggestion of partiality he submits that it is quite unnecessary to bring counsel from the United Kingdom and relies upon the words of the Chief Justice in re Thomas (unreported HCMP 4158 of 1993) where, when dealing with an attack that was proposed to be made upon a senior Queen's Counsel, he said:

"I do not think that a local counsel will feel inhibited, or the least hesitant, in fearlessly doing his duty for his lay client in a way that accords with the highest tradition of his profession."

Ruling

19. We are here involved with s.47 of the Ordinance:

"(1) Where shares are sold in pursuance of an order of the High Court under section 46(4) of the proceeds of sale, less the costs of the sale, shall be paid into court for the benefit of the persons who are beneficially interested in the shares; and any such person may apply to the High Court for the whole or part of those proceeds to be paid to him.

(2) On application under subsection (1) the High Court shall order the payment to the applicant of the whole of the proceeds of sale together with any interest thereon or, if any other person had a beneficial interest in the shares at the time of their sale, such proportion of those proceeds and interest as is equal to the proportion which the value of the applicant's interest in the shares bears to the total value of the shares.

(3) On making an order under section 465(4) or (6) the High Court may further order that the applicant's costs be paid out of the proceeds of sale, and if that order is made, the applicant is entitled to payment of this costs out of those proceeds before any person interested in the shares in question receives any part of those proceeds."

The High Court is empowered under s.47(2) to order the payment of the proceeds of sale of shares to an applicant or any other person having a "beneficial interest" in the shares at the time of their sale. Both the appeal from the Registrar's decision and the appeal to the Court of Appeal from the decision of Rogers J. will be concerned with and governed by the true meaning of s.47. The extent and nature of the application made under s.47, which will include the determination of the proper role of the Attorney General, well fall to be decided. Ultimately the factual situation, to whatever degree is proper, as to beneficial ownership will also have to be canvassed. Those matters, I am satisfied, involve the application of well-established legal principles and their determination does not call for any particular expertise in financial law or the law of securities.

20. Given the above I do not consider that the public interest requires that Sir Patrick Neill be admitted. I am satisfied that local counsel do have the appropriate skill and experience properly to argue this matter and that it does not present unusual difficulty or complexity such as to require specialist knowledge of a kind not available in Hong Kong. The final contention that the attack upon the conduct of the judge makes it desirable that overseas counsel appear I answer by echoing the words of the Chief Justice re Thomas which I have set out above.

21. The application is refused.