CHONG WAI LEE CHARLES AND ANOTHER v. THE INSIDER DEALING TRIBUNAL AND ANOTHER

HCAL 116/2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST

NO. 116 OF 2005

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AND

HCAL 122/2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST

NO. 122 OF 2005

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BETWEEN

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J U D G M E N T

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Hon Reyes J (giving the reason for judgment of the Court):-

I.       Introduction

1.  These 2 applications concern the constitution and procedures of the Insider Dealing Tribunal (IDT).  They have been heard together as they raise similar issues.  HCAL 116/2005 relates to dealings by Charles and Becky Chong (brother and sister) in the shares of Vanda Systems and Communications Holdings Ltd. in 2000.  HCAL 122/2005 relates to dealings by Thomas Lau in the shares of Asia Orient Holdings Ltd. (AOH) in 1999. 

2.  Lau and the Chongs challenge the manner in which the tribunals to hear their respective cases were constituted. They also question the procedure by which those tribunals “determined” them to be persons implicated in possible insider dealing.  It is additionally claimed that there has been such delay in the convening of the tribunals that there can no longer be fair trials.  It is further alleged that the handling of another insider dealing inquiry (relating to the Chongs’ trading of Harbour Ring International Ltd. shares in 2000) prejudices the fair hearing of the Vanda Inquiry.

3.  The Applicants say that, in all the circumstances, there should be a permanent stay of the proceedings before their respective tribunals.  The Applicants applied to their tribunals for such stays. Their applications were refused.  The Applicants now seek judicial review of those refusals.

4.  Having heard both applications last week, we dismissed them. We state our reasons for so doing in this Judgment.

II.      Background

A.      The Vanda Inquiry

5.  Between February 2000 and August 2002 the Securities and Futures Commission (SFC) investigated suspected insider dealing by the Chongs in Vanda’s shares.  As part of its investigation, the SFC interviewed Becky on 26 July 2001 and Charles on 14 August 2001. The SFC referred the results of its Vanda investigations to the Financial Secretary (FS) on 28 August 2002.

6.  At the same time, the SFC looked into suspected insider dealing by the Chongs in Harbour Ring shares.  On this, the SFC questioned Becky on 17 August 2000 and Charles on 7 September 2000.  The SFC passed its conclusions on Harbour Ring to the FS on 25 September 2003.

7.  The FS has power under the Securities (Insider Dealing) Ordinance (Cap.395) (SIDO) s.16(2) to require the Insider Dealing Tribunal (IDT) to inquire into possible insider dealing.  Exercising such power, on 25 September 2003 the FS directed that a division of the IDT inquire into whether the Chongs (among others) had engaged in insider trading of Harbour Ring shares.  On 28 October 2003 the FS directed a division of the IDT to look into possible insider dealing by the Chongs in Vanda shares.

8.  In October and November 2003 the IDT asked the Department of Justice (DOJ) to supply synopses and dramatis personae relating to the Vanda and Harbour Ring cases.  The documents were requested to enable the IDT quickly to grasp the issues in the Vanda and Harbour Ring Inquiries.  The documents would also help in identifying the persons involved and so assist the IDT to appoint tribunal members who would not have a conflict in relation to the subject matter of an inquiry.  The DOJ forwarded the requested documents to the IDT in early February 2004

9.  By letter to the DOJ dated 23 December 2004, the Chairman of the IDT’s 2nd division (McMahon J) said that he intended to start the Vanda Inquiry in May/June 2005.  Before constituting a tribunal for the matter, the Chairman asked whether the DOJ anticipated any problems with his proposed time frame.  Mr. Wesley Wong (Senior Assistant Law Officer (Civil Law) at the DOJ) replied on 30 December 2004 that, in light of the suggested dates, the DOJ was thinking of recommending Mr. Peter Duncan SC and Mr. Dick Ho (Senior Government Counsel (Ag)) to act as counsel for the Vanda tribunal.  The IDT later confirmed that the Chairman had no objection to Mr. Duncan’s appointment.

10.  On 18 January 2005 the IDT informed the ICAC that the Chairman was intending to appoint Mr. David Ng Tse Kin as a member for the Vanda tribunal.  The IDT requested that Mr. David Ng be vetted for any security problems.  On 9 March 2005 the IDT made a similar request of the ICAC in respect of the appointment of Professor Lam Kin as a tribunal member.

11.  On 19 January 2005 Mr. Ho wrote to the IDT that the Secretary for Justice had nominated him to act as counsel for the Vanda tribunal.

12.  On 4 March 2005 the IDT requested that witness statements be provided as soon as possible.  This was because the Chairman envisaged an initial preliminary hearing in late April 2005 with the substantive inquiry starting in May 2005.  Mr. Ho sent paginated bundles of witness statements on 12 March 2005.

13.  On 8 March 2005 the IDT asked Mr. Ho to consider whether it was possible or desirable for the Vanda and Harbour Ring Inquiries to be heard together, given similar factual backgrounds and the involvement of the same individuals in both cases.

14.  On 11 March 2005 the Chairman nominated Mr. David Ng and Professor Lam to act as lay members of the Vanda tribunal.  The IDT requested the Government’s Financial Services and Treasury Bureau (FSTB) to arrange for formal appointments by the FS pursuant to SIDO s.15(2).  The FS appointed both persons to the Vanda tribunal by letters dated 18 March 2005.

15.  Towards the end of March 2005, the Vanda tribunal appointed Mr. Duncan and Mr. Ho as its counsel.

16.  On 31 March and 8 April 2005 the Vanda tribunal met with its counsel. 

17.  The 31 March meeting lasted for 50 minutes.  It was there decided to send Salmon A letters to the Chongs and 9 other persons.

18.  Salmon A letters are sent to persons who are thought by an IDT to have engaged in possible insider dealing.  Such individuals are sometimes referred to as “implicated persons”.  Salmon B letters, on the other hand, are sent to persons who are not believed to have engaged in insider dealing, but who may be asked to give evidence or who may be adversely affected by an inquiry’s findings.

19.  The 8 April meeting lasted for 100 minutes.  The meeting confirmed that Salmon A letters would be sent to the Chongs and the 9 others.  It was further decided to send Salmon B letters to 2 persons. The tribunal resolved to consider later whether 3 more persons (the 3 others) should also be included as potentially implicated persons and sent Salmon A letters.  The tribunal approved draft Salmon A and B letters previously provided by Mr. Ho to the Chairman.

20.  In the course of the 8 April meeting the Chairman referred to the Harbour Ring Inquiry.  He observed that what he said about the Harbour Ring was confidential.  He expressed concern that the latter case would be “quite old” before it could be heard by the IDT.

21.  By Salmon A letters dated 11 April 2005 the Chongs were informed that they were the subject of the forthcoming Vanda Inquiry by the IDT.  The letters stated:-

“The Inquiry has been convened as a result of an investigation by the [SFC] into the affairs of [Vanda], which brought to light evidence which suggests you may have been an insider dealer.  The Tribunal has determined that your conduct will be the subject of the Inquiry and that you are potentially implicated or concerned in the subject matter of the Inquiry.”

22.  The letters asked the Chongs to appear before the IDT at a preliminary public hearing on 17 May 2005.  Prior to receipt of their Salmon A letters, the Chongs had been unaware that the dealings in Vanda were to be examined by the IDT.

23.  On 13 April 2005, the Vanda tribunal informed Mr. Ho that, having considered materials provided by the FS, there was not enough evidence to establish to a high degree of probability that the 3 others had engaged in insider trading.  The tribunal decided that no other Salmon A letters were needed in the Vanda Inquiry.

24.  On 20 April 2005 the IDT sent a draft press release on the Vanda Inquiry to the FSTB.

25.  On 17 May 2005 the preliminary public hearing of the Vanda Inquiry took place.

26.  On 31 May 2005 there was a 2nd public hearing of the Vanda Inquiry.  Mr. Kevin Patterson (then acting for the Chongs) there applied for a permanent stay.  That application was heard over subsequent sittings of the tribunal.

27.  On 8 July 2005 the Chongs were informed that the IDT had been asked by the FS to look into their dealings in 2000 in Harbour Ring shares. At about this time, the Chongs also learned that Mr. Vincent Kwan Po Chuen and Mr. Louis Fung Kai Lin had been appointed as lay members to hear the Harbour Ring Inquiry with Deputy High Court Judge Saunders (by then Chairman of the IDT’s 3^rd division).

28.  On 9 August 2005, in a detailed Ruling, the Vanda tribunal rejected the Chongs’ application for a permanent stay.

B.      The AOH Inquiry

29. From around December 1999 to October 2001 the SFC investigated suspected insider dealing by Lau in AOH shares.  The SFC then communicated its views to the FS.

30.  On 15 May 2003 the FS asked a division of the IDT to look into possible insider trading by Lau in AOH shares between 14 and 20 September 1999.

31.  On 24 June 2003 Mr. Herbert Li (Deputy Principal Government Counsel (Ag) at the DOJ) informed the FSTB that he was preparing a case synopsis in anticipation of a request from the Chairman of the IDT division being convened to hear the AOH Inquiry.  The Chairman of the IDT’s (3rd division) (then Lugar-Mawson J) formally requested such synopsis by letter to Mr. Li dated 31 October 2003.  Mr. Li sent the synopsis with a dramatis personae on 26 November 2003.

32.  By letter dated 27 November 2003 the Chairman asked Mr. Li to nominate counsel to act for the AOH tribunal.

33.  The Chairman commenced interviewing possible lay members for the AOH tribunal in December 2003.  He eventually decided to nominate Mr. Nigel Bacon and Mr. Eric Ng.  Accordingly, on 21 January 2004, he asked the ICAC to check their backgrounds.

34.  On 3 February 2004 the IDT confirmed to the FSTB that Mr. Bacon and Mr. Eric Ng had been cleared by the ICAC and the Chairman wished them to sit on the AOH tribunal.  The IDT observed that “[t]he Chairman finds that their wealth of experience in their respective field makes them suited to hear the present case”.

35.  The FS formally appointed Mr. Bacon and Mr. Eric Ng to the AOH tribunal by letters dated 19 April 2004.

36.  On 21 June 2004 the IDT asked Mr. Wesley Wong (Senior Assistant Law Officer (Civil Law)) at the DOJ) to recommend counsel for the AOH tribunal.  The DOJ nominated Mr. Li on 14 July 2004 and he was appointed by the tribunal as its counsel on 17 August 2004.  Mr. Andrew Bruce SC was appointed as leading counsel for the tribunal on 18 January 2005.

37.  On 13 January 2005 the IDT wrote to Mr. Li:-

“The Tribunal has considered both the Synopsis and Dramatis Personae in respect of the inquiry and reached a decision that Thomas Law Luen Hung is the only implicated person and to be served a Salmon Letter.  Please let me have the draft of the Salmon Letter with a summary of evidence as soon as possible.”

38. Shortly thereafter, Mr. Li provided the IDT with a draft Salmon A letter.

39.  Until receipt of the Salmon letter, Lau did not know that his transactions in AOH shares were to be the subject matter of an insider dealing inquiry.

40.  The finalised letter was sent to Lau on 28 January 2005.  It read (in part):-

“The Tribunal has determined that you are implicated or concerned in the subject matter of the Inquiry and that your conduct in relation to the dealings in the listed securities of the company as described in the notice will be one of the subjects of the Inquiry.”

41.  The letter also stated that a preliminary public hearing would take place on 28 February 2005.

42.  On 15 February 2005 the IDT sent a draft press release on the AOH Inquiry to FSTB.

43.  By letter dated 21 February 2005 Messrs. Sit Fung Kwong & Shum (SFKS) (the Applicants’ solicitors) queried whether it was appropriate for Mr. Eric Ng to hear the case.  SFKS wrote:-

“We note that Mr. NG Kwok-hai has been appointed as a member of the Tribunal.  He was of course a member of the Tribunal chaired by Hartmann J, which sat in the Chinese estates Insider Dealing Inquiry to hear allegations against Mr. Joseph LAU, the brother of our client Mr. Thomas LAU.  Our client was a material witness in that earlier inquiry.  It is also a matter of public record that the Tribunal’s ultimate finding in the Chinese Estates Insider Dealing Inquiry, whilst favourable to Mr. Joseph LAU, was a majority decision (i.e. one member dissented).  In view of these facts, we would be obliged in you would confirm by return whether or not Mr. NG Kwok-wai is the member who dissented in the earlier inquiry.  We would also appreciate being advised when Mr NG was first appointed as a member of the [IDT], of the number of insider dealing inquiries in which he has sat as a member of the Tribunal and, how is it that he was appointed to hear a second inquiry into the alleged conduct of a member of the LAU family.  We await hearing from you.”

44.  The issue of Mr. Eric Ng’s suitability to sit as a member of the AOH Inquiry tribunal was raised at the preliminary hearing on 28 February 2005.  Having heard submissions from counsel and after discussing the matter with Judge Saunders (who had succeeded Lugar-Mawson J as Chairman in November 2004), Mr. Eric Ng decided to resign from the IDT.  He tendered his resignation to the Chief Executive (CE) accordingly.

45. The Chairman then recommended to the FS that Mr. Pang Hon Chung replace Mr. Eric Ng.  Mr. Pang was eventually appointed to act as a temporary member of the IDT on 1 April 2005.  The appointment was made by the FS as the delegate of the power conferred on the CE by SIDO Schedule §8.

46. On 14 April 2005, at a resumed hearing of the tribunal, Lau by his counsel challenged the constitutionality of the AOH Inquiry. Lau sought a permanent stay of the proceedings.

47.  On 11 August 2005 the AOH tribunal held that its inquiry was validly constituted.  The application for a stay was rejected.

III.     Discussion

A.      The issues

48. Mr. McCoy SC (appearing for the Applicants) has identified the following issues:-

(1) Whether the Vanda and AOH tribunals are “independent and impartial tribunals established by law” within the meaning of International Covenant on Civil and Political Rights (ICCPR) art.14(1) and Hong Kong Bill of Rights Ordinance (Cap.383) (HKBORO) art.10.

(2) Whether the Applicants had a right to be heard at the first public hearing of their respective tribunals on whether they should be “implicated persons”.

(3) Whether Mr. Eric Ng’s involvement as a member of the AOH tribunal gave rise to apparent bias and (if so) whether that tribunal’s “determination” at its first sitting that Ng was an “implicated person” was invalid.

(4) Whether the CE had properly delegated to the FS the power to appoint temporary members (such as Mr. Pang) to the IDT.

(5) Whether there has been a breach of ICCPR art.14(3) and HKBORO art.11(2) insofar as the Applicants:-

(a) were not promptly informed that they were the subject of an insider dealing inquiry; and,

(b) are being tried after a period of undue delay.

(6) Whether the Vanda and AOH Inquiries should be permanently stayed.

B.      Issue 1: Whether independent and impartial tribunals

49. Basic Law art.39 incorporates the ICCPR into Hong Kong law. ICCPR art.14(1) provides that in the determination of criminal charges or civil suits a person shall be entitled to a fair and public hearing by a “competent, independent and impartial tribunal established by law”.  HKBORO art.10 is in similar terms.

50.  There is no dispute that ICCPR art.14(1) and HKBORO art.10 apply to an IDT.  The tribunal must not only be, but be seen to be, independent and impartial.

51.  Nor is there any dispute about the tests for impartiality and independence.  Although impartiality and independence are not wholly synonymous, the tests for assessing the existence of the two qualities are essentially the same. 

52.  The Court asks itself in effect whether, having considered the facts, a fair-minded and informed observer, would conclude that there was a real possibility that a tribunal was biased.  See Porter v. Magill [2002] 2 AC 357 (HL) (at §103); Sun Honest Development Ltd. v. Appeal Tribunal (Buildings) [2005] 2 HKC 582 (CA) (at §8); R. v. Genereux (1992) 88 DLR (4th) 110 (SCC) (at 130c-g).

53.  As a practical guide to applying this test of the fair-minded bystander, we have found it helpful to bear in mind Kirby J’s dictum in Johnson v. Johnson (2000) 201 CLR 488 (HCA) (at §§52-53):-

“The attributes of the fictitious bystander to whom courts defer have therefore been variously stated. Such a person is not a lawyer.  Yet neither is he or she a person wholly uninformed and uninstructed about the law in general or the issue to be decided. Being reasonable and fair-minded, the bystander, before making a decision important to the parties and the community, would ordinarily be taken to have sought to be informed on at least the most basic considerations relevant to arriving at a conclusion founded on a fair understanding of all the relevant circumstances.  The bystander would be taken to know commonplace things, such as the fact that adjudicators sometimes say, or do, things that they might later wish they had not, without necessarily disqualifying themselves from continuing to exercise their powers.  The bystander must also now be taken to have, at least in a very general way, some knowledge of the fact that an adjudicator may properly adopt reasonable efforts to confine proceedings within appropriate limits and to ensure that time is not wasted.  The fictitious bystander will also be aware of the strong professional pressures on adjudicators (reinforced by the facilities of appeal and review) to uphold traditions of integrity and impartiality. Acting reasonably, the fictitious bystander would not reach a hasty conclusion based on the appearance evoked by an isolated episode of temper or remarks to the parties or their representatives, which was taken out of context.  Finally, a reasonable member of the public is neither complacent nor unduly sensitive or suspicious.”

54.  The Applicants submit that a fair-minded observer could not regard the Vanda and AOH tribunals as “independent and impartial” for the following reasons:-

(1) An IDT has no judicial independence because of the way in which its lay members are appointed.

(2) The 2 lay tribunal members neither enjoy security of tenure nor financial security.

(3) Counsel for the Vanda and AOH tribunals do not have the appearance of impartiality.

55.  To evaluate the Applicants’ criticisms, we first set out the structure of an IDT and explain how an IDT is generally convened. We then examine each of the Applicants’ criticisms against the particular tribunals convened here.

B.1    The structure of IDTs

56.  SIDO was repealed on 1 April 2003.  A newly established Market Misconduct Tribunal has since taken over the IDT’s functions.  But an amended version of SIDO remains in effect in respect of insider trading which may have occurred before 1 April 2003.  The present applications concern the constitution of IDTs under that amended version of SIDO.

57.  The IDT’s constitution is set out in SIDO s.15 and the Schedule thereto.

58.  The IDT sits in divisions.  There are currently 3 divisions.  A tribunal consists of a division Chairman and 2 lay members. 

59.  The Chairman is appointed by the CE on the Chief Justice’s recommendation.  He must be a judge.  He is appointed for a term of not more than 3 years or ad hoc in relation to a given inquiry or inquiries.  He may be re-appointed.

60.  Lay members are appointed by the FS.  They may not be public officers.  By SIDO Schedule §2, they are appointed in relation to any specific inquiry or inquiries.  They may be appointed more than once.  By SIDO s.15(4), they may be paid “such amount as the [FS] thinks fit” for their services.

61.  A member of a tribunal (including the Chairman) may resign by tendering written notice to the CE.  Otherwise, a lay member may only be removed from office by the CE for incapacity, bankruptcy, neglect of duty or misconduct proved to the CE’s satisfaction. 

62.  By SIDO Schedule §8, the CE may appoint a temporary member to act in place of any tribunal member who is:-

“precluded by illness, absence from Hong Kong or any other cause from exercising his functions or who considers it improper or undesirable that he should exercise his functions in relation to any specified matter”.

63.  A tribunal sits as the Chairman thinks necessary for the efficient performance of its functions.  All members must be present at a sitting.  Questions before the tribunal are determined by majority opinion, save that questions of law are decided by the Chairman. 

64.  By SIDO Schedule §18, a tribunal “may appoint a legal officer nominated by the Secretary for Justice, a barrister or a solicitor to act as counsel”.

65.  SIDO Schedule §§14, 16, 17 and 19 govern sittings of the tribunal.  They provide as follows:-

“14.   Every sitting of the Tribunal shall be held in public unless the Tribunal considers that in the interests of justice a sitting or any part thereof should not be held in public in which case it may hold the sitting or part thereof in private.

 16.   A person whose conduct is the subject of an inquiry or who is implicated, or concerned in the subject matter of an inquiry shall be entitled to be present in person at any sitting of the Tribunal relating to that inquiry and to be represented by a barrister or solicitor.

 17.   For the purposes of paragraph 16 the Tribunal shall determine at the first sitting of the Tribunal relating to the inquiry whether the conduct of any person is the subject of the inquiry or whether a person is in any way implicated or concerned in the subject matter of the inquiry.

 19.   In paragraph 16 ‘sitting’ does not include any meeting of the Tribunal which is held for the purpose of deliberating on any question before the Tribunal.”

B.2    The convening of IDTs

66.  Upon receipt of representations from the SFC, the FS considers whether to direct the IDT to look into alleged insider trading. If he decides that the matter should be investigated, he sends a notice to the Chairman of an IDT division.  The notice is sent pursuant to SIDO s.16(2).  It defines an IDT inquiry’s terms of reference.

67. At the same time, the FS forwards the dossiers of evidence which the SFC has compiled on the case to the section of the DOJ’s Civil Division handling insider dealing.

68. On receipt of the FS’ notice, the relevant division Chairman considers whom to nominate as lay members for a tribunal.  As a matter of practice, he consults a list of persons willing to act as members of an IDT. 

69.  That list is kept by the FS’ office and the IDT has copies of the list.  But it is unknown how and by whom the names on the list were compiled.  The list is apparently updated from time to time, although it is unclear by whom, how or at what intervals.  There are no published criteria for getting one’s name on or off the list.

70.  The practice of consulting the list for potential lay members appears to have been followed by successive IDT Chairmen over the years.

71. Having selected possible lay members, the Chairman arranges to interview them.  As a matter of practice, he requests the section of the DOJ which handles insider dealing to prepare a synopsis and dramatis personae on the subject matter of the forthcoming inquiry. The synopsis and dramatis personae are intended to help the Chairman rapidly to grasp the relevant facts and thereby assess whether a potential lay member has any conflict of interest. 

72.  Counsel at the DOJ prepares the synopsis and dramatis personae on the basis of the dossiers of evidence which the FS has previously forwarded.  Counsel then sends the synopsis and dramatis personae to the IDT.

73.  When interviewing potential members, the Chairman also ascertains their likely availability.  He may show them the synopsis and dramatis personae in confidence and ask whether they have any conflict of interest.

74.  Having decided on 2 possible lay members, the Chairman asks the ICAC to run a security check on them.  If those individuals are cleared by the ICAC, the Chairman invites the FS formally to appoint them as tribunal members for the relevant inquiry.

75.  Although he has a discretion to reject the Chairman’s nominations, in practice the FS appoints the members nominated by an IDT Chairman.

76.  Once constituted, the tribunal appoints its counsel.  It will then meet with its counsel to identify the persons to whom Salmon A and B letters should be sent.  There may be other meetings with counsel to consider administrative matters and possible lines of inquiry.

77.  Following the issue of Salmon A and B letters, the tribunal holds its first public meeting in accordance with SIDO Schedule §§16, 17 and 18.

B.3    Criticism 1: Flawed appointment of lay members

78.  The Applicants’ case on this has not been consistent.

79.  In its Skeleton, the Applicants suggested that it was “constitutionally objectionable” for the tribunal’s 2 lay members to be appointed by the FS.  This was because (according to the Applicants) in an insider trading inquiry “the FS’s role is akin to a prosecutorial role like that of the Secretary of Justice in a criminal prosecution”.

80.  But, at the hearing before us, Mr. McCoy SC (appearing for the Applicants) disavowed the case advanced in his Skeleton.  He submitted that there was nothing wrong in the FS appointing lay members.  The statutory scheme (Mr. McCoy said) was constitutionally acceptable and perfectly workable.  Mr. McCoy had no complaint about the IDT’s structure as stipulated in SIDO. 

81.  Instead, Mr. McCoy attacked the particular manner in which the AOH and Vanda tribunals had been established.  Those tribunals (Mr. McCoy contended) had been convened following bad practice.

82.  According to Mr. McCoy, the following are elements of the bad practice followed in the Vanda and AOH Inquiries:-

(1)     There was a lack of transparency (utmost or otherwise) in the way the list of potential lay members was compiled and updated.  The public has a right to know who is on the list and on what basis their names come to be there.  But despite constant pressing of the FS by the Applicants, the genesis of the list remains (Mr. McCoy says) shrouded in darkness.

(2)     It was undesirable that a Chairman recommended lay members for an IDT to the FS.  A High Court judge (apart possibly from the Chief Justice or Chief Judge of the High Court) should not be allowed (or be required) to choose with whom he sat.  A judge is only human.  Consciously or not, he is prone to choose like-minded persons to sit with him.  It is true that “in theory” the FS retained a discretion to veto the Chairman’s nominees.  But in practice the FS never did that.

(3)     It was invidious for a Chairman to interview potential lay members.  As triers of fact, lay members are of “equal status with the Chairman”.  But the interview process occasions “an impression that the members ... feel inferior to the Chairman and would nore easily succumb to the view of the Chairman”.

(4)    It was invidious that the Chairman should ask the ICAC to vet his lay member nominees.  The judiciary should not have any contact with the executive on such a matter.

(5)     The way that the Chairman selected lay members for a tribunal (including his communications with the ICAC and the FS) gives the impression that “the Chairman equate[s] himself with an official in a Government Department under the FS”.  The appearance of independence between the executive and judiciary branches is fatally eroded.

(6)     An analysis of the names of lay members who have sat in recent IDTs shows that a few persons have sat 2, 3 or even more times, while others have sat only once. This could not be a mere chance happening.  It suggests that the FS or various Chairmen select the same few people over and over again.  This shows that the system of selection is subject to arbitrary whim.  It is not something transparent and objective, established by law.  On the contrary, there is a distinct possibility that members are appointed to IDTs on the basis of past performance. The more frequently they favour Government, the more often they sit.

83.  Having criticised the practice followed in setting up the Vanda and AOH Inquiries, Mr. McCoy explained how the statutory scheme in SIDO might properly operate.  He submitted that a procedure with proper safeguards would run along the following lines:-

(1)     It was acceptable for the FS to compile a list of potential lay members.  But the criteria for getting on or off that list would have to be published.  The names of persons on the list would have to be gazetted from time to time.  The list would be in the form of a roster.

(2)     The appropriate time to have a person vetted by the ICAC would be before his name went on the list, not afterwards.

(3)     When the FS thought that there should be an inquiry into possible insider dealing, he would inform the Chairman of an IDT division accordingly by a s.16(2) Notice.  At the same time, the FS would appoint as members for the forthcoming tribunal the next 2 available persons on the roster who are not in positions of conflict.

(4)     Subject to availability and having no conflict, the persons on the list would sit on a tribunal as and when their name came up on the roster in strict rotation.

(5)     There would be no interviews of possible lay members by the Chairman and there would be no requests by the Chairman for vetting by the ICAC.  The Chairman would have no discretion as to who might sit with him as tribunal members.

84.  We are not persuaded by Mr. McCoy’s submissions.  We make 5 observations.

85.  First, Mr. McCoy’s proposed system may or may not be a good way of implementing the framework for IDTs in SIDO.  Let us suppose that it is a good way.  It does not follow that it is the only acceptable method of convening an IDT. 

86.  Any system can always be improved, especially with the benefit of hindsight.  Even if the system sketched out by Mr. McCoy were a superior procedure, it does not mean that the one actually followed for the Vanda and AOH Inquiries would give rise to a perception of bias in a fair-minded observer. 

87.  Second, Mr. McCoy may be right in submitting that the list and the criteria for inclusion in or exclusion from it should be published.  As a matter of open government, the public may well be entitled to know more about the list. 

88.  But we do not see how the lack of information about the list could have any impact on a reasonable observer’s perception of the impartiality of the Vanda and AOH tribunals.  However the lay members of the 2 tribunals were appointed, the reality is that the Applicants could always object to them specifically, if they truly believed that the lay members were actually or apparently biased. 

89.  The fact is that, theoretical considerations about the general practice of appointment apart, the Chongs have no actual objection to Mr. David Ng and Professor Lam.  There is no hint of evidence that these two members are biased or even have the appearance of being so.  There is nothing to suggest that Mr. David Ng or Professor Lam would be anything otherwise than independent and forthright in the expression of their views within the tribunal.

90.  On the other hand, Lau objected to Mr. Eric Ng’s presence on the tribunal.  We examine below in connection with Issue 3 whether there was at law any basis for Lau’s allegation of the appearance of bias.  For now, assume that there was some basis. 

91.  Lau’s challenge was successful.  It prompted Mr. Eric Ng to resign and to be replaced by Mr. Pang.  The result is now that, again abstract considerations about the practice of appointment apart, Lau has no real objection to Mr. Pang sitting as a member of the AOH tribunal.  There is no hint of any lack of independence, impartiality or competence on the part of Mr. Pang.

92.  Now apply the fair-minded observer test.  Bearing in mind that the Applicants are unable to point to anything specific in the backgrounds of their lay members to impugn their suitability, we do not see how the Applicants could reasonably harbour any doubt that Professor Lam, Mr. David Ng, Mr. Bacon and Mr. Pang would be otherwise than impartial or independent.

93.  As a reality check, it is instructive to compare the present situation with that in Morris v. UK (2002) 34 EHRR (cited by Mr. McCoy). 

94.  In Morris M was tried before a district court martial.  Two members of the court were junior officers (with no legal training) appointed on an ad hoc basis.  They expected to (and did) return to regular army life after the hearing.  They were themselves subject to army discipline at all times.  There was no statutory bar to their being influenced by the army while sitting as members.  The court’s decision was subject to review by a non-judicial “reviewing authority”.  Everything considered, the European Court of Human Rights held that the court martial could not be regarded as an independent and impartial tribunal established by law.

95.  We are miles away from a Morris situation in this case. 

96.  Whether one thinks in terms of impartiality or independence, Morris involves a classic conflict of interest.  In Morris there was an appreciable risk that, being subject to army discipline before, during and after the court martial, the two junior officers could not truly be (or be seen to be) independent or impartial.  It could be embarrassing for them to decide adversely to the army, while themselves serving in relatively subordinate positions on army pay.

97.  Contrast that with the position here.  By statute public officers are not allowed to sit as lay members.  Having served on the Vanda and AOH Inquiries, the lay tribunal members will resume their ordinary private lives, outside the sphere of Government influence. 

98.  We note, incidentally, that in Morris the European Court rejected (at §70) a submission that the ad hoc appointment of the junior officers by itself meant that the tribunal’s impartiality was suspect.

99.  Third, we do not see anything objectionable in the Chairman interviewing members or requesting the ICAC to vet them.  Nor do we see any problem in the Chairman nominating lay members to the FS.

100.  We agree with the submission of Mr. Tong SC (appearing for the FS) that, if anything, the involvement of the Chairman (a High Court judge) in the selection process enhances transparency and objectivity.  The Chairman (as Mr. Tong points out) is well-placed to assess, on the basis of his experience as a judge, a candidate’s suitability for a particular IDT in light of the technical expertise called for by a given case.  We know, for example, that Lugar-Mawson J considered that Mr. Bacon and Mr. Eric Ng possessed special knowledge which rendered them particularly suitable to hear the AOH case.

101.  We do not accept Mr. McCoy’s contention that the FS in approving a Chairman’s recommendation acts (in effect) as a rubber stamp. Instead, the convention has arisen (we believe rightly in the interests of transparency) that the FS will not normally reject a Chairman’s nominations without good reason.  Otherwise, there is a danger that the FS may be seen to be unduly interfering in the conduct of justice.  The FS might then be perceived to be appointing persons on the basis of past record.

102.  We regard as fanciful the suggestions that, in interviewing lay members and having them vetted by the ICAC, the Chairman somehow transforms himself into a Government functionary.  On the contrary, we again see the FS being kept as far away as possible from the selection process, so as not to be open to a charge of influencing an outcome.

103.  Nor do we think that there is any merit in the submission that judges are simply going to nominate “like-minded persons”.

104.  As Kirby J notes, the fair-minded observer would be aware of the “pressures” (we would say, “beneficent pressures”) on a judge, by virtue of his position, to uphold the independence and impartiality of the judiciary. 

105.  The reality is that some judge (not just the Chief Justice or the Chief Judge) has to decide with whom he or other judges will sit on a daily basis, whether it be on a 2-man or 3-man bench in the Court of Appeal, or on a 2-man bench of the High Court reviewing a decision of a tribunal presided over by a judge, or in some other context.  The reasonable bystander will not jump to the conclusion that a judge is likely to ignore the pressures and traditions of his office and “gerrymander” (to use Mr. McCoy’s words) the membership of a tribunal with an eye to a particular result.

106.  In short, whatever the merits or demerits of Mr. McCoy’s ideal system, the present practice for convening IDTs can hardly be described as flawed as alleged by the Applicants.  In our view, the present procedure arose precisely in order to promote impartiality and independence and negative any suggestion of Government influence.

107.  Fourth, at one time, Mr. McCoy seemed to be suggesting that the practice followed in appointing lay members could not be characterised as “established by law”.  This was apparently because the practice being followed is obviously not found in an ordinance or other publicly available formal document having legal effect.  Hamid Ali Husain v. Asylum Support Adjudicator [2001] EWHC Admin 852 was cited in support of this contention.

108.  In Husain Burnton J stated (at §§64-66):-

“In the absence of authority, and untrammelled by the wording of the [European] Convention [on Human Rights] [ECHR], I should have thought that the independence of a tribunal should be established by law.  If its independence is grounded in the law, then, since that law is publicly available, the second question [namely, what facts may be taken into account when deciding whether a tribunal is independent?] does not arise.  If the independence of a tribunal may properly be assured by other provisions, then the matters which go to establish that a tribunal is independent should be publicly available.  It is important that justice be seen to be done, and that requires that the tribunal that is responsible for doing justice is seen to be independent.  Of course, any facts, publicly known or not, which go to show that a tribunal is not in fact independent, must be taken into account in determining whether there has been a violation of Article 6.  In other words, legally established independence should be a necessary, but not a sufficient, qualification for a tribunal that determines civil rights and obligations or criminal charges.

However, this view is not supported by the wording of Article 6 or by authority.  The wording of Article 6 indicates that the tribunal must be established by law ... but that their independence need not be.  This interpretation receives support from the judgment of the European Court of Human Rights in Sramek v. Austria (1984) 7 EHRR 351, which considered under separate headings the requirements that the determination of a civil right or obligation should be by a ‘tribunal established by law’ and that there should be an ‘independent and impartial tribunal’: see paragraphs 36 and 37 ff. of the judgment.  More explicitly, in Campbell and Fell v. UK (1984) 7 EHRR 165 the Court said, at paragraph 80:-

‘It is true that the irremovability of judges by the executive during their term of office must in general be considered as a corollary of their independence and thus included in the guarantees of Article 6.1.  However, the absence of a formal recognition of this irremovability in the law does not in itself imply lack of independence provided that it is recognised in fact and that the other necessary guarantees are present.’

It follows that Article 6 does not require that the independence of a tribunal that determines civil rights and obligations be guaranteed by statute.”

109.  It will readily be seen that, far from supporting Mr. McCoy’s proposition, Husain is against it.  ICCPR art.14 and ECHR art.6 are in similar terms.  Given that, when assessing whether there is independence under art.6, one can examine non-formal elements (including an established practice), the same must hold true for art.14. 

110.  Thus, a Court can (as we have done) look at the practice regularly followed by Chairmen in the appointment of lay members to an IDT.  The practice can be evaluated to assess whether the IDT is an “independent tribunal established by law”.

111.  Fifth, it is instructive that in Morris the European Court was not content to decide the matter solely by reference to the two junior officers’ employment.  The Court’s approach was instead to examine the entire court martial structure and process.  In evaluating the tribunal’s independence, the European Court asked itself whether there were adequate safeguards to counterbalance any potential lack of independence on the part of the two junior officers.  Despite noting certain positive factors, the Court concluded that the risk of outside pressure being brought to bear on the two officers was not sufficiently excluded.

112.  The same cannot be said here.  We do not think that the method of appointing IDT lay members gives rise to any palpable risk of outside pressure from the FS.  Even if it could conceivably do so, we believe that there are adequate safeguards in the entire IDT process to render such possibility far-fetched in the extreme.

113.  Among the safeguards that we have in mind are the following:-

(1) An IDT is chaired by a High Court judge for a fixed term of 3 years.  The judge is not appointed by the FS and his salary is paid by the Judiciary.

(2) The Chairman alone determines questions of law.

(3) Lay members cannot be public officers.

(4) Only the CE can remove lay members and then only if certain matters have been proved to his (as opposed to anyone else’s) satisfaction.

(5) There is an appeal procedure to the Court of Appeal.

(6) The decisions of the IDT are susceptible to judicial review.

B.4    Criticism 2: Lack of security of tenure and financial security

114.  This criticism did not appear in the Applicants’ original application for leave.  The Applicants sought to introduce the complaint by way of a late amendment.

115.  We believed that the argument was untenable and therefore refused leave to amend.

116.  The Applicants rely heavily on the following passage from the judgment of Lamer CJC in Genereux (at 127d, 129a - 130c):-

“Section 11(d) of the [Canadian] Charter [of Rights] guarantees a person who is charged with an offence the right ‘to be presumed innocent until proven guilty according to law in a fair and impartial public hearing by an independent and impartial tribunal.

....

The essential conditions of independence, or basic mechanisms by which independence can be achieved, were discussed by Le Dain J in Valente [(1985) 24 DLR (4th) 235].  He emphasised that a flexible standard must be applied under s.11(d).  Since s.11(d) must be applied to a variety of tribunals, it is inappropriate to define strict formal conditions as the constitutional requirement for an independent tribunal.  Mechanisms that are suitable and necessary to achieve the independence of the superior courts, for example, may be highly inappropriate in the context of a different tribunal.  For this reason, the court chose to define three essential conditions of independence that can be applied flexibly, being capable of attainment by a variety of legislative schemes or formulas....

The first essential condition of judicial independence, as defined in Valente, is security of tenure.  This condition, like the other two, can be satisfied in a number of ways.  What is essential is that the decision-maker be removable only for cause.  In other words,...

‘The essence of security of tenure for purposes of s.11(d) is a tenure, whether until an age of retirement, for a fixed term, or for a specific adjudicative task, that is secure against interference by the executive or other appointing authority in a discretionary or arbitrary manner.’

Similarly, s.11(d) of the Charter requires that a decision-maker have a basic degree of financial security.  The substance of this condition is as follows...:-

‘The essence of such security is that the right to salary and pension should be established by law and not be subject to arbitrary interference by the executive in a manner that could affect judicial independence.’

Within the limits of this requirement, however, the federal and provincial governments must retain the authority to design specific plans of remuneration that are appropriate to different types of tribunals.  Consequently, a variety of schemes may equally satisfy the requirement of financial security, provided that the essence of the condition is protected.

The third essential condition of judicial independence is institutional independence with respect to matters of administration that relate directly to the exercise of the tribunal’s function.  It is unacceptable that an external force be in a position to interfere in matters that are directly and immediately relevant to the adjudicative function, for example, assignment of judges, sittings of the court and court lists.  Although there must of necessity be some institutional relations between the judiciary and executive, such relations must not interfere with the judiciary’s liberty in adjudicating individual disputes and in upholding the law and values of the Constitution...

A tribunal will not satisfy the requirements of s.11(d) of the Charter if it fails to respect these essential conditions of judicial independence.  Although the conditions are susceptible to flexible application in order to suit the needs of different tribunals, the essence of each condition must be protected in every case....”

117.  The Applicants first argue that the lay members are not independent because they have no security of tenure.  They are only appointed on a case-by-case basis.

118.  There is no merit to this point.  In the Genereux passage just quoted, the Canadian Supreme Court accepted that an appointment may be for “a specific adjudicative task”.  We have seen that the European Court in Morris reached a similar conclusion.

119.  The Applicants’ Skeleton states that Genereux (at 143c-d) is authority for the proposition that “security of tenure during the period of a specific inquiry is not adequate”.  But the text cited actually reads:-

“It was stated in Valente that according a decision-maker tenure for a ‘specific adjudicative task’ may be a sufficient guarantee of security of tenure.  I do not believe that this statement is applicable in this context.  Although a General Court Martial is convened on an ad hoc basis, it is not a ‘specific adjudicative task’.  The General Court Martial is a recurring affair.  Military judges who act periodically as judge advocates must therefore have a tenure that is beyond the interference of the executive for a fixed period of time.  Consequently, security of tenure during the period of a specific General Court Martial, achieved by the fact that no provision of the statute or regulations allows for the removal of a judge advocate during a trial (except if the judge advocate is unable to attend:...) , is not adequate protection for the purposes of s.11(d) of the Charter.”

120.  The situation here is different.  A lay member’s appointment to an IDT is not a recurring affair.  Once a specific inquiry or inquiries are over, a lay member’s service comes to an end.  On the other hand, while a tribunal is sitting, he may only be removed by the CE if one of a limited number of identified causes is established to the CE’s satisfaction.

121.  The Applicants then say that the lay members do not have financial security.  This is because it is unknown how much (if any) remuneration the FS has allowed them under SIDO s.15(4).

122.  The Applicants’ argument here is equally without merit.

123.  Genereux stresses that the conditions identified by the Canadian Court must be applied flexibly.  The nature of any given tribunal must be carefully examined in assessing whether the relevant conditions have been met.

124.  It is evident from Lamer CJC’s discussion of financial security in Genereux that he was especially concerned about longer term judicial appointments, where the provision of secure salary and pension rights would be vital.

125.  In contrast, IDT inquiries typically run for weeks or at most a few months.  Sittings are half-day long to enable lay members to continue with their ordinary lives and work.

126.  In those premises, it is hard to see what salary or remuneration package for the relatively short duration of an IDT inquiry would give a lay member true “financial security”.  The reality is that a lay member’s participation in a tribunal must primarily be a matter of public service.  In practice, unless the member is already financially secure in his ordinary life, it is unlikely that any reasonable remuneration for his half-days of service during the brief period of an IDT hearing could give him effective “financial security” as opposed to momentary financial relief.

127.  We bear in mind that the Applicants have disavowed any intention of challenging the whole of the IDT system.  Their complaint is solely in respect of the AOH and Vanda tribunals. 

128.  In the circumstances of an IDT in Hong Kong and consistently with the parameters of the Applicants’ own challenge, it is appropriate to look at the circumstances of the lay members actually appointed.  In so doing, a reasonable observer would (we believe) readily conclude that in all likelihood their normal employments bring them more than enough income security to assure their independence as adjudicators.

129.  Mr. David Ng works for Hong Kong Great Wall Certified Public Accountants Ltd.  He appears to be an accountant.  Professor Lam is Chair Professor and Head of the Department of Finance and Decision Sciences at the Hong Kong Baptist University.  Mr. Eric Ng is a Certified Public Accountant and the Managing Director of Eric Ng CPA Limited.  Mr. Bacon practises as a solicitor and was a partner at Messrs. Herbert Smith in Hong Kong from 1987 to 1996.  Mr. Pang is an accountant and the Director of Finance and General Manager of Lotus International Ltd., an investment and trading business.

130.  On the face of their resumes, the persons chosen by the respective Chairmen for their tribunals seemingly have comfortable financial backgrounds.  The Applicants have not adduced any evidence to the contrary.  There is thus no basis for any informed bystander to form a conclusion that the selected lay members may be affected by financial pressures.

131.  There is no merit in Criticism 2.

B.5    Criticism 3: Lack of independent counsel

132.  The Applicants’ complaint here is essentially that, because of their involvement in advising the FS in connection with the Vanda and AOH share dealings under inquiry, counsel for the two tribunals cannot be regarded as independent.

133.  The case as eventually argued by Mr. McCoy was markedly different from that espoused in the Applicants’ Skeleton.  In the latter, the blanket assertion was made that it was inappropriate for any legal officer of the DOJ to be appointed as counsel for an IDT. The Applicants have now resiled from that extreme position.

134.  In the examination of these complaints, it has to be borne in mind that counsel to the tribunal are not part of the tribunal, see Dato Tan Leong Min v The Insider Dealing Tribunal [1998] 1 HKLRD 630; [1999] 2 HKC 190.  They have no role to play in the judicial function of the tribunal.  Hence, the independence or otherwise of such counsel has no real impact on the independence of the tribunal.  A fair minded bystander would not jump to the fanciful conclusion that simply by virtue of the connection of a counsel with the small unit in the Department of Justice dealing with insider dealing matters, the independence of the tribunal is thereby compromised.  In any event, as analysed below, the complaints could not avail the Applicants.

135.  We shall proceed by examining the precise complaints made in respect of each relevant counsel.

136.  Mr. Andrew Bruce SC had no prior dealing at all with the FS in connection with the AOH or Vanda share transactions.  There is no basis for suggesting that he is in any way tainted by some conflict of interest. 

137.  Mr. McCoy faintly suggested that Mr. Bruce should be ruled out because he had contact with his junior counsel Mr. Li, who (Mr. McCoy submitted) may have been in the “small unit” which advised the FS on Vanda and AOH.  As will become evident shortly when we examine Mr. Li’s situation, the contention is far-fetched and unmeritorious. A bystander who formed a suspicion of Mr. Bruce on the ground advanced by Mr. McCoy would strike us as being unduly sensitive.

138.  In the case of Mr. Li, a statement was read out in open hearing on 26 July 2005 to the effect that, before becoming counsel to the AOH tribunal, he had no involvement in advising the FS about Vanda and AOH. 

139.  The statement read in part:-

“In relation to the unit which deals with [IDT] cases, a case may be handled in one of three ways:-

·        Counsel gives advice to the financial Secretary and/or the financial services and the Treasury bureau and becomes counsel to the Insider Dealing Tribunal

·        counsel advises the financial Secretary and/or the financial services and Treasury bureau and has no further involvement in the case; or

·        counsel is appointed as counsel to the [IDT] in relation to a case having had no involvement in the provision of legal advice in connection with that case.

Junior counsel was not involved in any way in the investigation of the case presently before the tribunal nor providing legal advice to any person or persons including officers of the [SFC] in connection with that investigation.”

140.  The Chairman of the AOH tribunal asked Mr. Bruce (who had read out the statement) to clarify the first bullet point.  The exchange ran as follows:-

“THE CHAIRMAN:  Mr. Bruce, are you able to confirm that Mr. Li did not instruct any counsel in terms of your first bullet point?

MR. BRUCE:  I can so confirm.”

141.  Mr. McCoy says that the statement and its clarification are not good enough.  Even though he had no actual involvement in advising the FS on Vanda and AOH, Mr. Li would have formed part (Mr. McCoy says) of the small unit of DOJ lawyers advising the FS on insider dealing matters.  As such, the Applicants might reasonably apprehend that he may be biased against them.  In such a small unit, there is bound to have been (Mr. McCoy submits) discussion among counsel (including Mr. Li) about any ongoing investigation into the Applicants’ dealings.

142.  We believe the statement and its clarification to be clear and categorical: Mr. Li had no involvement in advising the FS or instructing counsel for the FS about share dealings in Vanda and AOH. To suggest that Mr. Li may have been privy to discussions in (say) the corridor or lift about ongoing investigations into the Applicants is purely speculative.  A bystander who harboured concerns as to bias solely because Mr. Li belonged (if he did belong) to the “small unit” investigating the Applicants, would be overly sensitive and suspicious.

143.  Mr. McCoy then criticises Mr. Li for sending a synopsis and dramatis personae to the Chairman of the AOH IDT before Mr. Li’s formal appointment as counsel for the tribunal.   Mr. McCoy is scathing about a reference to Lau as a “Potential Implicated Person” in the dramatis personae prepared by Mr. Li. 

144.  It would have been perfectly correct (Mr. McCoy acknowledges) had Mr. Li sent the same synopsis and dramatis personae (including the identification of Lau as a “Potential Implicated Person”) after his appointment as counsel.  But it was not so before.  In acting as he did before his formal appointment (Mr. McCoy submits), Mr. Li could only have been acting for the FS, and not the tribunal.

145.  We see nothing in the complaint. 

146.  It is true that Mr. Li was only formally appointed as counsel to the IDT a few months after sending the synopsis and dramatis personae.  It is true that, when he sent the synopsis and dramatis personae, he was also seeking information from the tribunal about the likely schedule for its sittings so that appropriate counsel could be suggested.  But in all probability, at the time when he sent the synopsis and dramatis personae, Mr. Li already had some inkling that he was likely to be the junior counsel nominated by the DOJ for the AOH Inquiry.

147.  Even if Mr. Li had no such inkling, we do not see how the reasonable observer would form the view from the sending of the synopsis and dramatis personae that Mr. Li was advancing the FS’ interests as quasi-prosecutor.  Given his experience in insider dealing matters, Mr. Li was presumably preparing a synopsis and dramatis personae in anticipation of the IDT’s request for such documents in accordance with normal practice.  The more speedily a synopsis and dramatis personae were prepared, the more quickly a tribunal could be convened and the inquiry get underway.

148.  Insofar as Mr. Duncan and Mr. Ho are concerned, both were previously involved in advising the FS on Vanda and Harbour Ring share transactions.  But both are no longer with the Vanda Inquiry.  Mr. Duncan left the team some time ago for unconnected personal reasons. Mr. Ho resigned in September 2005 and has since been replaced by Mr. Kwan.  In those circumstances, we would have thought that the Applicants have no further ground of complaint.

149.  It might be suggested that the Vanda IDT has been tainted by its early association with Mr Duncan and Mr. Ho.  But such submission would be unwarranted.

150.  A reasonable and informed observer would not perceive bias in a tribunal only because, early in its proceedings, it had contact with counsel who had earlier advised the FS in connection with the institution of an insider dealing inquiry.

151.  In the context of judges, the English Court of Appeal observed in Locabail v. Bayfield Properties [2000] QB 451 (at 480G):-

“[T]he mere fact that a judge earlier in the same case or in a previous case had commented adversely on a party or witness, or found the evidence of a witness to be unreliable, would not without more, found a sustainable objection.”

152.  We have already cited the remarks to similar effect of Kirby J in Johnson. 

153.  In light of such dicta, we do not think that there can be the appearance of bias arising from a tribunal’s mere contact with particular counsel at only a preliminary stage of the inquiry process.

154.  In addition to criticising the tribunals’ association with its counsel, the Applicants have belatedly sought to amend their judicial review notice to suggest potential bias arising from contact with Mr. Wesley Wong and Mr. Richard Fawls (Senior Assistant Law Officer (Civil Law) at the DOJ).

155.  In respect of Mr. Wong, the complaint is that on 30 December 2004 Mr. Wong wrote to the Vanda IDT about the DOJ’s intention to nominate Mr. Duncan and Mr. Ho as counsel. Later, Mr. Wong appeared on behalf of the FS in a directions hearing before Lam J in connection with this judicial review.  This would convey the impression (the Applicants say) that the tribunal was under the FS’ influence.

156.  In respect of Mr. Fawls, the complaint is that on 23 February 2005 (at the request of the Chairman of the AOH Inquiry), Mr. Fawls met privately with the AOH tribunal for 30 minutes.  The 3 tribunal members, Mr. Bruce and Mr. Li were at the meeting.  The meeting had 2 purposes.  One was to discuss SFKS’ objection to Mr. Eric Ng sitting as adjudicator.  The other was to consider the question of delay, which SFKS also raised.

157.  Later, Mr. Fawls sat behind Mr. Wong at the directions hearing before Lam J mentioned above.  This would have (the Applicants say) reinforced an impression of bias on the part of the tribunal in favour of the FS.

158.  The FS filed an affirmation from Mr. Fawls in response to the late application to amend.  That deposed to Mr. Fawls only having joined the insider dealing team within the DOJ’s Civil Litigation Unit on 1 February 2005.  Mr. Fawls states that he has never been involved in advising the FS in relation to the AOH, Vanda or Harbour Ring Inquiries.  He took no active part in the 23 February 2005 meeting. 

159.  Mr. Fawls only attended the directions hearing before Lam J because he was concerned about the implications of the interim stay imposed by this Court on the Vanda, AOH and Harbour Ring Inquiries pending the resolution of these judicial reviews.  As a result of the stay, the IDT voluntarily halted proceedings in another inquiry in which SFKS are also involved.  There has accordingly been serious disruption to the IDT’s timetable.  Mr. Fawls was thus concerned that an early hearing date for the resolution of these judicial reviews be obtained.

160.  It seems to us on the facts that there is no ground for suggesting that the AOH or Vanda tribunals have been contaminated by their contact with Mr. Wong and Mr. Fawls.

161.  Mr. Wong’s only contact with the Vanda tribunal was to communicate the appointment of its counsel.  Neither of the latter remain as counsel to the Vanda Inquiry.

162.  Mr. Fawls had no involvement with the Vanda, AOH or Harbour Ring Inquiries on behalf of the FS.  His concern was purely the administrative one of ensuring that these judicial reviews were speedily resolved so as to allow the IDT to get on with its pressing work.

163.  There being no substance in the complaints raised in respect of Mr. Wong and Mr. Fawls, we refused the application for late amendment in such respect.

B.6    Conclusion on Issue 1

164.  Criticisms 1, 2 and 3 fail.  The Applicants have failed to make a case on this issue.

C.      Issue 2: Whether right to be heard at first public hearing

165.  Mr. McCoy says that, at the first public meetings of the AOH and Vanda Inquiries, the tribunals decided that the Applicants were “implicated persons” without affording them an opportunity to make submissions on why they should not be held to be such.  In particular, Lau wished to submit that he should not be regarded as an “implicated person” because he had been buying AOH shares over a long period of time before the transactions forming the subject matter of the AOH Inquiry.

166.  Mr. McCoy submits that a “determination” that someone is an implicated person pursuant to SIDO Schedule §17 will inevitably have serious repercussions on his reputation.  Natural justice dictates that, before any “determination” under SIDO Schedule §17, a person’s counsel should be able to address a tribunal on whether or not the person is “implicated” in insider dealing.

167.  Mr. McCoy’s Skeleton adds:-

“The Applicants are not asserting a uniform right in the nature of a committal hearing in a criminal case where the defendant will be entitled to hear evidence from the witness box, to cross-examine those witnesses and, if he wishes, to call or give evidence himself.”

168.  Mr. McCoy suggests that, since an IDT is master of its own procedure under SIDO s.17, the tribunal might limit the scope of any first public hearing to hearing submissions on the implications to be drawn from the case synopsis and the documents in the hearing bundles.

169.  Since his clients have been denied natural justice by being refused a right to make representations, Mr. McCoy asks this Court to overturn the tribunals’ determinations that the Applicants are “implicated persons”.

170.  We are not persuaded by Mr. McCoy’s argument.

171.  SIDO Schedule §17 states the an IDT “shall determine whether the conduct of any person is the subject of the inquiry or whether a person is in any way implicated or concerned in the subject matter of the inquiry”.

172.  This may be broken down for greater clarity.  At the first hearing an IDT “shall determine” 3 categories of persons:-

(1) Persons whose conduct is the subject matter of the inquiry.

(2) Persons who are in any way “implicated” by the subject matter determined.

(3) Persons who are “concerned” in the subject matter of the inquiry.

173.  The categories are not mutually exclusive. 

174.  Insider dealing is typically triggered by the conduct or dealing of some persons in shares.  Such persons would presumably fall within the first category.

175.  The persons whose conduct forms the subject matter of an inquiry may or may not be “implicated” in insider dealing through their conduct.  Accordingly, a person in category 1 may also (but need not necessarily) come within category 2.  It is not enough for a tribunal to “determine” whose conduct or dealings will form the subject matter of an inquiry.  A tribunal must also direct its mind as to which individuals are “implicated” as a result of the conduct under inquiry. 

176.  Note that “implicated” persons may be parties whose dealings form the subject matter under investigation or they may be persons whose conduct is not the immediate subject matter of an inquiry.  An obvious example is where a principal engages in insider dealing through an agent.  The agent’s conduct is the immediate subject matter of investigation. But the principal may be “implicated” by the agent’s conduct. 

177.  There is a 3^rd category of persons.  These are individuals who are merely “concerned” in the subject matter of an inquiry.  An example may be (say) witnesses who can give evidence in respect of the conduct under investigation.  There also be individuals who, although not “implicated” themselves, might be adversely affected by the tribunal’s findings.  We do not believe that it is possible or useful to be more specific about this last miscellaneous group of persons.

178.  So far we have employed quotations to set out the words “determine” and “implicated”.  It is now necessary to analyse what they mean in the context of SIDO Schedule §17.

179.  Contrary to what one might think at first blush, in the context of SIDO Schedule §17 the expression “shall determine” cannot mean “shall finally decide”.  The Legislature could not have expected an IDT at its first meeting to decide whether a person has engaged in insider dealing.  Such reading of “shall determine” would be absurd. The whole point of an IDT is to hear the evidence over succeeding sittings in order to come to a final decision at the end of an inquiry on whether X or Y or anyone else is an insider dealer.

180.  But if “shall determine” does not connote “finally decide”, what sense does it have?

181.  The word “determine” can also mean “establish the nature of” or “identify”.  In our view, such reading of “determine” would seem more apposite to SIDO Schedule §17.  At the first public hearing, the tribunal must “identify” or “establish” the nature of the forthcoming inquiry.  An IDT in effect merely sets down the bounds of its inquiry at its first sitting.

182.  Consider now the word “implicated”.  It seems to us that it can have at least 2 senses. 

183.  Sense 1 would be the obvious one that a person is actually “guilty” of (say) insider trading. 

184.  Sense 2 would be that a person is “potentially guilty” of insider trading.  Sense 2 would mean that the facts as perceived at the start of an inquiry “imply” that a person may have engaged in insider dealing.  The person so “implicated” may nonetheless be able to rebut the “implication”.  Insofar as he claims to have an answer, that will form part an IDT’s inquiry over succeeding sittings.

185.  Once again, it would be absurd if the Legislature expected an IDT finally to decide that a person was “implicated” in the sense of “guilty” at its first public hearing.  Insofar as it refers to a person being “implicated”, SIDO Schedule §17 must be referring to the word in the limited sense of “potentially guilty”.

186.  If we now put together the results of our analysis, what a tribunal does at its first public hearing becomes plain.  The tribunal announces the agenda for its future sittings.  It establishes the scope of its inquiry by identifying and announcing:-

(1) the persons whose conduct will be investigated;

(2) the persons whose possible guilt as insider dealers will be investigated;

(3) the persons who may be involved as witnesses or as persons whose interest may be adversely affected by any finding at the end of the day.

187.  Such a reading makes sense in the context of what has so far transpired before the first public sitting.  Until then, the tribunal has only met privately to identify to whom Salmon A and B letters should be sent.  The individuals receiving Salmon A letters correspond to the category 1 and 2 persons mentioned above.  The individuals receiving Salmon B letters correspond to category 3 persons.  The Salmon letters having been sent out, the recipients become entitled under SIDO Paragraph §16 to be present either in person or by lawyers at an IDT’s first public sitting.

188.  Until the first public meeting, there has been no open pronouncement (apart possibly from a brief press release) of the precise scope of an inquiry.  The first public meeting under SIDO Schedule §17 performs this function of formally announcing to the world at large just what an IDT will be looking into.

189.  We note that the words “at the first sitting of the Tribunal relating to the inquiry” were recently inserted into SIDO Schedule §17 by way of an amendment. 

190.  In the past, as an inquiry went underway, it was frequently discovered that other persons might be “implicated” (in Sense 2) and they were usually joined as parties mid-way into an inquiry. This was thought to be unfair and undesirable.  The amendment therefore requires an IDT to establish its scope right at the outset.  The public pronouncement of the scope is important.  Once the hearing proceeds beyond the first sitting, it will no longer be possible for an IDT to extend its bounds to include other potential insider dealers.

191.  The consequence of our analysis is that at its first public hearing an IDT would not have come to any decision as to who was or was not “guilty” of insider dealing.  It has merely “determined” what it will be looking into in days to come. 

192.  It follows that in the Vanda and AOH first hearings, there have been no abridgements of natural justice or the right to be heard. Knowing the scope of their respective inquiries, the Applicants will have ample opportunity in the course of successive sittings to make whatever representations they wish. 

193.  Nothing prevents Lau from applying in a subsequent sitting (for example) to strike out the proceedings against him by adducing evidence of previous AOH share dealings and submitting that such dealings are a full answer to any allegation of insider dealing.  At that points, it will be for the tribunal to decide whether or not to accede to Lau’s request.

194.  We therefore do not believe that the Applicants have made out a case on Issue 2.

D.      Issue 3: Whether Mr. Eric Ng’s presence gave rise to apparent bias

195.  This issue arises out of a late application to amend Lau’s notice for judicial review.  Lau seeks by the amendment to challenge Mr. Eric Ng’s appointment.

196.  Lau’s argument is that Mr. Eric Ng’s presence on the AOH IDT gave it the appearance of bias.  It follows (Lau reasons) that the determination by the AOH tribunal (including Mr. Eric Ng) that Lau was an implicated person must be set aside.

197.  The argument assumes that the “determination” that Lau was an “implicated person” at the first public sitting of the AOH Inquiry constituted a judicial finding of guilt.  As we have seen, it did not.  All that happened was that the tribunal set out the scope of its inquiry, including an inquiry into whether Lau should be held guilty of insider dealing in AOH shares.  Thus, whether or not Mr. Eric Ng’s presence on the tribunal gave rise to apparent bias, there would be no final judicial determination of Lau’s guilt to quash.

198.  But assume that we are wrong in our understanding of SIDO Schedule §17 and that there was some sort of judicial decision to the effect that Lau was an “implicated” person (in some adverse sense).

199.  Even then we do not believe that a reasonable bystander could conceivably have regarded Mr. Eric Ng as biased or apparently so. We have cited a dictum from Locabail which appears to us to cover the point. 

200.  Suppose that Mr. Eric Ng was the dissenting voice in the Chinese Estates Inquiry.  It would require a quantum leap of logic to infer that Mr. Eric Ng dissented because he regarded Lau’s evidence in the Chinese Estates Inquiry as unreliable.  However, suppose that the inference could just about be drawn.  We would still be unable to see how an observer might reasonably conclude from this alone that Mr. Eric Ng was potentially biased against Lau.

201.  Lau fails on Issue 3.  His late application to amend his judicial review was dismissed accordingly.

E.        Issue 4: Whether Pang rightly appointed by FS’ exercise of delegated authority

202.  Mr. McCoy submits that Mr. Pang was not validly appointed. He argues that the CE’s power under SIDO to appoint a temporary member to an IDT is either non-delegable or (if delegable) the power was not effectively delegated to the FS.

203.  We disagree with Mr. McCoy.

204.  Under Interpretation and General Clauses Ordinance (Cap.4) (IGCO) s.63(1) the CE may delegate a statutory power of appointment to a public officer.  IGCO s.63(3) further provides that where a public officer exercises a power vested in the CE, the power shall be deemed to have been delegated to the officer unless the contrary is proved.

205.  The CE in fact delegated his power to appoint IDT temporary members to the FS.  This is evidenced by a loose minute dated 16 January 1999 recording that fact.  That states that “the CE also agreed with FS’ proposal that the authority for approving similar appointments [of temporary IDT members] be delegated to FS in future”. 

206.  We think that the meaning and intent of the minute is clear. We do not believe (contrary to what Mr. McCoy has submitted) that there is any ambiguity with the expression “in future” used in the minute.  The minute plainly states that in the future the FS may exercise the power of appointment.

207.  Mr. McCoy argues, however, that IGCO s.63 must be read subject to IGCO s.2.  The latter provision states that the general ability to delegate under IGCO s.63(1) is subject to any indication to the contrary in a statute.

208.  Mr. McCoy says that a contrary intention may be discerned from the fact that in SIDO the power to appoint temporary members is specifically vested in the CE, while the power to appoint lay members is otherwise vested in the FS.  The Legislature (Mr. McCoy contends) must have meant by this that the CE and only the CE could appoint temporary members.

209.  This would make sense (Mr. McCoy reasons) since temporary member would typically be appointed when an IDT inquiry was underway. The FS having a quasi-prosecutorial role in such inquiries, he should not (Mr. McCoy suggests) be seen to have any influence on the appointment process.

210.  We do not find the argument based on IGCO s.2 persuasive.

211.  There is no plain indication in SIDO rendering IGCO s.63(1) inoperative.  One cannot deduce anything about the availability or otherwise of a power to delegate from the mere fact that a general power to appoint temporarily is expressly conferred on the CE. 

212.  First, under SIDO Schedule §8 the CE has power to appoint temporary members, including the Chairman of a tribunal.  Normally, the Chairman would be appointed not by the FS, but by the CE on the recommendation of the Chief Justice.  There is thus nothing remarkable in vesting a fall-back power to appoint any member temporarily on the CE. 

213.  Second, the power to appoint temporarily is not confined to the situation where an IDT is fully underway.  The power under SIDO Schedule §8 may be exercised at any time after an ordinary member has been appointed.   The power can come into play well before an IDT has had significant discussion on the conduct of an inquiry.  There is no reason why the FS should not be able to appoint replacement members at that stage if necessary.  One cannot infer (absent clearer words) that, because the power might be exercised when proceedings are well advanced, the Legislature intended such power to be non-delegable so as to remove an impression of the FS interfering in judicial process.

214.  Lau therefore fails on Issue 4.  Mr. Pang’s appointment by the FS was valid.

F.      Issue 5: Whether undue delay

215.  This issue can only concern the Vanda Inquiry.  The AOH tribunal postponed the hearing of submissions on delay to a future date.  The AOH tribunal has not come to any reviewable decision on the question of delay.

216.  On undue delay, the Chongs rely on ICCPR article 14(3) and HKBORO art.11(2). 

217.  Those articles apply where a person faces a “criminal charge”. Although there is authority (R v. SFC ex parte Lee Kwok-hung (1993) 3 HKPLR 1 (Jones J)) to the effect that insider dealing proceedings are not criminal or quasi-criminal, we shall assume (without deciding) that a finding of insider dealing is analogous to a finding of guilt on a criminal charge.  On that premise, the 2 articles would be applicable here.

218.  The articles stipulate that a person on a criminal charge should:-

(1) promptly be informed promptly of the nature of the charge against him; and,

(2) be tried without undue delay.

219.  The Chongs’ alleged insider dealing took place in early 2000. They did not learn of the Vanda Inquiry until April 2005 when they received Salmon A letters.   The Chongs complain that the lapse of some 5 years is inordinate and inexcusable. 

220.  This is particularly so (the Chongs contend) because the Vanda IDT was directed by the FS in September 2003.  The Chongs were not told of this at the time.  Instead, they accuse the IDT of “secretly and deliberately hoarding” the FS’ s.16(2) Notice.

221.  The Chongs further say that, because of the lapse of time, their memory of events (and that of relevant witnesses) will inevitably have dimmed.  The result (the Chongs conclude) is that a fair trial is no longer possible.

222.  In its Ruling of 9 August 2005, the Vanda tribunal rejected the Chongs’ allegations of undue delay. 

223.  The tribunal accepted (at §106) that more than 5 years had passed since the events which the subject of its inquiry.  That was “a substantial period of time and ... there is no doubt that the detail and clarity of ... events will to some extent have faded in the recollection of witnesses”. 

224.  But the tribunal “[did] not believe that it is so long a period as to undermine witnesses’ recollections to a degree as to render the proceedings unfair” (at §106).  The tribunal found no evidence of real prejudice to the Chongs as a result of delay. 

225.  This was especially the case where the Chongs could refresh their memories from the records of their 2001 interviews with the SFC.  In any event, the tribunal could “[take delay] into account in a commonsense way in assessing a witness’s credibility and reliability in determining the facts of the case” (at §107).

226.  Becky Chong affirmed that she could no longer remember events clearly.  But the tribunal could place little weight on such assertion.  The tribunal commented (at §109): “In our view it is far too early to know how much Becky CHONG (or indeed any other witness) can or cannot remember.  We will however regard her evidence afresh in due course.”

227.  Finally, the tribunal observed (at §108) that a large part of the evidence was documentary.  Those documents were normal commercial ones obtained from banks, securities firms and other financial institutions which retain records for 7 years.  Key documents evidence remained available.

228.  On the alleged failure to inform the Chongs promptly of the inquiry, the tribunal doubted that it was possible to inform them immediately upon the issuance of a s.16(2) Notice. 

229.  This was because (at §97):-

“For one thing, the notice does not purport to name the implicated parties.  They have yet to be decided. A section 16(2) notice names only individuals whose share trading is to be the subject of an inquiry.  They may or may not become implicated parties.  Other persons who do become implicated parties are not named and cannot be named until the Tribunal has been constituted and its members have appointed counsel assisting and have been served with the inquiry materials and had an opportunity to read those materials, that is the various witness statements and interviews, and examine the documents, then meet with counsel assisting and decide which of the various individuals referred to in those materials are to be considered a implicated parties and will accordingly be issued with Salmon letters (which include the terms of the section 16(2) notice).”

230.  The tribunal pointed out (at §98):-

“No doubt that process [of constituting an inquiry] could be hastened and be conducted in a timeframe of less than the 17 months it took in the present inquiry.  But it should be remembered that this process is usually conducted during the course of another inquiry.  No Salmon letters can be issued without the appointment of lay members and the constitution of the tribunal.  Lay members can only be appointed with some specific hearing timetable in mind, they cannot be appointed and then be expected to be available at large ready to sit whenever at some future time the inquiry is to begin.  For that reason a compromise has to be arrived at, where members are best appointed to new inquiries only once the end of a currently proceeding inquiry is in view and the dates for the new inquiry can be set with some (though far from complete) certainty.”

231.  Accordingly, the relevant consideration is “solely whether the implicated parties can have a fair hearing given the period of delay which has elapsed since the date of the events the subject of the inquiry” (at §100).  On that question, as we have seen, the tribunal believed that the answer was “yes”.

232.  In our view, the tribunal’s reasoning was impeccable.  We fully agree with it.  Although matters could have moved more promptly, that does not mean that delay has been inordinate or undue.  Consequently, the Chongs fail on Issue 5.

233.  Before moving to Issue 6, it is convenient to dispose here of a complaint raised by the Chongs.  They contend that there was a “secret” (but unfair) decision by the Chairman of the Vanda IDT not to try Harbour Ring at the same time as Vanda.

234.  There was plainly no such decision.

235.  The Chairman simply observed to the members of the Vanda IDT that “what cannot happen is that [Vanda] and Harbour Ring are heard together”. 

236.  We understand by the statement that, having himself explored whether the 2 inquiries could be heard together to save time and cost, the Chairman concluded that unfortunately they could not (as a matter of possibility rather than prohibition).  This would have been because Harbour Ring was not yet in a state to proceed.  Further, if assigned to a different tribunal, Harbour Ring could not be heard over a period which overlapped with Vanda.  There would (for example) be obvious logistical problems (not least of which would be the difficulty of scheduling common witnesses), if the 2 tribunals sat simultaneously.

237.  Nothing prevents the Chongs from now applying (if they see fit) for the Vanda and Harbour Ring Inquiries to be heard at the same time by a single tribunal.  Their application may or may not be granted. That would be a matter which the tribunal seized of their application can only decide if and when an application is made.

G.      Issue 6: Whether there should be a stay

238.  The Applicants have failed on all issues.  There is no ground for the grant of a permanent or temporary stay.  There has been no abuse of power by any of the IDT tribunals.

239.  Given in particular that we agree with the conclusion of the Vanda tribunal that fair trial is still possible despite the lapse of time and in the absence of any abuse of process, it would be wrong to order a permanent stay of those proceedings, see HKSAR v Lee Ming Tee (No.2) (2003) 6 HKCFAR 336 at Paras. 182 to 184.

IV.     Conclusion

240.  The Applicants fail on all issues.

241.  We thus dismissed the applications for judicial review and the various applications to amend the same.  We also lifted the interim stays previously imposed by this Court on the Vanda, AOH and Harbour Ring Inquiries.

242.  Finally, at the end of the substantive hearing, we made an order nisi that the FS was to have his costs of the judicial reviews, such costs to be taxed if not agreed.  Unless the Applicants apply to vary the order nisi, it will become absolute within 14 days of the date of handing down of this Judgment.