ANDREW NICHOLAS BARBER v. SECURITIES AND FUTURES COMMISSION

CACV 236/2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL No. 236 OF 2005

(ON APPEAL FROM THE SECURITIES AND FUTURES
APPEALS TRIBUNAL APPLICATION No. 12 of 2004)

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JUDGMENT

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Hon. Stock JA:

1.  I have had the advantage of reading in draft the judgment of Yuen JA which sets out the facts and issues, and an analysis and conclusion with which I respectfully agree.

2.  The remit of this Court in this appeal is to decide whether the determination of the Securities and Futures Appeals Tribunal was one that no such reasonable Tribunal could properly reach on the evidence before it. It is not our function to retry the matter or to say whether anyone of us standing in the shoes of a member of the Tribunal would or would not have come to the same conclusion; into which statement should be read no more than a statement of fundamental principle.

3.  At issue before the Tribunal was the standard demanded by the Code  of a registered independent investment adviser on the facts found unanimously by the Tribunal. So the ambit of this appeal falls within a narrow compass. On those facts, which were essentially the facts propounded by Mr Barber himself, did he do enough as an independent investment adviser to comply with the dictates of the Code?  This is a matter of judgment based not on a counsel of   perfection or hindsight, but on a sound understanding of the industry and of the duties and expected skills of an independent investment  adviser in the light of all the facts. The majority of the Tribunal, after lengthy reflection to which the Determination makes express reference at paragraph 107, took the view that on Mr Barber’s own account, he failed properly to assess the suitability of this particular investment to this particular client and that he did not sufficiently explain to this particular client the downside risks of this investment.  We are asked to say that that finding has no support on the evidence and is perverse.

4.  The gravamen of Mr Pirie’s submissions, and indeed of the evidence of Mr Barber before the Tribunal, was that no more could reasonably     be expected of such an adviser than to take the client through the literature produced by the purveyor of the investment product.   Indeed, each went so far as to suggest that to go further, to make explanations and illustrations beyond the literature was contrary to  industry practice and to what was expected by the SFC.

5.  There was no evidence to support that contention and an approach of  that kind does not, in my judgment, sit well with a common sense and  practical view of the role, skill and experience to be expected of an independent investment adviser. The Code itself requires more than that, and not surprisingly so; for were it otherwise the words “independent” and “adviser” would be otiose. It is clear from the Code  that what is expected is that the adviser takes all reasonable steps to establish the client's financial situation, investment experience and investment objectives and shall, having regard to that information "when making a recommendation or solicitation, ensure the suitability of such recommendation or solicitation for that client as is reasonable in all circumstances", and "shall assure himself that  the client understands the nature and risks of the products and has sufficient net worth to be able to assume the risks and bear the potential losses of trading in such products." : see paragraphs 5.1 to 5.3 inclusive of the Code.  I accept that an adviser cannot ensure that   he is given full and frank asset information by his client; and I accept  that the choice of level of investment risk and, ultimately, whether or not to make the investment is that of the client. But that does not  absolve the adviser from his duty to advise and to do so  independently; and it seems to me to be impossible to say that the Tribunal's majority adopted other than a sensible approach, let alone  a perverse one,  when finding that, given this client's profile, the  extent of her assets known to the adviser, and the very particular risks    attending this specific product, more was required then a mere  reading through of the literature and advice that she should read it carefully through herself.

6.  Mr Barber accepted (Transcript page 361) that he never produced any calculations to demonstrate to his client what would happen if  she bought the Scottish Life Policy denominated in sterling by borrowing Yen from Rothschilds and were the Yen then   to appreciate.  He said that he simply used a gearing illustration which    we see in the brochure produced by Rothschilds. The problem with the gearing illustrations in the brochure was that they were not     tailored to the circumstances of individual investors; and, more than that, none illustrated, by reference to figures, the margin calls that might be made in the event of an appreciation of the Yen and what in practical terms that might mean to someone who, like Ms Field, was investing all or most of her resources in this one instrument.  Mr Barber accepted, in terms, that he did not produce any calculations to  demonstrate the effect of an adverse currency movement, nor use the  illustrations themselves to show losses. When asked why he did not do that, he said: "It is not industry practice.  What is the point of howing losses?  Just pick a figure out of the air?" He added that it   was not industry practice to do more than use marketing literature      when discussing investments with clients.  He believed the literature     to be clear.  Furthermore when asked as to his knowledge of her    assets, he said that he knew that her cash flow and profitability was very good and that "she may have had other bank accounts.  She        could have had other assets elsewhere which she was not declaring to me."

7.  Well, the point of showing losses, or potential losses, to a non-expert  client of limited assets, with a high risk product of this kind, is to bring home to such a client the full picture; to show what funds she may have to produce at short notice in the event of an adverse currency movement, so that with this information, as well as with the positive picture put to her, she can make an informed decision whether she can afford the risks involved and whether she is, in the light of her investment objectives, nonetheless prepared to take that risk. What is the harm, one asks, in doing so ? What is the difficulty in doing so ? It is not to ask the impossible, nor the difficult, nor for an unrealistic or endless exercise. But what we see in this case is no attempt at all at illustration for this client directed at her situation and her asset position.  I note that the literature provided to Ms Field referred to risk consideration.  However, the obligation upon the client to pay a call is buried in very small print in the lengthy terms and conditions and in the application form.

8.  And as to the statement that a client may have assets other than those disclosed to an adviser, that fact does not absolve an adviser from advising on the basis of what he knows and assessing on the basis of what he knows whether a product is suitable for the client, or whether it may be unwise for the client to put all his or her eggs in that particular basket. If the client, keeping to himself or herself the fact that he or she has other assets, decides to proceed, despite such cautionary advice and despite sufficient explanations of the risks, then the adviser cannot be criticised. But that is not this case.

9.  I fail, in these circumstances, to see how it can properly be said that the conclusion of the majority members of the tribunal was perverse or unsupported by evidence.  It is self-evident that the majority's view  - and the Tribunal is composed of those who can be well expected to be attuned to what is and what is not reasonable in particular circumstances - was that it was not sufficient for Mr Barber to respond to Ms Field’s wish for a more aggressive product by merely presenting to her the product in question and talking her through the documentation. I fail to see on what basis that can properly be said to be a perverse view.   This was not a case in which the client intimated that whatever the risk she would invest in the product so long as the prospect of a higher return was there; and it was not a case in which the investment adviser was expected by the client to do no more than to act as an agent or product marketer. He remained an investment adviser; he remained an independent investment adviser; and he remained her adviser. He was in the circumstances of this particular case not absolved from his duty diligently to assess the suitability of the investment for the particular client or from a duty to ensure that she was properly informed of the risk, given in particular the fact that the risk was such that in the event of an adverse movement of the currency, the degree of exposure in relation to her overall assets, as known to the adviser, would be stark. 

10.  Much has been said to the effect that the Tribunal had tied itself to the question whether there was a breach only of paragraph 5.2 of the Code (ensuring the suitability of the recommendation); rather than of 5. 3 ( assuring that the client understands the nature and risks of the leveraged transaction). The complaint is that the terms of the finding of the majority, to be seen at paragraph 129 of the written determination, go beyond a finding of a breach of paragraph 5 .2 by the decision that Mr Barber had been insufficiently diligent in explaining and amplifying to his client the downside risks within the investment.  I do not agree that the Tribunal was thus constrained to a paragraph 5.2 question or that it purported so to constrain itself. It is perfectly clear from the thrust of Mr Harris’s cross-examination of Mr Barber and from the text of his closing submissions that he was inviting a finding that there had been a breach also of paragraph 5 .3. The Tribunal's powers under section 218 of the Ordinance enabled it to make the findings it did, even if the Commission had restricted itself to paragraph 5 .2.

11.  I too would dismiss this appeal and order that the appellant pay the costs of the appeal, including the costs of the application to appeal   out of time.

Hon. Yuen JA:

12.  This is an appeal by Andrew Barber against a determination of the Securities and Futures Appeals Tribunal (Hon. Stone J, Mr Fong Hup     and Dr Bill Kwok Chi-piu) given on 30 June 2005.

Procedural history

13.  In January 2005, on the application of Mr Barber a registered investment adviser, the Tribunal reviewed the decisions of the Securities and Futures Commission ("SFC") that he had negligently advised a client causing her financial loss, thereby calling into question his fitness and competence as an investment adviser, and that he should be suspended for a period of 6 months.

14.  A complaint against Mr Barber had been made to the SFC in October 1999 by Susan Field, a client of his company Barber Asia Ltd ("BAL"). 

15.  The SFC’s decisions were made after an action in the High Court had been brought by Ms Field against BAL for negligent advice.  Judgment was given in Ms Field’s favour which was upheld on appeal.  Pursuant to those judgments, the SFC asked for representations from Mr Barber, and its decisions were made on the strength of the findings in the judgment and after consideration of Mr Barber’s representations. 

16.  Mr Barber applied for a review of the SFC’s decisions under s.217 of the Securities and Futures Ordinance cap. 571 ("the Ordinance").

17.  On review, the Tribunal (as it was entitled to do under s.219 of the Ordinance) considered the evidence afresh and also heard oral evidence from Mr Barber, Charles Dunford a former director of BAL and Ms Field. 

18.  The Tribunal also considered (as it was entitled to do under s.218 of the Ordinance) the submissions made on behalf of the SFC that Mr Barber was in breach of duties set out in the 1996 Code of Conduct for Persons Registered with the SFC ("the Code") regarding diligence while providing advice (“the duty of diligence") and ensuring the suitability of  recommendations for individual clients ("the duty of suitability"). 

19.  In June 2005, the Tribunal by a majority found that Mr Barber was in breach of the duties of diligence and suitability set out in the Code but unanimously substituted a period of suspension of 1 month.

20.  Mr Barber has appealed the Tribunal’s decisions to this court.

Appeals on point of law only

21.  The appeal is governed by s.229 of the Securities and Futures Ordinance cap. 571 which provides, where material:

"A party to a review who is dissatisfied with a decision of the Tribunal relating to the review may appeal to the Court of Appeal against the decision on a point of law".  (Emphasis added).

Ground advanced

22.  The point of law argued on Mr Barber’s behalf is that the majority decision was:

"perverse in being unsupported by any evidence and manifestly wrong in law in that the decision on liability conflicts and contradicts in a material respect the unanimous findings of fact made by the Tribunal".  (Emphasis added).

23.  It is common ground that the relevant approach should be that set out in Edwards v Bairstow [1956] AC 14.  In Runa Begum v Tower Hamlets LBC [2003] AC 430, Lord Millett reiterated that in an appeal on point of law "the court cannot substitute its own findings of fact for those of the decision-making authority if there was evidence to support them; and questions as to the weight to be given  to a particular piece of evidence and the credibility of witnesses are for the decision-making authority and not the court" (para. 99).

24.  As a matter of completeness, I would record that at the commencement of the hearing of this appeal, the competence of the Tribunal was also challenged on behalf of Mr Barber but Mr Pirie did not pursue this argument which in any event was not in the Notice of Appeal.

Background

25.  BAL was a private client investment advisory company.  Mr Barber was a director and registered with the SFC as an investment adviser.  Although Ms Field did not sign a client agreement, it is common ground that Ms Field became Mr Barber’s client at BAL.  Although the company was not directly remunerated by clients, it received commissions from the providers of the investment products that its clients acquired through its recommendation.

26.  As Ms Field’s investment adviser, Mr Barber was obliged to act pursuant to the duties set out in the Code. 

The Code of Conduct

27.  The 1996 Code of Conduct required investment advisers to act in the following way: 

"C3.  Diligence

3.4     When providing advice to a client a registered person shall act diligently and ensure that his advice and recommendations in relation to clients are based on thorough analysis andtake into account available alternatives. 

C5.    Information about clients

5.2     Having regard to information disclosed by a client and other circumstances relating to the client which the registered person is or should be aware of through the exercise of due diligence, the registered person shall, when making a recommendation or solicitation, ensure the suitability of such recommendation or solicitation for that client as is reasonable in all circumstances.

5.3     A registered person providing services to any client in relation to derivative products, including futures contracts or options, or any leveraged transactions shall assure himself that the client understands the nature and risks of the products and has sufficient net worth to be able to assume the risks and bear the potential losses of trading in such products".

(Emphasis added).

In its determination, the Tribunal referred to these provisions as "the ‘diligence’ and the ‘suitability’ regulatory rubrics" (para. 128).  It is clear from the context that para. 5.2 imposes a general duty to clients and that para. 5.3 emphasizes the particular importance of the duty when the product involved is a leveraged transaction.  

Tribunal’s findings of fact

28.  The Tribunal’s findings of fact have been set out extensively in its 50-page determination ("the Determination").  It would be wasteful to reproduce it here but the following salient features should be noted.

The client

29.  Mr Barber was well-acquainted with Ms Field’s financial situation.  He was first introduced to Ms Field in 1997 through mutual friends.  At their first meeting in June 1997, Ms Field gave detailed information to Mr Barber on her personal circumstances, her financial position and her investment aim.  In summary,

- Ms Field was then a single lady in her early 40’s who had been in Hong Kong for about 10 years and who had established a small business here in marketing communications which she operated by way of a limited company;

- Ms Field had never had any fixed assets or investments, but by then had succeeded in saving some money.  She had previously ploughed most of the profits back into the business, but by June 1997 as a result of the sale of a magazine, she had accumulated HK$3m of which she was aiming to initially invest US$190,000 (HK$1.5m) "for capital growth - conservative risk" as Mr Barber recorded in his meeting notes;

- under a section entitled "Plans & objectives", Mr Barber recorded Ms Field as informing him that she planned to spend the next 5 years in Hong Kong to build up the company’s value by maximising profits, at the end of which she might sell the company and return to the UK where her elderly mother was residing and buy a house.

Original recommendation

30.  Mr Barber’s original recommendation to Ms Field was unexceptionable.  He recommended that she invest in a bond with the life insurance group Old Mutual International, in a portfolio structure called the Alpha Capital Investment Plan.  He suggested a “balanced portfolio”. 

First investment

31.  A few months later in March 1998 (by which time Mr Barber and Ms Field had become friends), Ms Field invested a little more than US$300,000 in the Old Mutual Alpha Plan.  Given that she had savings of HK$3m., that represented the lion’s share of her assets.  The component investments in her portfolio were described by the Tribunal as "conservative and relatively low risk" (Determination, para. 13).

32.  About 2 months later, on 26 May 1998, Mr Barber and Ms Field met again.  They discussed the Old Mutual plan with a view to adjusting her existing fund selection to include a European fund, because Ms Field had heard "everybody talking about Europe", but nothing came out of it.

Client’s desire for higher returns

33.  About a week later, on 3 June 1998, they met for dinner at the Grand Hyatt.  Mr Barber’s evidence (recorded at para. 84 of the Determination and which the Tribunal accepted) was that Ms Field told him that she had made some "important decisions" concerning her personal life and that this materially affected her investment objectives.  She was planning to remain in Hong Kong for a further 3-5 years to build up her business at the end of which she would sell her business and return to the UK.  (Pausing there, it would be noted that this was actually no different from the plans she had disclosed to Mr Barber when they first met in June 1997 which he had recorded in his meeting notes: see para. 29 above). 

34.  Be that as it may, Ms Field told Mr Barber that she wanted to "make her money work harder".  He gathered from this that she wished to abandon her original ‘conservative risk’ strategy. 

Client’s rejection of volatile options

35.  Mr Barber then discussed emerging South American markets and switching to narrow "sector funds" in the Old Mutual plan, but after he pointed out the volatility in these markets, Ms Field rejected those options (Determination para. 85).  I shall return to this aspect of the evidence later.

Recommendation involving leveraged forex term loan

36.  Mr Barber said it was at this stage at the dinner at the Grand Hyatt on 3 June 1998 that he told Ms Field that some clients of BAL were enhancing their returns by using a 5-year term loan gearing facility offered by N.M. Rothschild & Sons (C.I.) Ltd ("NMR").  He explained that this scheme involved borrowing in Yen from NMR at a low interest rate, converting the Yen into sterling, and investing those funds in sterling-denominated investments producing a higher return, the investments being used as collateral for the loan.

37.  As for the ‘downside’, Mr Barber said he told Ms Field that this strategy carried a greater risk than her existing investment, and that there was a risk of currency loss if the Yen were to appreciate against sterling, but if that were to occur, she could then switch to another low interest rate currency for the loan.  He also advised her that if she were to invest in the NMR scheme, he would recommend that she invest the loan proceeds in a low-risk capital protected fund, suggesting a fund offered by the life insurance group Scottish Life.

38.  Ms Field was interested and asked Mr Barber to send her details – from this it may be inferred that Mr Barber did not have any relevant documents with him at the Grand Hyatt dinner on 3 June 1998 (although at one stage of his evidence before the Tribunal, he said he gave her the brochure but they did not discuss the NMR scheme then: Transcript p.371).

The NMR documents

39.  Be that as it may, at some stage (it is not clear when) Mr Barber did send Ms Field a set of standard pro forma documents from NMR on the Loan and Guarantee Scheme.  The Tribunal found that this included an introductory document (reproduced at pp 12-20 of the Bundle, albeit out of sequence). 

- There was one page containing sections on “Important Notes”, “Risk Considerations”, “Taxation” and “Regulation”.  Under the section on “Risk Considerations”, it was stated amongst other things that “fluctuations in currency exchange rates can affect performance returns”.

- There was also a section on Investment Gearing.  Three examples were given.  Example 1 showed a scenario where the same currency was used for the loan and for the investment.  Example 2 showed a scenario where a different currency was used but assumed no movement in the exchange rate.  Example 3 was a scenario where the exchange rate moved, in one instance in favour of the investor and in the other, against him.  However no monetary figures were given as in the other two examples and only differences in percentages in the rate of return were mentioned.  

- This section did however warn that “gearing, however, can be a high risk strategy and hence is certainly not for every investor”.  The main issue before the Tribunal was whether Mr Barber should have realised that this “high risk” leveraged forex strategy was not for Ms Field.

Client’s change of investment

40.  On 10 July 1998, Mr Barber met Ms Field and went through the NMR documents with her, including the risk clauses and the gearing examples given in the NMR literature.  The Tribunal accepted Mr Barber’s evidence that when he left her, he left copies of the documents with her and suggested that she re-read them.

41.  Later that afternoon, Ms Field signed the relevant documents and returned them to Mr Barber.

42.  This new investment recommended by Mr Barber and effected by Ms Field involved her using the entirety of her Old Mutual investment (then worth about £187,000) as security to borrow from NMR 2½ times that sum – in Yen, i.e.  ¥110 m (equivalent to £451,500 net ) – which loan would be converted to sterling to acquire an insurance product from Scottish Life, which was itself secured to NMR.

Currency movements

43.  As the Tribunal put it, “there is little doubt, as matters transpired, that this was a calamitous investment.  It is also clear, in light of the events which occurred, that this was an investment which contained a significant element of risk” (Determination para. 108). 

44.  Soon after the loan was drawndown, the Yen appreciated considerably against sterling and it remained so in the course of the next few months.  As the Yen rose, returns dropped. 

Margin calls

45.  In February 1999, barely 6 months into the 5-year term, the value of the collateral fell short of the minimum margin cover required under the scheme.  NMR made its first margin call on Ms Field.  On Mr Barber’s advice, Ms Field kept the loan in Yen.  However to service the investment, she had to take out an additional loan for HK$650,000 (£76,000) from HSBC – at an interest rate of 11.5% – to place it with NMR, who paid interest on the reserve cash at only 4.56% (Transcript p.342).

46.  The Yen continued to maintain its strength against sterling.  About 6 months later, Ms Field received another margin call.  When she did not meet it, NMR made a demand for immediate repayment of the loan and switched the currency of loan to sterling.

Result

47.  Eventually in December 1999, a little more than 15 months into the 5 year term, Ms Field closed out her investment.  She lost three-quarters of her assets, being left with £44,000 out of her original capital of £187,000.

Majority’s determination

48.  It was in the light of those findings of fact that the majority of the Tribunal found that Mr Barber was in breach of the duty to “ensure that his ... recommendation in relation to [Ms Field] is based on thorough analysis and take into account available alternatives” and the duty to “ensure the suitability of such recommendation ... for [Ms Field] as is reasonable in all circumstances”.

49.  The majority found that

“notwithstanding the express warnings on the face of the Rothschild literature, at bottom Mr Barber had been insufficiently diligent in explaining and amplifying to his client the downside risks within this investment, which clearly involved a leveraged forex position, and further, and ultimately, that he had failed properly to assess the suitability of this investment to this particular client notwithstanding her announced, and admitted, increase in risk profile” (Determination para. 129).    

Discussion

50.  Was this determination “perverse in being unsupported by any evidence”?  Did it “conflict with or contradict” the findings of fact?  With respect to the minority, the majority of the Tribunal was in my view clearly entitled to arrive at that conclusion on the evidence,  which conclusion was entirely consistent with the findings of fact.

The duty of diligence

51.  As far as the duty of diligence was concerned, it was undisputed that this was the first time that this particular client had had any contact with an investment of this nature.  Mr Barber said that he had to explain to her what gearing was.  He said he explained to her the risk in currency loss and the need to maintain margin security by going through the gearing examples given in the NMR documents.

52.  However he admitted that he "did not use the illustrations to show losses" (Transcript p.361).  That was because (he said) "it is not industry practice.  What is the point of showing losses? ..." (Transcript p.361).

53.  Clearly the majority of the Tribunal determined that as an investment adviser recommending this high-risk product to an inexperienced investor, there was indeed a point in Mr Barber showing Ms Field how significantly currency movements might affect a leveraged transaction and that in not having done so, Mr Barber had failed to comply with the duty of diligence. 

54.  When cross-examined by counsel for the SFC on this aspect, Mr Barber sought to defend his position by saying that he believed the downside of the scheme was "covered sufficiently in the application form and in the gearing illustration" (Transcript p.362) and admitted he made no effort to independently demonstrate the downside of the arrangement (Transcript p.363).  

55.  However as I have noted, only Examples 1 and 2 in the NMR literature gave figures in arithmetical form in illustrations involving a loan in first, the same currency and secondly, in a different currency but at a constant exchange rate. 

56.  Example 3, the example given for a scenario where there were exchange movements, only gave resulting percentage changes in the rate of return, but did not provide (in arithmetical or other form) the figures which would result.  Unlike Examples 1 and 2, it did not show in dollars and cents (or in this case, Yen and sterling) how significant an impact currency movements could have when magnified by the second highest maximum gearing factor offered by the lender and the consequential drain on the margin security.  And Mr Barber did not fill the gap.

57.  In his evidence, Mr Barber said he did not do so because (he said) "it is not the practice of our industry to indicate losses, potential losses because that is not what clients are coming to you for; they are coming to you for an expectation of return.  It is a given that there is always the opportunity to lose money" (Transcript p.337).

58.  It is precisely "the opportunity to lose money" – particularly the magnified opportunity in a leveraged transaction consequential upon fluctuations in currency exchange rates - that the Tribunal determined Mr Barber as Ms Field’s investment adviser should have explained in detail and illustrated to her.   

59.  The Tribunal would have noted that regarding Mr Barber’s assessment of the "opportunity to lose money", or in other words his understanding of risk, he had earlier in cross-examination said: "the risk is loss of capital, so if you are going for a ten percent, in simple terms, if you are going for a ten percent return then you might have to accept a ten percent loss" (Transcript p.336).  The Tribunal found that Ms Field’s desired annual growth was 20% (Determination para.108).  It is not surprising given Mr Barber’s perception of risk, that he did not take steps to explain to his client that this investment might cause her to lose much more than 20% of her capital. 

60.  That omission was exacerbated by his apparent failure to inform her that for the purposes of valuation as collateral, her investments in Old Mutual and Scottish Life - being life assurance policies - were  restricted to the surrender value (Transcript p. 340-1).

61.  In view of Mr Barber’s own evidence, in particular that there was no point in showing losses, not even to an inexperienced client, the majority of the Tribunal was in my judgment entitled on the evidence to find that he had not done enough to drive home to the client the possible downside of the scheme that he was recommending to her. 

The duty of ensuring the investment was suitable

62.  I then come to the duty of ensuring that the investment recommended was suitable for the particular client.  Mr Barber had taken full details of Ms Field’s situation and was aware that she had savings of about HK$3m (Transcript p.350-1), of which the bulk (£187,000) had been invested in the Old Mutual scheme.  Although she had a business, she had regularly ploughed the profits back and had planned to maximise its profits so that she could sell it in 3-5 years.  Mr Barber admitted in evidence that he knew that Ms Field was only able to purchase the product he recommended by borrowing money (Transcript p.363-4).  He did not discuss hedging with her and in any event, Mr Dunford’s evidence showed that hedging was not a viable option for Ms Field as the cost of hedging would in effect have nullified the purpose of borrowing in yen to invest in sterling (Transcript p.395).

63.  In other words, this client had no other financial resources she could readily turn to in case additional collateral was required.  Her situation did not fit the client profile for which the NMR scheme was suitable i.e. according to Mr Barber’s evidence:  "somebody who could readily service the loan", "who could provide additional collateral, presumably, if there was a call for additional collateral" (Transcript p.339).  That she did not fit this profile was corroborated later by her need to borrow further funds from HSBC to meet the first margin call and the fact that she did not meet the second margin call a few months later. 

64.  The fact that Ms Field had expressed her wish to "make her money work harder" did not make an unsuitable investment a suitable one.  Her rejection of the volatile options suggested by Mr Barber in June 1998 showed that she was not so desperate to achieve higher returns that she had thrown caution to the wind.

65.  The majority of the Tribunal was therefore clearly entitled on the undisputed evidence to find that the NMR scheme involving a leveraged forex loan was unsuitable for Ms Field and that Mr Barber should never have recommended it to her. 

Order

66.  By reason of the matters discussed above, I do not consider that the appellant has made out a case that the majority’s determination was  unsupported by evidence or that it conflicted with or contradicted in any respect the Tribunal’s findings of fact.

67.  As for the determination that Mr Barber be suspended for 1 month, this was a unanimous decision of the Tribunal and there was nothing before us that suggested that that was too harsh. 

68.  Accordingly there is no error in point of law and the appeal should be dismissed, with an order nisi that the appellant bear the costs of the appeal.

Hon Burrell J:

69.  I agree with the judgments of Yuen & Stock JJA.

Hon Stock JA:

70.  In the result, the appeal is dismissed and there will be an order nisi that the appellant do pay the costs of the appeal, including the costs of the application to appeal out of time.  The appellant’s own costs are to be taxed in accordance with the Legal Aid Ordinance.