SECURITIES AND FUTURES COMMISSION v. C.L. MANAGEMENT SERVICES LTD AND ANOTHER

HCMA 382/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MAGISTRACY APPEAL NO 382 OF 2014

(ON APPEAL FROM ESS 30673-30676/2013 & ESS 39231-39232/2013)

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REASONS FOR DETERMINATION

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1.  This application arises from an appeal against the decision of a magistrate, to which I have dismissed on 2 June 2016. The Notice of Motion as to the questions to be certified was filed on 6 June 2016 and served on the respondents accordingly. Backgrounds and facts of the case are laid out in full in my judgment which I am not going to repeat or recite.

2.  According to s 32(2) of the Hong Kong Court of Final Appeal Ordinance, Cap 484：

“(2) Leave to appeal shall not be granted unless it is certified by the Court of Appeal or the Court of First Instance, as the case may be, that a point of law of great and general importance is involved in the decision or it is shown that substantial and grave injustice has been done.”

3.  The points of law stated to be certified is rephrased as follows:

“(1) whether the phrase ‘holding out’ in s 114(1)(b) of the Securities and Futures Ordinance (Cap 571) connotes ‘a representation intentionally made and which was intended to be relied upon’, and if not, being a strict liability offence, which of the alternatives stipulated in Hin Lin Yee and Kulemesin reflects the legislative intent? If yes, how can the representation of an employee be attributed to a corporate defendant?

(2) If the liability of the corporate defendant is founded on a written instrument, whether it needs to be proved beyond reasonable doubt that either the general public could objectively understood or a reasonable reader in the shoes of the representee would have understood the contents as representing the corporate defendant to be carrying on a business in a regulated activity. Further, whether it needs to be proved that the drafter of such instrument was delegated by the directing mind and will of the corporate defendant to act on and behalf of the corporate defendant, and whether it needs to be proved that the officer knew, ought to have known, or was reckless as to whether the Instrument contained the representation to find the officer liable under s 390 of the Ordinance.

(3) where the arranger does not give any advice and only arranged for introduction of other persons qualified to give advice, does it still amount to ‘advising on corporate finance’.”

4.  The issue framed in question 1 has been dealt with in paragraphs 18 to 25 of my judgment.  The decision only involved the construction of that section instead of any wider and broader legal principles relating to statutory construction, the mens rea of regulatory offence and how to determine that mens rea has been displaced, and which alternative if it has been displaced.  These latter broader legal principles are well settled in the cases of Hin Lin Yee v HKSAR (2010) 13 HKCFAR 142 and Kulemesin v HKSAR (2013) 15 HKCFAR 195, and was applied without ambiguity in the case of Ho Loy, FACC 7/2015.  With that, the argument that “holding out” in s 114(1)(b) requires proof of intention inevitably fails.  The question regarding attribution of corporate liability is not a point of law which was “involved in the decision”.

5.  Question 2 involves a question relating to the court’s interpretation of the instrument.  A2’s claim of not knowing the contents of the instrument when she signed was rejected by the magistrate.  The magistrate made specific findings that she signed the instrument which contained the scope of service to be provided knowingly with full comprehension of its contents, and that both Cheuk and A2 had no mistaken comprehension of the services to be provided.  Question 2 was simply an attempt to challenge findings of fact under the disguise of a so‑called question of law.

6.  The third question is framed under the premise that A2 was merely arranging for introduction of others to give advice to Cheuk.  The magistrate found specifically that A2 was in the know throughout and Michael performed his role under her delegation.  No question of law is involved.

7.  With the greatest respect to counsel, the questions so posed as are either not questions of law, or, as in Question 1, the law is settled with no ambiguity.  I refuse to certify that any point of law of great and general importance is involved in the present case.  The application for certificate is refused with costs to the respondent, with certificate for two counsels, to be taxed if not agreed.