"A" v. THE SECURITIES AND FUTURES COMMISSION AND ANOTHER

HCAL 103/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST

NO. 103 OF 2007

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J U D G M E N T

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I. INTRODUCTION

1. Under Securities and Future Ordinance (Cap.571) (SFO) s.182(1) the SFC may appoint investigators to look into potential insider dealing.  Under SFO s. 183(1)(c) an investigator may require a person whose conduct is being looked into to attend an interview and answer questions. 

2. The short issue which I have to decide today is this: Can the investigator insist that the person’s interview (in particular, the oral questions asked and oral answers given) be audio (as opposed to video) recorded?

3. The question is raised as a preliminary issue in a judicial review.  This approach has been taken with the agreement of the parties.

II. BACKGROUND

4. The SFC appointed investigators (including Mr. Tong) to look into possible insider dealing by the Applicant in certain shares.

5. In the course of his investigation, Mr. Tong wrote to the Applicant requiring attendance at an interview.

6. The Applicant agreed to attend and answer questions. 

7. He asked for the interview to be conducted in Putonghua (his native language) by fluent Putonghua speakers.  If that was not possible, the Applicant made it clear that he expected an interpreter who was independent of the SFC to be present.

8. The Applicant alleges that Mr. Tong is not a fluent Putonghua speaker.  The Applicant is concerned that consequently Mr. Tong will not be able accurately to understand and transcribe his answers.  The Applicant has asked that the questions posed to him and his answers be recorded in writing.

9. The SFC proposed that the interview be video recorded.  The Applicant objected to that.

10. The SFC proposed that, at the very least, the interview be audio recorded.  The Applicant also objected to that.  When the SFC insisted on the audio recording of oral answers, the Applicant brought this judicial review. 

11. The Applicant contends that the SFC has no power to insist on the audio recording of s.183(1)(c) interviews.  The Applicant also accuses Mr. Tong of actual or apparent bias and seeks an order barring him (as opposed to other investigators appointed by the SFC) from continuing with the case.  This Court will consider the allegation of bias at a later date.

III. DISCUSSION

A. The Applicant’s submissions

12. Mr. Coleman SC (appearing for the Applicant) advances 5 arguments.

13. First, there is no express power under the SFO enabling an investigator to insist on an interview being audio recorded.

14. Second, all that an investigator can require under s.183(1)(c) is that a person attend an interview and answer questions.

15. Third, although an investigator may take notes during the interview, nothing in s.183 allows him to go beyond that and insist on a person's “audio signature” to the record of an interview.

16. Fourth, under ss. 183(2) and (3), an investigator may require a person to verify his answers to (or his inability to answer) particular questions.  Those are the only occasions when an investigator can insist on a “signature”.  The express provision of those powers precludes the implication of any other powers (including the power to insist on an audio recording).

17. Fifth, while a written note of what transpires at an interview is “non-invasive”, an audio recording is “invasive” of a person’s privacy.

B. Arguments 1 and 2 : No express or implied power

18. These arguments may be taken together.

19. Mr. Westbrook SC (appearing for the SFC and Mr. Tong) accepts that the SFO does not expressly provide for the audio recording of a s.183(1)(c) interview.  However, that (Mr. Westbrook observes and I agree) is hardly surprising and cannot be the end of the story. 

20. Legislation rarely condescends to the level of detail of specifying how an interview is to be carried out.  Thus, commenting on what he labels “the commonsense construction rule”, Bennion in Statutory Interpretation (4^th ed., 2002) states (at p.473):-

“	Drafters are often silent on points of detail, simply because it is not possible to express every aspect of a matter.  Commonsense may be needed in working out the detail.”

21. The key question is whether a power to record an interview in audio form can be implied from the SFO.

22. Interpretation and General Clauses Ordinance (Cap.1)(IGCO) s.40(1) would be applicable.  That provides that where a statute (such as the SFO) confers upon any person (such as an investigator) power to do or enforce any act (such as conduct an interview) then:-

“	all such powers shall be deemed to be also conferred as are reasonably necessary to enable the person to do or enforce the doing of the act...”

23. Again it is helpful to refer to Bennion for guidance in the application of IGCO s.40(1).  He states in Statutory Interpretation (at p.429):-

“

Implied ancillary powers.  The rule in AG v. Great Eastern Rly Co [(1880) 5 App Cas 473] provides that an express statutory power carries implied ancillary powers where needed.  As stated by Lord Blackburn [at 481] the rule says that ‘those things which are incident to, and may reasonably and properly be done under the main purpose [of an enactment], though they may not literally be within it, would not be prohibited’. Or, as stated by Lord Selborne LC [at 478], the rule is that ‘whatever may fairly be regarded as incidental to, or consequential upon, those things which the Legislature has authorised, ought not (unless expressly prohibited) to be held, by judicial construction, to be ultra vires’....”

24. In the latest Supplement to his 4^th ed. Bennion has further clarified (at S22):-

“	In R (on the application of Morgan Grenfell & Co. Ltd.) v. Special Comr of Income Tax [2001] EWCA Civ 329 … Blackburne J cited the following dictum of Lord Nicholls of Birkenhead in B (a minor) v. DPP [2000] AC 428, at 464:
	‘	“Necessary implication” connotes an implication which is compellingly clear. Such an implication may be found in the language used, the nature of the offence, the mischief sought to be prevented and any other circumstances which may assist in determining what intention is properly to be attributedto Parliament…’
	This does not mean that any statutory implication, to be acted on, must be obvious.  That would be unsound.  In construing the wording of an enactment to find the legal meaning it is necessary to take account of the nature of the enactment and the surrounding circumstances.  If it is a penal enactment the penalty will not fall to be imposed unless any suggested implication is indeed clear and obvious.  With other types of enactment an implication may properly be found where the wording is not ‘compellingly clear’, but it is more likely than not that the implication was intended by the legislator.”

25. An example of the application of the principles just discussed is found in a New Zealand High Court case concerning similar (but not identical) circumstances.

26. In Jaffe v. Bradshaw (1998) 16 CRNZ 122 Paterson J examined whether the Serious Fraud Office Act 1990 permitted the videotaping of interviews.  The Act enabled an officer of the Serious Fraud Office to require a person to attend an interview. But the Act did not specify whether interviews could be videotaped. 

27. Jaffe objected to the videotaping of his interview.  That was because (according to Jaffe) the Director of the Serious Fraud Office may (on watching the video) form an adverse impression of Jaffe from irrelevant factors (such as lighting, camera angle, mis-framing).  That impression may unfairly influence any decision by the Director whether or not to prosecute Jaffe.

28. Citing Bennion’s 3^rd edition on implied ancillary powers, Paterson J thought that, as a matter of general principle, the Act left the administration of the Director's powers under the Act to the Director.  Although the powers conferred by the Act were not unlimited or unfettered, the Director would have such powers as were reasonably needed to enable him effectively to perform his duties under the Act.

29. In particular, despite not being expressly stated, the Director obviously had an implied power to record answers given at an interview.

30. Paterson J acknowledged that there could conceivably be prejudice to a person arising from an interview being recorded on video.  But he pointed out that there were considerable advantages to both interviewer and interviewee in having an accurate and reliable videotape recording of what each has said.

31. Further, as far as prejudice from the use of video recordings of interviews as evidence in court proceedings was concerned, that would be subject to their exclusion by the judge on the ground of unfairness to an interviewee.

32. Paterson J concluded that any potential prejudice to an interviewee under the Act did not counter-balance the use of video as an accurate and effective means of recording an interview.  He said (at p.135):-

“

Thus, any prejudice arising from demeanour or the manner in which the interview is given, if it exists at all, is minimal.  It is not unreasonable to allow the Director to take demeanour into account, and if he is not permitted to videotape an interview, this may lead to the need for him to sit in on interviews with most, if not all, of the interviewees.  This would be impractical. In my view, prejudice, if it exists, is not sufficient to determine that the use of the Director of videotape interviews in fulfilling the purposes and objectives intended by Parliament, is not reasonable and proper. As such, it is a legitimate and incidental ancillary power.  Video recording of interviews is merely an extension of rigorous and effective powers which are required to investigate serious or complex fraud.  The Director should not be impeded in the effective and expeditious use of these powers....”

33. The judge granted a declaration recognising the Director’s entitlement to impose a video recording on Jaffe.

34. I fully appreciate that the New Zealand Act, although similar in some respects to the SFO, is ultimately a different regime from the latter.  Nonetheless, in principle, Paterson J’s approach must be the correct one to follow in construing the ambit of an investigator’s jurisdiction under s.183(1)(c).

35. In the present case I simply have to decide whether it is reasonably necessary for an investigator to insist on an audio recording.  Unlike Paterson J, I do not have to grapple with potential prejudice to the Applicant which might arise from technical aspects (lighting, camera angle, mis-framing, etc.) of the video process.

36. I agree with Mr. Westbrook that the starting point must be that the SFO impliedly authorises an investigator to record the oral answers given at an interview.  This does not just follow from Jaffe.  It is a matter of commonsense.

37. Mr. Coleman does not dispute this.  But he would restrict the permitted ways of recording interviews to written means, including (say) a simultaneous verbatim transcript by a stenographer.

38. But a written transcript alone will not be an effective record.  See, for example, R. v. Pui Kam Chuen [1996] 4 HKC 365 (DC), where Judge Lugar-Mawson (at 368D - 370F) was critical of the practice of recording interviews with suspects by purely handwritten means unaided by any complete electronic recording.

39. Questions are likely to arise after the event as to whether this or that was said or not.  There may be queries as to whether the written transcript properly conveys some nuance or meaning arising out of a person’s inflection, his manner of speech or the precise words used.

40. Especially if the interview is long and detailed (as is inevitably the case in commercial matters such as insider dealing investigations), there will likely be disputes as to whether questions or answers given minutes or hours ago have been correctly recorded even by the most careful of stenographers.

41. If there is interpretation, there could be complaints after the event about whether something said in one language (say, Putonghua) was correctly translated into another (say, Cantonese or English).  It may be suggested, after the passage of minutes, hours or days following the giving of an answer, that the actual words used by the interviewer or interviewee were mis-translated, misunderstood or wrongly recorded.

42. In those circumstances, a written transcript will not conclusively settle disputes between the parties over what was said or not.

43. I therefore cannot accept that insistence on an audio recording is unreasonable or unnecessary.  An audio recording strikes me as the minimum reasonably necessary to ensure a degree of integrity to the interviewing process.  An audio recording provides a touchstone against which the accuracy of any contemporaneous or later transcript of an interview may be evaluated.

44. In my judgment, the power to record an interview by audio means must be reasonably incidental to the ability under s.183(1)(c) to conduct an interview.  The power to record by audio means is (I believe) thus “compellingly clear” in the sense described by Lord Nicholls in B (a minor). 

C. Arguments 3 and 4: No “audio signature”

45. These 2 arguments may be taken together.

46. This is a variant of the arguments just canvassed. Mr. Coleman is relying in effect on the maxim expressio unius, exclusio alterius (that is, “the express provision of one thing implies the exclusion of everything else”).

47. Mr. Coleman’s syllogism runs as follows:-

(1)	SFO ss.183(2) and (3) expressly provide that an interviewee (if required by an investigator) must sign a declaration verifying:-
	(a)	his answers to the questions asked; and,
	(b)	(where appropriate) his inability to answer specific questions due to a lack of knowledge or access to information.
(2)	The SFO does not provide for an interviewee verifying by his signature any other record of what transpired during an interview.
(3)	An audio recording is equivalent to an “audio signature” by an interviewee of what has transpired during an interview.
(4)	But, given the express authority in ss.183(2) and (3) to require written signatures in only limited situations, by implication the power to compel an “audio signature” through insisting on an audio recording must be excluded.

48. I do not accept that the syllogism is valid.

49. First, as Mr. Westbrook points out, an audio recording does not involve any kind of “signature”.  No one signs anything whether actually or metaphorically.

50. The recording exists as a necessary check on any contemporaneous or later written note of what was said (or not said) during an interview.

51. Second, a principal purpose of the statutory declaration under ss.183(2) and (3) must be to compel an interviewee to verify his answers (or inability to answer) on oath.  This would potentially expose the person under investigation to penalties for perjury if his evidence should later prove false.

52. An audio recording does not serve such function.  It would not render otiose the making of statutory declarations under ss.183(2) and (3).  The taking of an audio recording has little (if anything) to do with the verificatory “signatures” (subject to penal sanction for perjury) mandated by ss.183(2) and (3).

53. Third, Mr. Coleman in his skeleton argument has suggested that, because an interviewee may when making a statutory declaration correct something said during his interview, I should infer the absence of a power to audio record. 

54. I do not think that the proposed conclusion follows from the premise. 

55. It may sometimes be relevant that during an interview a person says X and then at the time of his declaration changes his mind to say Y or even not X. 

56. An audiotape only provides a record of what was said (or omitted) during an interview.  What a later change of answer by an interviewee may or may not connote is something for the investigator to decide as part of his investigation.  That a person may change his mind does not imply anything about whether a record can or cannot be kept in audio or (for that matter) any other form.

57. For those reasons, the existence of ss. 183(2) and (3) do not somehow negate the ability to make an audio recording.  The existence of those provisions is unrelated to the question of whether audio recording is authorised.  An answer to the latter question cannot be deduced from the presence of ss. 183(2) and (3).

D. Argument 5: Audio recording is “invasive”

58. Like Mr. Westbrook, I am unable to see how the audio recording of an interview can be characterised as “invasive”. 

59. Mr. Coleman suggests that an audio recording is a breach of the right of privacy guaranteed by Basic Law (BL) Art. 30; Hong Kong Bill of Rights (BR) Art. 14; and International Covenant on Civil and Political Rights (ICCPR) Art. 17.

60. BL Art. 30 provides as follows:-

“

The freedom and privacy of communication of Hong Kong residents shall be protected by law.  No department or individual may, on any grounds, infringe upon the freedom and privacy of communication of residents except that the relevant authorities may inspect communication in accordance with legal procedures to meet the needs of public security or of investigation into criminal offences.

61. BR Art. 14 provides as follows:-

“	(1)	No one shall be subjected to arbitrary or unlawful interference with his privacy, family, home or correspondence, nor to unlawful attacks on his honour and reputation.
	(2)	Everyone has the right to the protection of the law against such interference or attacks.”

62. ICCPR Art.17 is in similar terms to BR Art.14.

63. In Jaffe Paterson J considered the potential intrusiveness of video-recording.  Jaffe had advanced expert evidence from a television producer concerning the “technical and perceptual problems arising from a videotape recording of an interview which can lead to a subliminal perceptual bias on the part of the viewer and thereby create distortions of truth”. 

64. As a matter of first impression, I confess to deep scepticism over the submission in Jaffe that videotaping may give rise to significant unfair prejudice.  But since that issue is not squarely before me, I refrain from expressing any final views on the matter.

65. In contrast, in the present case, no evidence has been adduced to show that physically or psychologically the audio recording process is unduly intrusive, stress-inducing or likely to cause misapprehension.

66. As a matter of commonsense, I do not see how an audio-taping of what transpires between investigator and interviewee, made so as to produce an accurate written record of an interview, can constitute unwarranted interference with privacy. 

67. Nor can I see anything disproportionate in the practice of audio recording even if there might be some conceivable interference with the right to privacy arising from its use.

68. If anything, on balance, the use of sound recording is more likely to protect (rather than interfere with) a citizen’s well-being. 

69. An audio recording will ensure that, to the greatest extent possible, in the course of a criminal or quasi-criminal investigation his statements and only his statements are attributed to the interviewee. It will also safeguard against misunderstanding arising from the use of more than one language in an interview (a common circumstance in Hong Kong).

IV. CONCLUSION

70. The power to record an interview by audio means is reasonably incidental and necessary to the power under s.183(1)(c) to compel a person under investigation to answer questions. 

71. Consequently, in insisting upon an audio recording of an interview, the SFC and its investigators did not act ultra vires.

72. The Applicant’s claim for a declaration contrary to what I have just stated is dismissed.  The prayer for a prohibition against the audio recording of his interview is likewise dismissed.

73. I shall now hear counsel on costs and any further directions.