FRANCIS CHEUNG AND ANOTHER v. INSIDER DEALING TRIBUNAL

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FAMV No. 19 of 2000

IN THE COURT OF FINAL APPEAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO. 19 OF 2000 (CIVIL)

(ON APPEAL FROM CACV NO. 157 OF 1999)

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D E T E R M I N A T I O N

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Mr Justice Chan PJ :

1. This is an application for leave to appeal to the Court of Final Appeal.

2. In March 1998, an Insider Dealing Tribunal chaired by Burrell J issued a report finding the applicants guilty of insider dealing. One of the members of the tribunal, namely John Wu, was acquainted with the 1st applicant through an old boys' association. This was disclosed at the start of the hearings and no objection was raised to his sitting in the inquiry. However, after the tribunal had published its findings, it came to light that shortly before the inquiry was concluded and also after the report was issued, Mr Wu had engaged in certain communications with the 1st applicant and with one Siu Kam Kan, also a member of the same association, concerning the tribunal's deliberations.

3. This discovery caused the applicants to start proceedings for judicial review to quash the tribunal's findings. The facts and the details of those proceedings are sufficiently set out in the decision of Keith J reported at [1999] 3 HKLRD 254 and in the two-part decision of the Court of Appeal reported at [2000] 1 HKLRD 807. The applications were dismissed at each stage and the Court of Appeal also refused leave to appeal further. Hence, this application for leave.

4. As court proceedings intervened, the "penalty phase" provided for by section 23 of the Securities (Insider Dealing) Ordinance (Cap 395) has not yet begun.

Appeal as of right?

5. The applicants argued that they are entitled to appeal as of right under section 22(1)(a) the Hong Kong Court of Final Appeal Ordinance which provides that an appeal shall lie:-

" ...... as of right, from any final judgment of the Court of Appeal, where the matter in dispute on the appeal amounts to or is of the value of $1,000,000 or more, or where the appeal involves, directly or indirectly, some claim or question to or respecting property or some civil right amounting to or of the value of $1,000,000 or more ......"

6. They contended that unless the tribunal's decision is quashed, they are likely to be penalised in a sum exceeding $1 million and therefore that "the appeal involves, ... indirectly, ... some civil right amounting to or of the value of $1,000,000 or more."

7. A similar argument was raised in Hui Shiu Wing v Cheung Yuk Lin [1968] HKLR 176 which was a case decided in the context of an application for leave to appeal to the Privy Council. In that case, the Full Court held that an appeal against a decree nisi for divorce was not an appeal which involved indirectly any property or right amounting to a sum in excess of the then statutory limit, notwithstanding that an award for maintenance upon divorce might exceed that limit. We were urged not to follow that decision.

8. We are unable to accept that submission. To do so is to give too wide a construction to the words "indirectly" and "civil right" in section 22(1)(a). Leave is being sought to appeal against the decision of the Court of Appeal which refused to set aside the findings of the tribunal regarding the applicants' share dealing activities. The tribunal has yet to convene a hearing to decide whether to impose any penalty and if so, what penalty is to be imposed. This would be a separate hearing and involves a separate decision with different considerations. To say that an appeal against the decision confirming the findings of the tribunal falls within the ambit of section 22(1)(a) is straining the language of the provision.

Discretion under "or otherwise" limb?

9. The applicants contended that as a matter of utmost probability or virtual certainty the financial loss to them would be in excess of $ 1,000,000 and hence leave should be granted under the "or otherwise" limb in section 22(1)(b). For the same reasons as set out above, this submission must also fail.

Questions of great general or public importance

10. As an alternative, counsel submitted that there were four questions of law of great general or public importance and that leave should be granted under section 22(1)(b).

11. The first question which the applicants wanted the Court of Final Appeal to consider was whether there is a duty to communicate dissenting views by a member of a tripartite tribunal to the other members. Counsel submitted that the judge and the Court of Appeal were wrong in holding that there was no such duty. His argument ran as follows. The inquiry was to be conducted by a 3-member tribunal with expertise from the financial field. Its decision was to be a collective decision and participation in its deliberation by all members was essential. This must include communication between them in order to arrive at such a decision. There would be no full participation if one member refrained from expressing his dissenting view, particularly when he had reasons to dissent. Thus the ruling of the trial judge and the Court of Appeal had far reaching implications on judicial tribunals. It would grossly undermine the integrity of such tribunals and would defeat the intention of the legislature in requiring such tribunals to be constituted. Reliance was placed on a number of Canadian and English authorities.

12. We do not think that this argument can succeed for the simple reason that there was no factual basis as found by the courts below to support such submission. It was held that on the evidence (which included not only the affirmations of Mr Siu and the 1st applicant, but also the affidavit of the Chairman of the tribunal and Mr Wu's letter), Mr Wu did participate in the deliberations, that the applicants had failed to establish that Mr Wu had any dissenting view and that even if he had, there was no duty to disclose it to the other members. As Leong J.A. said in his judgment at p.110 of the bundle :-

"The evidence shows that the report cannot be anything other than a unanimous report by all three members of the Tribunal based on their unanimous findings, reached as a result of active participation by all three members who sat together through out the Inquiry. ... Even if on the tenuous evidence of Mr Siu and Mr Cheung, it does show Mr Wu harboured a dissenting view but felt unable to go against the majority view of the other two members and therefore signed the report, that does not mean non participation by him in the deliberation. A majority decision is a proper and regular decision perfectly acceptable under rule 13 of the rules relating to conduct of inquiry by the Tribunal.

The Judge was right to hold that whatever view Mr Wu might have held whether he expressed it or not, could not have affected the outcome."

See also the comments by Mayo JA at p.115 and 116 and Nazareth VP at p.122 and the Court of appeal's decision refusing leave to appeal at p.131.

13. Counsel for the applicants submitted that there were glaring differences in the Court of Appeal's first and second judgments which demonstrated that it had made a complete U-turn in its approach towards the evidence. It is not necessary to set out the alleged discrepancies in the two judgments. Suffice it to say that we do not read these judgments in the way counsel contended. At the first hearing before the Court of Appeal, the judges were dealing with the admissibility of evidence which was sought to be adduced. They were then considering whether such evidence was relevant to the issues before the court. The 1st judgment was clearly premised on the assumption made for the purposes of argument that the evidence sought to be adduced could be believed and accepted. The question of how much weight should be attached to such evidence was not before the judges who were not required to make any decision on what to accept. On the other hand, at the second hearing, when the issues involved in this case were to be determined, such evidence had to be weighed against other evidence and the court did make a finding based on such evidence.

14. The second question sought to be submitted to the Court of Final Appeal for consideration was whether a tribunal's decision would still stand notwithstanding the serious misconduct on the part of one member of the tribunal. The question as framed does not identify the "serious misconduct" in question. The only serious misconduct, found by the court, was the disclosure by Mr Wu of the deliberations of the tribunal and the supply of confidential notes to the 1st applicant towards the end of the inquiry and before the issue of the report. Such conduct was clearly a breach of confidentiality on the part of Mr Wu and was described as probably a criminal offence. As a result, it was considered that Mr Wu was unfit to continue and he resigned.

15. It was conceded by the applicants that such misconduct was insufficient in itself for the court to quash the tribunal's findings. As the Court of Appeal held, the isolated misconduct of Mr Wu had nothing to do with the decision-making process of the tribunal and the findings of the tribunal were not tainted by such conduct. No other misconduct arises on the facts as found capable of grounding the question as framed. This is enough to dispose of counsel's argument.

16. The third question was whether there was any discretion not to quash the tribunal's finding where evidence disclosed actual or a real danger of bias, including "reverse bias" on the part of a tribunal member. It was submitted that the court had applied the wrong test on bias and that the matter should be considered objectively from the points of view of the applicants and members of the public and not subjectively from the judge's point of view. This question was linked with the last question which was how that discretion is justified or exercised in the light of the well-established principle that justice must not only be done but see to be done. Counsel sought guidance on the conflict between this principle and the modern "trend" to do justice as economically as possible.

17. In the course of the hearing before us and while on his feet, Mr Denis Chang SC for the applicants re-formulated his third question along the following lines: Should the Hong Kong courts discard the test of a real danger of bias laid down by the House of Lords in R v. Gough [1993] AC 646 and adopt in its place the test laid down by the High Court of Australia in Webb v. R [1994] 123 ALR 41, namely the test of a reasonable apprehension or suspicion on the part of a fair-minded and informed member of the public that the decision-making task had not been or would not be discharged impartially?

18. This question, we were informed, was apparently touched upon at the hearing before Keith J who considered that the courts of Hong Kong are bound to apply the Gough test. This point was not argued on appeal. The trial judge having considered the evidence simply found that the evidence "does not begin" to establish that Mr Wu was biased against the applicants and that there was no reason for him to impress upon tribunal that he was impartial and not in favour of the applicants because of their relationship. Hence, applying the test in Gough, the judge took the view that there was not any real danger that Mr Wu had regarded the 1st applicant's case with disfavour. In other words, no bias could be established, whether actual or real. The exercise of discretion did not arise for consideration. The Court of Appeal came to a similar conclusion finding that there was no actual or real danger of bias. See Leong JA at p.112, Mayo JA at p.120 and Nazareth VP at p.124.

19. For present purposes, it cannot be said that it is totally unarguable that the Webb test could not be adopted as the correct test in Hong Kong. But the question would be academic unless it is at least reasonably arguable that the circumstances of the present case are such that the application of the Webb test would lead to a different result from that achieved by application of the Gough test. That, in our view, is not even reasonably arguable. The suggestion based on so-called "reverse bias" is that Mr Wu's connection with the 1st applicant in the old boys' association of their old school caused Mr Wu to go so far to avoid any appearance of bias in the 1st applicant's favour that he ended up being biased against him. That was speculation rightly rejected by the courts below. The applicants' case is at best to the effect that Mr Wu had a dissenting view and reasons for holding such view but that he did not express it to the other members of the tribunal because he thought there was no point in doing so. In these circumstances, we do not see any necessary inference of bias on either test and accordingly cannot see any reasonable prospects of the applicants succeeding on the appeal. There is no question that justice is not seen to be done in this case.

Result

20. For these reasons, we would refuse leave. We would also make an order nisi that the applicants should pay the costs of the Financial Secretary.