PACIFIC SUN ADVISORS LTD AND ANOTHER v. SECURITIES AND FUTURES COMMISSION

Press Summary (English)

Press Summary (Chinese)

FACC No. 11 of 2014

IN THE COURT OF FINAL APPEAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

FINAL APPEAL NO. 11 OF 2014 (CRIMINAL)

(ON APPEAL FROM HCMA NO. 490 OF 2013)

____________________

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J U D G M E N T
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Mr Justice Ribeiro PJ:

1. I agree with the judgment of Mr Justice Fok PJ.

Mr Justice Tang PJ:

2. I agree with the judgment of Mr Justice Fok PJ.

Mr Justice Fok PJ:

3. Section 103(1) of the Securities and Futures Ordinance[1] makes it an offence to issue advertisements, invitations or documents relating to investments in certain cases but there are various exemptions specified in section 103(3).  This appeal concerns the proper construction of section 103(3)(k), specifically the ambit of the exemption it provides from the application of the offence-creating section.  Does the exemption apply where an advertisement relates to a product which, as a matter of fact, is only disposed of or intended to be disposed of to professional investors?  Or, does the advertisement have to actually state that the product is intended for professional investors before the exemption can apply?

A.  Section 103 of the SFO

4. Section 103(1) of the SFO creates an offence in the following terms:

“(1) Subject to subsections (2), (3) and (5) to (9), a person commits an offence if he issues, or has in his possession for the purposes of issue, whether in Hong Kong or elsewhere, an advertisement, invitation or document which to his knowledge is or contains an invitation to the public –

(a) to enter into or offer to enter into –

(i) an agreement to acquire, dispose of, subscribe for or underwrite securities; or

(ii) a regulated investment agreement or an agreement to acquire, dispose of, subscribe for or underwrite any other structured product; or

(b) to acquire an interest in or participate in, or offer to acquire an interest in or participate in, a collective investment scheme,

unless the issue is authorized by the Commission under section 105(1).”

5. A person who commits an offence under section 103(1) is liable on summary conviction to a fine at level 6[2] and to imprisonment for 6 months.[3]

6. Section 103(3) provides a list of exemptions from the application of section 103(1), which includes that in sub-section 103(3)(k), as follows:

“(3) Subsection (1) does not apply to the issue, or the possession for the purposes of issue –

…

  (k) of any advertisement, invitation or document made in respect of securities or structured products, or interests in any collective investment scheme, that are or are intended to be disposed of only to professional investors.”

7. The term “professional investors” is defined at some length in section 1 of Part 1 of Schedule 1 of the SFO and includes persons prescribed as being within the meaning of that definition in section 3 of the Securities and Futures (Professional Investor) Rules[4] made by the Securities and Futures Commission (“the Commission”)[5].

8. It is common ground, and it is self-evident from the structure of the provisions, that the burden of proof of the material elements of the offence in section 103(1) rests on the prosecuting authority, whilst the burden of proof that the exemption in section 103(3)(k) applies rests on the person charged with the offence.  The issue in the present case relates to what that person must show to pray in aid the exemption.

B.  The material facts

9. The 1^st appellant is a company of which the 2^nd appellant is the Chief Executive Officer and provides investment advice.  On 2 November 2011, the 1^st appellant sent an email prepared by the 2^nd appellant to various recipients.  The email announced the launch of a fund called the Pacific Sun Greater China Equities Fund (“the Fund”) and attached a press release to the same effect (exhibit P8 at trial).  On 25 November 2011, the 1^st appellant’s website published three documents relating to the Fund (exhibit P9 at trial).

10. It is not disputed that the Fund is a collective investment scheme[6], which was launched by the 1^st appellant on the 2^nd appellant’s instruction, and that exhibits P8 and P9 were advertisements for the Fund issued to the public or a sector of the public.  It is also common ground that authorisation had not been obtained from the Commission in respect of the issue of the advertisements.

11. The key facts for the purposes of the present appeal are that:

(1) as found by the Magistrate[7], the Fund was or was intended to be available solely to professional investors and was not one for investment by the general public; and

(2) this fact is not expressly stated in the advertisements themselves.

C.  The course of the proceedings below

12. The email attaching exhibit P8 formed the basis of two charges[8] brought by the Commission against the appellants for breach of section 103(1) of the SFO.  The publication on the 1^st appellant’s website of the documents which were exhibit P9 formed the basis of two further charges[9] brought by the Commission under section 103(1).

13. After trial, the Magistrate acquitted the appellants on two bases.

(1) First, based on disclaimers in the exhibits and subsequent screening procedures adopted by the 1^st appellant to ensure that the Fund was available to professional investors only, he held that he was unable to conclude beyond reasonable doubt that the advertisement contained an invitation to the public to invest in the Fund.  Instead, he found that it constituted an invitation to the public to seek further information from the appellants if required.[10]

(2) Secondly, he found that the Fund was or was intended to be available solely to professional investors[11] and was not one for investment by the general public, so that the exemption in section 103(3)(k) applied.[12]

14. The Commission appealed by way of Case Stated against the Magistrate’s verdict and the Judge allowed the appeal, ruling that the Magistrate had erred in respect of both bases on which he had acquitted the appellants.[13] In this appeal, we are only concerned with the Judge’s holding that the Magistrate erred in respect of the applicability of the section 103(3)(k) exemption.  In that regard, the Judge held that for the exemption in section 103(3)(k) to apply it was necessary for it be seen from the advertisement itself whether it was, by its terms, confined to professional investors to the exclusion of other members of the investing public.  She also held that the carrying out of a screening process to ensure that all investors in the Fund were professional investors was irrelevant.

15. Her Ladyship remitted the matter to the Magistrate with her opinion on the questions raised in the Case Stated to determine whether to convict or acquit on the facts he found.  On the remitter, the Magistrate has since convicted the appellants of the offences charged and sentenced the 1^st appellant to a total fine of HK$20,000 and the 2^nd appellant to two concurrent terms of 4 weeks’ imprisonment suspended for 12 months.[14]  Those convictions are the subject of an appeal to the Court of First Instance by the appellants but that appeal has been stayed pending the outcome of this appeal.[15]

D.  The issue in this appeal and the parties’ rival contentions

16. As already stated, in this appeal, the Court is concerned only with the Judge’s holding that the exemption in section 103(3)(k) does not apply.  The questions for which leave to appeal was granted[16] are:

(1) Whether for section 103(3)(k) of the SFO to be applicable, it must be seen from the advertisement, invitation or document itself, that it is, by its terms, confined to professional investors to the exclusion of other members of the investing public; and

(2) Whether the carrying out of a screening process to ensure that all investors investing in the collective investment scheme are professional investors is irrelevant.

17. The Commission’s case is that, for the exemption in section 103(3)(k) to apply, the advertisement must make it clear that the relevant advertised investment product is or is intended only for professional investors.  It was the submission of Mr Jat Sew Tong SC[17], leading counsel for the Commission, that the advertisement has to state expressly that the investment product is or is intended to be disposed of only to professional investors.  He submitted that any other construction would defeat the statutory purpose and would be inimical to the protection of the investing public intended by the statutory scheme.

18. For their part, the appellants contend that the exemption applies if, as a matter of fact, the relevant investment product is or is intended to be sold only to professional investors.  Mr Laurence Li, counsel for the appellants, submitted the burden will be on the person issuing or possessing the advertisement to prove this fact, for example by proving that there is a screening process to exclude persons who are not professional investors.

E.  The proper construction of section 103(3)(k)

19. The issue raised and the parties’ respective submissions give rise to a short point of construction of section 103(3)(k).  For the reasons that follow, I would reject the Commission’s construction of that section and, instead, accept the appellants’ construction.

E.1  The natural and ordinary meaning of section 103(3)(k)

20. By reason of section 103(3)(k), section 103(1) does not apply to the issue or possession for the purposes of issue of an advertisement, invitation or document:

“made in respect of securities or structured products, or interests in any collective investment scheme, that are or are intended to be disposed of only to professional investors.”

21. Since the other elements of section 103(3)(k) (namely (i) “the issue or possession for the purposes of issue of …”, (ii) “… any advertisement, invitation or document …” and (iii) “… made in respect of securities or structured products, or interests in any collective investment scheme …”) are already constituent parts of the offence created by section 103(1), it is the additional concept of disposal only to professional investors that provides the substance of the exemption created by section 103(3)(k).

22. It is clear, as a matter of grammar, that the concept of being disposed of or intended to be disposed of only to professional investors qualifies the securities, structured products or interests in a collective investment scheme that are being advertised rather than “the advertisement, invitation or document”. First, the use of the plural “are or are intended” must relate the concept of disposal to the (plural) “securities or structured products, or interests in any collective investment scheme” rather than the (singular) “advertisement, invitation or document”.  Secondly, the entire clause “that are or are intended to be disposed of only to professional investors”[18] must qualify the “securities or structured products, or interests in any collective investment scheme” rather than “the advertisement, invitation or document” since it is only the former and not the latter which can be relevantly disposed of to anyone.

23. For the exemption to come into play, “the advertisement, invitation or document” must be “made in respect of” one of the relevant products.  The words “in respect of” mean having a relation, connection, reference or regard to something[19]. In Cunard’s Trustees v Commissioners of Inland Revenue, they were described by Lord Greene MR as “colourless” [20]. Mann CJ in The Trustees Executors & Agency Co. Ltd. v Reilly[21] said of them:

“The words ‘in respect of’ are difficult of definition, but they have the widest possible meaning of any expression intended to convey some connection or relation between the two subject-matters to which the words refer.”

24. The use of this wide expression to frame the exemption provided by section 103(3)(k) does not support the construction advanced by the Commission.  The exemption simply applies to the issue of an advertisement “made in respect of [the relevant investment products] that are or are intended to be disposed of only to professional investors”; that is to say, having some connection or relation to the investment products disposed of only to professional investors.  It is not drafted in terms, for example, of disapplying section 103(1) to the issue of an advertisement “expressed to be for”, or “containing a statement that it is for”, the exempted investment.

E.2  Construing section 103(3)(k) in context

25. Since, however, the proper construction of the words “in respect of” will necessarily depend on their context[22], one must look to the context of their use in section 103(3)(k) to determine whether any conclusions can be drawn as to their legislative intent.

26. In this regard, when one construes section 103(3)(k) in its context, it is abundantly clear that, where the Legislature chose to express an exemption to section 103(1) in terms of express statements contained in the relevant advertisement, invitation or document, it said so in clear, express and unambiguous terms.

27. A clear example of this can be seen in section 103(2)(ga), which provides:

“(2) Subsection (1) does not apply to the issue, or the possession for the purposes of issue, of any advertisement, invitation or document –

…

(ga) to the extent that the advertisement, invitation or document relates to an offer falling within paragraph (b)(ii) of the definition of prospectus in section 2(1) of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap.32)”. (Italics in original)

28. Section 2(1)(b)(ii) of Cap.32 provides that “prospectus”:

“(b) does not include any prospectus, notice, circular, brochure, advertisement, or other document –

…

(ii) to the extent that it contains or relates to an offer specified in Part 1 of the Seventeenth Schedule as read with the other Parts of that Schedule”.

29. The Seventeenth Schedule is headed “Offers Specified for the Purposes of Paragraph (b)(ii) of the Definition of Prospectus in Section 2(1) of this Ordinance” and Part 1 of that schedule contains a list of 12 offers not falling within the definition.  Paragraph 2 in Part 1 of the Seventeenth Schedule lists:

“An offer –

(a) to not more than 50 persons; and

(b) containing a statement specified in Part 3 of the Eighteenth Schedule to this Ordinance.”[23]

30. Part 3 of the Eighteenth Schedule is headed “Statement to Be Contained in Certain Offers Specified in Part 1 of the Seventeenth Schedule” and provides:

“A statement, in a prominent position, if in the English language, in the following form or a form to the like effect –

‘WARNING

The contents of this document have not been reviewed by any regulatory authority in Hong Kong. You are advised to exercise caution in relation to the offer. If you are in any doubt about any of the contents of this document, you should obtain independent professional advice.’;

and, if in the Chinese language, a statement in the following form or a form to the like effect –

‘警告

本文件的內容未經在香港的規管當局審核。你應就有關要約謹慎行事。如你對本文件的任何內容有任何疑問，你應尋求獨立專業意見。’.”

31. Thus, when an advertisement, invitation or document must contain a particular express statement in order for an exemption to the application of section 103(1) to apply, the Legislature has clearly and expressly stated this and identified the substance of the particular form of words to be used.

32. In the face of this compelling contextual argument, Mr Jat submitted, first, that Cap.32 is directed to offers made to certain persons and so expressly regulates the wording of such offers to those persons whereas section 103(3) is dealing with advertisements, invitations or documents seeking to elicit investment interest from their recipients.  With respect, this is a distinction without any difference.  Section 103(1) is directed to advertisements, invitations or documents relating to investments in certain cases.  There would not appear to be any good reason for recipients of offers to be afforded greater protection by the legislation than recipients of advertisements, invitations or documents relating to investment products.

33. Mr Jat’s second submission in answer to this contextual argument was that there is no defined category of situations in sections 103(2) and (3); rather, the two sub-sections contain a collection of discrete exemptions and there is no rationale for thinking that the same requirements apply to different exemptions.  However, while it is correct that the various situations in sections 103(2) and (3) disapplying section 103(1) constitute a disparate list of exemptions, Mr Jat’s argument does not answer the more significant fact that, within the same division of the same part of the same ordinance, where an exemption to the application of an offence-creating section is provided for, insofar as the exemption depends on the inclusion in a document of a particular form of words, the legislation expressly states the fact that particular wording must be used and specifies the substance of that wording.  The absence of this in section 103(3)(k) points strongly to the conclusion that, as a matter of context, the Commission’s construction of that exemption is erroneous.

E.3  The purposive construction of section 103(3)(k)

34. There was no dispute that the modern approach to statutory construction is to adopt a purposive interpretation and that the language of a statutory provision is to be construed having regard to its context and purpose[24]. It is this principle of construction that the Commission primarily relies upon in support of its construction of section 103(3)(k).

35. Section 103 is to be found in Division 2 of Part IV of the SFO.  Part IV of the SFO is headed “Offers of Investments” and Division 2 of Part IV carries the sub-heading “Regulation of offers of investments, etc.”  Section 103 itself is headed “Offence to issue advertisements, invitations or documents relating to investments in certain cases”.

36. Broadly, section 103(1) regulates the issue of advertisements containing an invitation to the public to acquire certain investments.  It is that invitation which constitutes the prescribed content which section 103(1) seeks to regulate and the system of regulation thereunder is subject to the overarching authority of the Commission to authorise the issue of an advertisement containing such an invitation under section 105(1).  However, the system of regulation in section 103(1) does not stand alone and must be read in the context of the opening words which expressly make section 103(1) subject to sub-sections (2), (3) and (5) to (9).  Thus, for example, section 103(2) provides that:

“Subsection (1) does not apply to the issue, or the possession for the purposes of issue, of any advertisement, invitation or document –”

falling within the terms of any of paragraphs (a) to (i) under section 103(2) and section 103(3) provides a further list of circumstances (in paragraphs (a) to (k)) in which section 103(1) does not apply.

37. It was the Commission’s contention that, in the light of its regulatory objects and functions[25], the key object of the SFO is to ensure that the interests of the investing public are protected.  In this context, it was submitted that the purpose of section 103(1) is to regulate the issue of advertisements that contain the prescribed content (set out in that section) in relation to certain investment products unless authorised by the Commission.  Thus, it was submitted, since it is not an offence to launch or sell a collective investment scheme that has not been authorised by the Commission, the Legislature has chosen to protect the investing public by regulating the advertising of the investment products as distinct from their subsequent sale.

38. Mr Jat submitted that, since section 103(1) was designed to protect the investing public from being exposed to unauthorised advertisements with a particular type of content, it was at the point of issue of the advertisement that the protection was required, as distinct from and prior to any actual sale activity. This was also consistent, it was submitted, with the Commission’s duty to exercise regulatory oversight, by way of the grant of authorisation for the issue of an advertisement, to ensure that the contents of advertisements are accurate and not misleading so far as practicable.  As a development of this argument, it was submitted that criminal liability under section 103(1) attaches at the point in time when an advertisement is issued, or when a person has such an advertisement in his possession for issue, and if the content of the advertisement contains the invitation prescribed by section 103(1)(a) or (b).  It does not, it was submitted, depend on whether any investment product was actually sold subsequently to the issue of the advertisement.

39. It was therefore submitted that it is only by construing section 103(3)(k) in the manner contended by the Commission that effect could be given to the legislative purpose of protecting the public from exposure to the prescribed type of unauthorised advertisements, which by definition would not previously have been vetted by the Commission, and in ensuring that the public is protected before the actual sale of the investment products.

40. An obvious flaw in the Commission’s argument is that if the investment products are not in fact sold or intended to be sold to the general public and instead are sold or intended to be sold only to professional investors, there is no necessity for protection to be afforded to the general public since they are not exposed to any material risk.  It was accepted by the Commission that the purpose of the exemption in section 103(3)(k) is clear, namely that professional investors, as opposed to the general investing public, do not require statutory protection under section 103(1) so that advertisements of products intended only for them are exempted from the prohibition.

41. Mr Jat sought to side-step the force of this point by referring to the advertisements in this case and drawing attention to the fact that one of the documents in exhibit P9 indicated a minimum investment of US$100,000 and that the presentation slides in that exhibit did not indicate the Fund was only to be disposed of to professional investors, merely containing the statement “preference for professional investors reduces trading volatility”.  Since the prescribed portfolio threshold for professional investors is HK$8 million[26], the minimum investment amount was well within that threshold and therefore non-professional, or retail, investors might think the Fund was intended for disposal to them.

42. The thrust of the Commission’s argument in this respect would appear to be that, because the advertisements did not expressly state that the Fund was or was intended to be disposed of only to professional investors, retail investors might have their interest piqued and, relying on the minimum investment amount, might wrongly think the Fund was intended for them.  But, if that were so, a retail investor would soon be disabused of this misapprehension upon his expressing an interest in the Fund to the appellants.  Once telephone or other inquiries informed a retail investor that the Fund was not intended for disposal to him, there would be no interest of the retail investor for the statutory regime to protect, save possibly from a waste of the time necessary to discover that the Fund was only for professional investors.  There is nothing to suggest the legislative purpose of section 103(3)(k) is to protect retail investors from wasting their time or, alternatively, against having their investment appetites whetted.

43. What appears to lie behind the Commission’s contention that retail investors might think the Fund was intended for them is a complaint about the Magistrate’s finding of fact that the Fund was or was intended only for professional investors and not for the general public.  However, although it is a fair point that the presence of express wording in the advertisement might go towards satisfying the burden of establishing that the exemption applies, the opposite by no means follows, and, in any event, this complaint is not open to the Commission on this appeal.

44. A further weakness in the Commission’s purposive construction argument is that, as Mr Jat rightly accepted, the exemption cannot properly be claimed merely because an advertisement states that a particular investment product is intended only for professional investors.  The exemption goes to the substance of the investment and it is therefore necessary for a person claiming its benefit to demonstrate that the relevant investment is in fact intended solely for professional investors.  It is the demonstration of this fact that shows that a retail investor is protected against exposure to an unsuitable investment product.  Once it is accepted that the substance of the question of whether the investment product is or is not intended for professional investors has to be investigated in order to invoke the exemption, the statutory purpose of investor protection is achieved, without reference to the express wording of the advertisement in question.

45. As to Mr Jat’s point in time argument, namely that criminal liability must attach at the time of the issue of the advertisement, an acceptance of the appellants’ construction argument does not necessarily result in criminal liability attaching at a subsequent time.  The burden will be on the issuer of the advertisement to establish that the investment product is intended only for professional investors.  If, as a matter of fact, the product has already been disposed of to a non-professional investor, the offence will have been committed at the point in time of the issue of the advertisement.  Similarly, if the issuer of the advertisement is unable to establish that the product is intended to be disposed of only to professional investors, the offence will likewise have been committed at the time of the issue of the advertisement.

46. It was further contended in the Commission’s printed case that the appellants’ construction sought to inject an unwarranted additional subject matter into section 103(3)(k), requiring separate proof that the investment product is or is intended to be disposed of only to professional investors and thus requiring an additional element of mens rea.  However, the answer to this contention is that the burden of proving the fact of disposal or intention to dispose only to professional investors rests with the issuer of the advertisement so that the Commission would not have any additional prosecutorial burden.  Insofar as an issuer of an advertisement acted through the medium of a public relations or marketing company, the latter parties might potentially be liable under section 103(1) but would, if they satisfied the relevant conditions, be entitled to claim the protection of the exemptions provided in sections 103(7) or 103(8) and so the Commission’s contention that a further party’s mens rea might need to be examined is already inherent in the statutory scheme.

47. For the above reasons, I do not accept the Commission’s contention that the purpose of section 103(3)(k) would be frustrated by the appellant’s construction of the exemption.  On the contrary, to accept the Commission’s construction of the exemption would require the Court “to attribute to a statutory provision a meaning which the language of the statute, understood in the light of its context and the statutory purpose, is incapable of bearing”[27]. The statutory purpose of investor protection is achieved on the appellants’ construction since the burden remains on the issuer of the advertisement to demonstrate that the investment product is or is intended for disposal only to professional investors.

E.4  Penalisation under a doubtful provision

48. Where a statutory provision is ambiguous, unclear or open to two reasonable interpretations, its penal effect may indicate a narrower construction[28]. Since, however, I have concluded that, on its proper construction, the exemption in section 103(3)(k) clearly applies to an advertisement of a relevant investment product that, as a matter of fact, is or is intended to be disposed of only to professional investors whether or not this fact is actually stated in the advertisement itself, it is not necessary for the appellants to invoke this principle in support of their appeal.

49. Had the proper construction of section 103(3)(k) not been clear, there would have been some scope for the application of the principle against penalisation under a doubtful law.  In this regard it is relevant that, whether tried summarily or on indictment, the offence may result in a term of imprisonment and, in the present case, the 2^nd appellant has been sentenced on conviction to a term of imprisonment, albeit suspended for 12 months.

50. In the respondent’s printed Case[29], it was contended that a reason not to apply the principle in the present case is that the appellants’ construction of section 103(3)(k) is less favourable to an advertiser since, on the respondent’s construction, the requirement to prove to whom the investment products are actually sold or intended to be sold is an additional requirement.  This contention, however, is inconsistent with and negated by the respondent’s acceptance of the need to have regard, on its construction, to the substance of a claim in an advertisement that the investment product is or is intended to be disposed of only to professional investors in order for the exemption to apply[30].

E.5  The Judge’s construction of section 103(3)(k)

51. The two questions in the Case Stated which related to section 103(3)(k) were:

“(iii) For s.103(3)(k) to be applicable, as a matter of statutory interpretation, does the advertisement, invitation or document itself need to contain a reference to the fact that the securities or structured products, or interests in any collective investment scheme being advertised or promoted are, or are intended to be disposed of only to professional investors?

(iv) Given the finding that the Fund launched by [PSA Ltd] was or was intended to be available solely to professional investors and was not one for investment by the general public, did I err in law in finding that s.103(3)(k) applied to exhibits P8 and P9?”

52. The Judge’s analysis of these questions was brief.  She said:

“30. The SFC has a duty, to be exercised so as effectively to protect the investing public, in relation to such advertisement, invitation or document. Except possibly in wholly exceptional circumstances, and it is plain that no such circumstances exist in the present case, the SFC, in order to be able to exercise this duty effectively, has to be able to see from the advertisement, invitation or document itself whether it is, by its terms, confined to professional investors to the exclusion of other members of the investing public. Section103(3)(k) is concerned with the advertisement, invitation or document itself and not with what may or may not be the arrangement or intended arrangement behind it.

31. At best for PSA Ltd and Mr Mantel, his evidence that he would carry out a screening process to ensure that all investors in the fund were professional investors is irrelevant. If anything, the idea of such a screening process suggests that the advertisement will result in some offers to acquire an interest in or participate in the fund coming from non-professional investors who would then have to be screened out.”

53. The answers the Judge therefore gave to the two questions were:

“32. …

(E) Answer to Question (iii): Subject to the possibility of a different answer in wholly exceptional circumstances (which certainly do not exist in the present case), the answer to this question is that it has to be apparent from the advertisement, invitation or document itself that it is confined to professional investors.

(F) Answer to Question (iv): Yes.”

54. The Judge would appear simply to have accepted, although somewhat equivocally, the respondent’s construction of section 103(3)(k) on the basis that retail investors require protection against having their investment appetites whetted or in wasting their time in pursuing an interest in investing only to be told they are not eligible to do so.  With respect, for the reasons already stated, this is not the statutory purpose of section 103(3)(k).  Insofar as, additionally, the Judge seems to have accepted the respondent’s construction for prosecutorial ease and convenience, this is not a good reason for supporting the respondent’s construction.  On the contrary, it is a clear example of the vice referred to by Lord Millett of a court distorting or ignoring the plain meaning of the text of a statute in order to achieve a perceived desirable result[31].

F.  Section 103(10)(a) and (b)

55. As indicated above, this appeal is only concerned with the application of the exemption in section 103(3)(k).  We have not examined the other basis on which the Magistrate acquitted the appellants, which the Judge held to have been erroneous.  The Magistrate held that because of the disclaimers in them and the screening procedures adopted by the 1^st appellant, he could not conclude that the advertisements contained an invitation to the public to invest in the Fund.  The Judge disagreed and held that the deeming provision in section 103(10)(a)[32] applied.  Since the proper scope of section 103(10)(a) has not been the subject of any argument before us, nothing in this judgment should be taken to indicate support for, or disagreement with, the Judge’s interpretation of that provision.

G.  Disposition

56. For these reasons, I would allow the appellants’ appeal, set aside the Judge’s answers to Questions (iii) and (iv) in the Case Stated and substitute the answers “No” to each question.  It follows also that I would set aside the Judge’s order remitting the matter to the Magistrate to continue the case since his original decision acquitting the appellants was correct and should not have been reversed.  The Magistrate’s subsequent convictions following the remitter are under appeal and although the disposition of that appeal is not a matter before us, its outcome will now follow this judgment.  Finally, I would direct that any submissions as to costs be lodged with the Registrar in writing within 14 days from the date of this judgment.

Mr Justice Stock NPJ:

57. I agree with the judgment of Mr Justice Fok PJ.

Mr Justice Gleeson NPJ:

58. I agree with the judgment of Mr Justice Fok PJ.