RE RIGHT CETRE CO LTD

[An objection to a decision which the applicant considers unfair, but which he cannot show to have been illegal, improper or irrational, has no hope of success on a judicial review.]

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

MISCELLANEOUS PROCEEDINGS NO. 2408 OF 1989

------------------

-------------------

-----------------------

J U D G M E N T

------------------------

1. This is an application by the Stock Exchange of Hong Kong Limited ("the Stock Exchange") to set aside an order of Barnett, J., made on 19th September 1989 ex parte at the instance of Rights Centre Company Limited ("the minority shareholder"), which is a minority shareholder in an inactive shell company called Wan Pao Navigation Company Limited ("Wan Pao") which last traded in 1978. The judge's order gave the minority shareholder leave to apply for a judicial review of the actions of the Stock Exchange in, first, suspending, and subsequently, cancelling, Wan Pao's Stock Exchange listing.

2. The background is as follows.

3. The Stock Exchange maintains rules, set out in a booklet called "Rules Governing the Official Listing of Securities", to assist it in its function of providing an efficient market place for the trading of securities. The introduction to the booklet reads as follows :

"The Stock Exchange of Hong Kong Limited ("the Exchange") provides an efficient market place for the trading of securities. Sufficiency of public interest, marketability of securitities, proper disclosure and communication of information to enable a fair and timely assessment of the affairs of a listed company, are regarded as essential for the continuation of listing and generally for the maintenance of such a market place.

Much of the information required to be disclosed and the methods of furnishing such information are contained in the Securities (Stock Exchange Listing) Rules 1986 ("the Statutory Rules") made by the Securities Commission under section 14 of the Securities Ordinance.

The non-statutory listing rules devised by the Exchange governing admission of securities to listing ("the Exchange Listing Rules"), which must be observed by all listed companies, complement the Statutory Rules. They are divided into two main parts. The general principles are set out in Chapter 2, while all other applicable details are set out in the ensuing chapters and appendices. The Exchange Listing Rules, the Statutory Rules and the provisions of the Companies Ordinance should be read and considered together as constituting the requirements to be observed by public companies seeking or having access to the capital markets of Hong Kong.

The Listing Committee and the Listing Department have been established by the Exchange to administer and supervise compliance with the Exchange Listing Rules, which are laid down in accordance with currently acceptable standards in the market place. They should not be regarded as exhaustive and may be rescinded, amended, added to, modified or waived by the Exchange, either generally or in any particular case according to circumstances. Any amendment to the Rules is subject to the approval of the Securities Commission under section 35 of the stock Exchanges Unification Ordinance.

The Listing Committee shall have the power to interpret these Rules and to issue practice notes in interpreting the same. Application for listing shall be approved by the Listing Committee at its absolute discretion."

Chapter 2 of the Exchange Listing Rules contains general principles governing admission of securities to listing.

Rule 2.01 reads as follows:

"2.01    The Exchange expects applicants for listing and listed companies to observe certain procedures and standards, which are set out in these Exchange Listing Rules.

The requirements of the Exchange Listing Rules are designed to ensure that investors have and can maintain confidence in listed securities, and to afford additional assurance of their interest beyond that available to them by law.

This Chapter sets out the fundamental principles. The Listing Committee requires observation of the Exchange Listing Rules both in letter and in spirit. These requirements are not exhaustive.

..........................................................."

Rule 2.04 reads as follows :

"2.04    Applications for new listing will only be considered from companies whose securities proposed to be listed are expected to have an initial aggregate market capitalisation of at least HK$50,000,000 or such other amount as the Listing Committee may from time to time prescribe. An application will not normally be considered in respect of any company whose market capitalisation is expected to be below HK$20,000,000. In exceptional cases, as determined by the Listing Committee, a lower initial capitalisation may be acceptable.

Rule 2.35 reserves power to the Listing Committee of the Stock Exchange to suspend or cancel a listing. It reads as follows :

"2.35    Permission to deal in and for listing of the securities of any company is granted subject to the condition that the Listing Committee reserves the right to suspend or cancel the listing of the Company on the Exchange if :-

(1)    the Listing Committee considers there is insufficient public interest in the Company, e.g. insufficient shares are in the hands of the public;

(2)    any of the terms and conditions stated in these Rules or the Listing Agreement are not complied with;

(3)    the Company becomes a subsidiary of any other company; or

(4)    the Listing Committee, in its absolute discretion, considers that the removal of the Company from listing is in the interest of the public."

Wan Pao was incorporated on 3rd November 1972. Its shares were orginally listed on the Kowloon Stock Exchange. On 24th March 1986 the new, unified, Stock Exchange approved the listing of Wan Pao's shares with effect from 2nd April 1986.

4. On 19th May 1986, Wan Pao asked the Stock Exchange to suspend dealings in its shares, and on the same day the Stock Exchange did so. These steps were taken, in accordance with the requirements of the Hong Kong Code on Takeover and Mergers, because the board of Wan Pao had entered into negotiations for the take-over of Wan Pao by another company ("the 1st bidder"). But the negotiations with the 1st bidder came to nothing, and, on 5th December 1986, at the request of Wan Pao, Wan Pao's listing was restored.

5. On 15th July 1987, Wan Pao again asked the Stock Exchange to suspend dealings in its shares and on the same day the Stock Exchange did so. These steps were taken because the board of Wan Pao had entered into further negotiations for the takeover of Wan Pao by another company ("the 2nd bidder"). These negotiations with the 2nd bidder also came to nothing and Wan Pao was then approached by a 3rd bidder, so the suspension of listing for which Wan Pao had asked in July 1987 continued in force. This had started to concern the Stock Exchange as early as 6th August 1987. On that date, it wrote to Wan Pao's financial advisers in these terms :-

"As you and your clients are aware, any prolonged suspension in the trading of the shares in a listed company is not in the best interest of the shareholders of the company. We would appreciate a speedy solution to the matter.

In this regard, kindly inform us when it is likely for you to apply for the resumption of dealings in the shares of Wan Pao."

On 15th March 1988 the negotiations with the 3rd bidder came to nothing, and on 16th March 1988, Wan Pao asked for its listing to be restored. But now the Stock Exchange wanted some information from Wan Pao before further considering Wan Pao's request. On 19th March 1988, the Stock Exchange wrote to Wan Pao and asked for that information. On 22nd March 1988, Wan Pao gave the Stock Exchange the information for which it had asked and promised to report further. But the Stock Exchange was still concerned about Wan Pao. It took the view (to which Wan Pao has always objected) that Wan Pao's application, although an application for a restoration of dealings in its shares, rather than an application for a new listing, should be judged by criteria analogous to those appropriate for a new listing.

6. On 6th April 1988, the Stock Exchange accordingly wrote to Wan Pao's advisers in the following terms :-

"We would like to bring your attention to paragraph 2.04 of the Exchange Listing Rules that consideration will only be given to listing application of new companaies whose securities proposed to be listed are expected to have an initial aggregate market capitalisation of at least HK$50 million. For a shell reactivation, we normally treat it as a traditional new listing such that the basic listing qualifications as prescribed in paragraphs 2.02 to 2.07 of the Exchange Listing Rules must be complied with.

Wan Pao is presently having a negative asset value of approximately HK$1.7 million and the injected asset value only amounted to HK$9 million. As you are aware, the total assets of Wan Pao after such proposed injection still cannot meet our qualification for listing. In this regard, we are of the opinion that such proposal is not sufficient to justify a reactivation of Wan Pao. Presumably, the total market capitalisation of Wan Pao will be very minimal at this stage, it is considered that that is not in the best interest of the investing public to resume the trading of the shares of Wan Pao.

Please inform us whether there will be any plans to inject more assets into Wan Pao, if so, kindly give us further details of these plans as soon as practicable."

Wan Pao objected to being treated as if it were an applicant for a new listing. It told the Stock Exchange so. It remained anxious to have its shares relisted. It made a number of proposals, and told the Stock Exchange about them. On 15th July 1988, the Stock Exchange asked for more information. It did not say that it was not willing to consider Wan Pao's proposals at all. Neither did it promise to accept them. It took the view that it would consider Wan Pao's proposals when it had been supplied with the information for which it had asked. Wan Pao, however, a month later, appointed different financial advisers and began to consider different proposals from those originally made. On 10th August 1988, Wan Pao so informed the Stock Exchange.

7. The Stock Exchange considered the position again. It formed the view that Wan Pao was no longer suitable for a continued listing on the Stock Exchange. But it felt that for the proper protection of Wan Pao's minority shareholders, Wan Pao should be granted a period of six months to rectify the position. If that was not done, then at the end of the six months the listing should be cancelled.

8. On 14th September 1988, the Stock Exchange informed Wan Pa o of its conclusions. It did so in the following terms:-

"The Listing Committee of The Stock Exchange of Hong Kong Limited (the "Stock Exchange") have decided that your company is no longer suitable for a continued listing on the Stock Exchange.

This decision has been made after careful consideration of the following points:-

i)    the size and nature of your company's existing business(es);

ii)    the number of the securities of your company in the hands of the public;

iii)    the interests of the public; and

iv)    the continued suspension of trading in the securities of your company since 15th July 1987.

However, for the proper protection of the minority shareholders in your company the Listing Committee have agreed to grant your company a period of six months from the date of this letter to rectify the position.

Accordingly you are hereby notified that the listing of and permission to deal in the securities of your company on the Stock Exchange will be cancelled on the 14th March 1989, pursuant to paragraph 2.35 of the Rules Governing the Official Listing of Securities, unless at that time you have either:-

i)    a business which is able to satisfy the Stock Exchange's normal requirements for listing; or

ii)    have finalised proposals in writing, which are acceptable to the Stock Exchange and the Commissioner for Securities, to acquire such a business; and

iii)    at least 25% of such securities are in the hands of the public as defined in the Stock Exchange Listing Rules in force on that date.

Any proposals to acquire a suitable business or assets must be made by the existing shareholders of the company and any change in control of the company in the next six months may result in the immediate cancellation of the listing.

If the existing shareholders are unable to prepare suitable proposals within the six month period then the Listing Committee strongly requests the existing controlling shareholders to make a cash offer to the minorities and thereby privatising the company rather than to incur a cancellation of the listing. The Directors and controlling shareholders of any company which has its listing cancelled would not normally be regarded as suitable to be associated with another publicly listed company in the future.

You are also hereby notified that any application for the resumption of trading in the securities of your company will be treated as a new application for all purposes and you will be required (inter alia) to issue a full prospectus, pay the initial listing fee and execute a new Listing Agreemeent.

We look forward to receiving your proposals as soon as possible."

9. Wan Pao did not challenge the decision of the Stock Exchange. Nor, if it had any doubt about the legality, or practicality, of the stock Exchange's suggestions, did it voice them. On the contrary, it did what it could to meet the Stock Exchange's requirements. It put in train a reduction of capital (the Stock Exchange had asked Wan Pao on 15th July 1988 whether Wan Pao had considered doing this). But Wan Pao's efforts did not go down well; and it had to deal, not only with the Stock Exchange, but also with the office of the Commissioner for Securities and Commodities Trading ("OCSC").

10. On 17th October 1988, OCSC wrote to Wan Pao in the following terms :-

"It was pointed out in the letter of the Stock Exchange of Hong Kong Limited ("the Exchange") to you of 14 September 1988 (which was copied to this Office) that any application for the resumption of trading in the securities of your company will be treated as a new application for all purposes. In this regard, you will also recall that when your first attempt to reactivate the company, together with a request for resumption of trading of the company's share, was discussed with this Office in March and April this year, you had also been informed that such a proposal would be regarded as an application for new listing and, thus, would have to be examined in the light of the general criteria for reactivating a shell company, the Rules Governing the Official Listing of Securities and the Securities (Stock Exchange Listing) Rules 1986. Accordingly, it is essential for a reactivation proposal to satisfy, inter alia, that the securities to be listed have a minimum market capitalization of $50 million and that the company's business possesses an adequate trading record which is normally regarded as five years. As your previous proposal involved the injection of two vessels having only an aggregate value of approximately $20 million, an amount falling short by at least $30 million of the required minimum capitalization of $50 million and that the company did not have an adequate trading record because it had not been trading since 1978, this Office considered that the then proposal was unable to meet the requirements of the various rules and relisting of Wan Pao's shares was therefore not recommended.

...............

In light of the foregoing, this Office does not consider your proposal as discussed in your letter of 29 September 1988 acceptable for the purposes of reactivation or resumption of trading in Wan Pao's shares. I understand that the Stock Exchange also expressed similar concerns and views at your meeting with them on Friday 14 October 1988.

I also note that a detailed reactivation proposal prepared by your financial adviser, IBI Asia Limited would be formally submitted for the Exchange's consideration and would be grateful if this Office would be kept informed on the matter."

The Stock Exchange and the OCSC continued to warn Wan Pao that trading in its shares would remain suspended unless and until the implementation of a reactivation proposal acceptable to the Stock Exchange and the OCSC was made; and that would have to be submitted before the stipulated deadline of 14th March 1989 (6 months after the date of the Stock Exchange's letter of 14th September 1988).

11. Wan Pao and its financial advisers (now Firmitas Limited) formulated and defined reactivation proposals and discussed them with officials of the Stock Exchange; some points were ironed out in this way. But when the Listing Committee of the Stock Exchange considered the proposals they decided they were not acceptable.

12. On 14th March 1989, the Stock Exchange accordingly wrote to Wan Pao in the following terms :-

"We refer to the joint announcement issued by the stock Exchange and the Securities Commission on 14th September, 1988 (the "Joint Announcement") and our subsequent correspondence regarding the reactivation proposals of your Company.

The Listing Committee have decided that the reactivation proposals put forward in connection with the Wan Pao Navigation Company Limited are not acceptable. The Listing Committee consider that Wan Pao Navigation Company Limited is no longer suitable for a continued listing on the Stock Exchange and that the removal of Wan Pao Navigation Company Limited from listing is in the interest of the public. Accordingly you are hereby notified that the listing of and permission to deal in the securities of your Company on the Stock Exchange will be cancelled with effect from the close of business on Tuesday, 14th March, 1989 pursuant to paragraph 2.35 of the Rules Governing the Official Listing of Securities and in accordance with the terms of the Joint Announcement.

The additional proposals received from Firmitas Limited on you behalf on 2nd March, 1989 have been considered but the Listing Committee's decision remains unaltered."

Wan Pao refused to accept this. On 15th March 1989, it asked for a further six months. It ignored the fact that, as the Stock Exchange kept trying to tell it, on 14th March 1989 Wan Pao had ceased to be a listed company, and, if it wanted to acquire a new listing, would have to start from scrach. It ignored the suggestions made by the Stock Exchange, no doubt for the protection of the minority shareholders, that Wan Pao should consider making recommendations to its shareholders, including privatisation or liquidation, or an offer from the majority to the minority shareholders. Instead, Wan Pao instructed solicitors, Messrs Deacons.

13. On 3rd April 1989, Deacons wrote to the Stock Exchange in the following terms :-

"1.     As you know, we act for Wan Pao Navigation Company Limited.

2.     We refer to your recent decision to cancel the listing of our client's shares. We think you will appreciate the great disappointment of the Board of Directors of our client with regard to the said decision because ever since the voluntary suspension of our client's listing status on 15 July 1987, much time and effort has been devoted by the directors of our client (Mr. Philip Wong Yuk Tung in particular), the Company Secretary of our client (Peter Chan (Secretaries) Limited), the merchant bankers (IBI Asia Limited initially and Firmitas Limited later) and us towards the restoration of the listing status of our client.

3.     Our client is fully aware of the discretion of the Stock Exchange of Hong Kong Limited (the "Exchange") under paragraph 2.35(4) of the Rules Governing the Official Listing of Securities (the "Listing Rules"). We must of course reserve all our client's legal rights to question the exercise of the discretion but in the meantime we are instructed to draw to your attention the following elements in our client's case :-

(1)    Waiver

On 24 March 1986, our client was informed by the Exchange that the Exchange's Listing Committee had approved the listing of 18,300,000 ordinary shares of $1.00 each in the capital of our client. At that time, the Exchange did not raise any issue regarding the quantum of our client's paid up capital nor its trading record. In essence, our client submits that the Exchange has already waived the application of the relevant listing requirements on our client back in March 1986. Since our client's position has not significantly changed since March 1986, our client cannot understand the sudden change of attitude of the Exchange in this respect.

(2)     Voluntary Suspension

One of the reasons given by the Exchange in its letter dated 14 September 1988 for cancelling the listing of our client's shares is 'the continued suspension of trading in the securities of your company since 15 July 1987'.

Our client submits that the above cannot be regarded as a reason by the Exchange at all because our client was not suspended from listing by the Exchange. The suspension was voluntary and such decision was made by the Board of Directors of our client in compliance with the Hong Kong Code-on Takeovers and Mergers and paragraph 2.34 of the Listing Rules.

(3)     Interest of the Public and the Efforts of the Major Shareholders

The Exchange and the Commissioner for Securities and Commodities Trading (the "Commissioner") have throughout the present case been talking about the interest of the public. Our client submits that the interest of the minority shareholders of our client should also be regarded as part of the "public interest" which the Exchange and the Commissioner should have in mind.

The major shareholders of our client have been trying their best to protect the minority (public) interest by funding the reactivation works of the Company. The fees paid to professional advisers were loaned to the Company by its major shareholders. Recently, a capital reduction exercise has also been completed at the funding of the major shareholders. From this, it can be seen that the major shareholders are committed and determined to take all necessary steps to improve the Company to enable a successful restoration of its listing status.

(4)     We understand that Mr. Philip Wong Yuk Tung of our client will meet with you at 3:00 p.m. today. On behalf of our client and in the light of the points made in this letter, we are instructed to respectfully request you to reconsider the decision that has been made with regard to our client's position. Without prejudice to our client's legal rights, what our client would like to achieve in the forthcoming meeting is to obtain a further extension of time of 6 months in which to consider with you other reactivation proposals which the Exchange would find acceptable. In this connection, we are instructed that the major shareholders of our client are prepared to inject more assets into the Company."

14. There was by now, of course, no question of any "extension of time" for consideration of new proposals (although Deacons do not seem to have appreciated it). Wan Pao's listing had already been cancelled. On the other hand, there was equally no reason why Wan Pao, if it could bring itself within the Stock Exchange requirement for a new listing, should not apply for such a listing. It did not do so. But, 18 months after Wan Pao applied on 16th March 1988 for its listing to be restored, 12 months after the Stock Exchange's letter of 14th September 1988 (warning it of the proposed cancellation of its listing on 14th March 1989), 6 months after the cancellation (which in fact did take place on 14th March 1989) and 5 months after the date of Deacons' letter, the minority shareholder instituted the present proceedings. These are designed to obtain a decision of this Court that the Stock Exchange should have relisted Wan Pao in March 1988 and not left its listing suspended; and should not have cancelled the listing in March 1989.

15. The minority shareholder's grounds for these stale complaints were that the Stock Exchange had acted unfairly, and contrary to the rules of natural justice; and that the relevant decisions of the Stock Exchange were not ones which it could have reached if it had properly directed itself as to the law. Barnett, J., who dealt in a 20 minute hearing with the minority shareholder's ex parte application without the benefit of adversary argument, gave leave to the minority shareholder to apply for a judicial review on these grounds, save that he excised the allegation that the Stock Exchange had acted unfairly.

16. That is the background to this present application. Clearly, the attitude of the Stock Exchange has left Wan Pao, and at least one of its minority shareholders, labouring under a sense of grievance. They see, or claim to see, no reason why, since Wan Pao had a listing before it asked for its suspension during takeover talks, it should now be dealt with on the basis of the same strict criteria as the Stock Exchange applies to new listings. And they think, generally, that they have been hard done by.

17. In these circumstances, then, the minority shareholder has applied for a judicial review of the actions of the Stock Exchange which I have mentioned above. In these circumstances, too, Barnett, J. granted, on 19th October 1989, the application of the minority shareholder for leave to apply for such a judicial review. And, finally, in these circumstances, the Stock Exchange now applies for that leave to be set aside.

18. The objection of the Stock Exchange to the application of the minority shareholder was based on the fact that, as the Stock Exchange alleged, the application had not been made timeously. The principle is clear. "The public interest in good administration requires that public authorities and third parties should not be kept in suspense as to the legal validity of a decision the authority has reached in purported exercise of decision making powers for any longer period than is absolutely necessary in fairness to the person affected by the decision." (See per Lord Diplock in O'Reilly v. Mackman [1983] 2 A.C. 238, at pp.280, 281). In all matters of judicial review, prompt action is important. So important is it that legislation, both primary and secondary, makes provision in this connection.

19. First, I must refer to section 21K of the Supreme Court Ordinance, Chapter 4. Subsections (6) and (7) of this section provide as follows :-

"(6)     Where the High Court considers that there has been undue delay in making an application for judicial review, the Court may refuse to grant -

(a)    leave for the making of the application; or

(b)    Any relief sought on the application, if it considers that the granting of the relief sought would be likely to cause substantial hardship to, or substantially prejudice the rights of, any person or would be detrimental to good administration.

(7)     Subsection (6) is without prejudice to any enactment or rule of Court which has the effect of limiting the time within which an application for judicial review may be made."

20. The Rules of the Supreme Court, Order 53, rule 4(1) provides :-

"4(1)    An application for leave to apply for judicial review shall be made promptly and in any event within three months from the date when grounds for the application first arose, unless the Court considers that there is good reason for extending the period within which the application shall be made."

21. Section 21K(6) and (7) of the local Ordinance set out above reproduce section 61(6) and (7) of the Supreme Court Act 1981. The provisions of Order 53, rule 4(1) of the local Rules of the Supreme Court reproduce the provisions of the Rules of the Supreme Court in England and Wales.

22. The 1981 Act, and the English rules, came under consideration by the Court of Appeal in England in Regina v. Stratford-on-Avon District Council, ex parte Jackson [1985] 1 W.L.R. 1323, Ackner L.J., giving the judgment of the Court, dealing with Order 53, rule 4(1) said this (at pp. 1322, 1323) :-

"The essential requirement of the rule is that the application must be made 'promptly'. The fact that an applicaton has been made within three months from the date when the grounds for the applicaton first arose does not necessarily mean that it has been made promptly. Thus there can well be cases where a court may have to consider whether or not to extend the time for making the application, even though the application has been made within the three month period."

23. The Court rejected an argument that the words "good reason" in the rule should be given a very restricted meaning. The Court held, on the facts of the case before it, that there was good reason for extending the period within which the application should be made. However, it emphasized that in matters of judicial review, prompt action was important, citing the passage to which I have already referred from Lord Diplock's speech in O'Reilly v. Mackman (see above).

24. The Court continued, after citing the statutory provisions which I have mentioned, by saying this :-

"It is accordingly said that, where good reason is held to exist for the failure to act promptly as required by 0.53, r.4 and the time for applying for leave to make the application is accordingly extended, there is no power under [the section], on the grounds of undue delay, to refuse either leave for the making of the application or relief sought on the application. It is suggested that the extension of time under 0.53, r.4 by itself negatives the existence of 'undue delay'. This is not an easy point to resolve, but we have concluded that whenever there is a failure to act promptly or within three months, there is 'undue delay'. Accordingly, even though the court may be satisfied in the light of all the circumstances, including the particular position of the applicant, that there is good reason for that failure, nevertheless the delay, viewed objectively; remains 'undue delay'. The court therefore still retains a discretion to refuse to grant leave for the making of the application or the relief sought on the substantive application on the grounds of undue delay if it considers that the granting of the relief sought would be likely to cause substantial hardship to, or substantially prejudice the rights of, any person or would be detrimental to good administration."

25. The Stock Exchange, on this application to set aside the leave to apply for a judicial review granted by Barnett J. on 19th October 1989, says that the minority shareholder (which has never actually asked for any extension of time) has been guilty of "undue delay" in making its application and that it has not shown any good reason why its time for doing so should be extended. It invited me to consider these points irrespective of the question whether or not the application had any merits. I have not found it possible to approach the matter in this way. I accept, of course, that I do not have to decide and cannot decide on this application whether the minority shareholder's application for a judicial review is or is not well-founded. That decision, if the matter goes so far, would be for the judge at the substantive hearing. But it does not seem to me to follow that, for the purposes of considering whether or not the minority shareholder has shown good reason for its "undue delay" in making its application for leave to apply for a judicial review, the Court must put altogether on one side any consideration of the merits of the minority shareholder's case. If the Court was of the opinion that the minority shareholder's case was hopeless, there would be no question of its showing good reason for extending the period, however short the "undue delay". If, on the other hand, the Court was of the opinion that the minority shareholder's case was very strong, it would not be difficult to persuade the Court that the interests of good administration should give way to the interests of justice; little would then need to be shown in the way of good reason to explain the "undue delay".

26. Accordingly, I do look at the merits; and I remind myself that the Court's concern, on an application for a judicial review, is to see whether any allegation of illegality, impropriety, or irrationality (I shall return to these matters later) is made against the respondent; and, if so, to consider whether that allegation is justified.

27. On the facts set out above, I am constrained to say that the minority shareholder's application for a judicial review here is, indeed, without any merit. Its only real complaint is that the Stock Exchange thought it right, before restoring or continuing Wan Pao's listing, to ensure that Wan Pao complied with the requirements of the Stock Exchange for a new listing. That decision appears to me to have been so clearly within the proper ambit of the exercise of the Stock Exchange's discretion that in the absence of any suggestion, let alone evidence of illegality, impropriety or irrationality, there is no hope of getting the minority shareholder's application off the ground. Its case is unarguable. The proceedings are yet another example of the abuse of this powerful and salutary remedy for maladministration, which will become much less valuable if it is sought to be used in inappropriate cases.

28. On this ground alone, I would refuse (now the matter has come on for hearing inter partes) to extend the time for making this application for a judicial review, holding, as I do, that there is no good reason to do so; and, indeed, that there is every good reason not to do so.

29. But if this is the wrong approach, and I am bound to put altogether on one side any question of the merits of the minority shareholder's case, I would still be of the opinion that it has been guilty of "undue delay", and has shown no good reason for extending the period within which it can apply for a judicial review. The original decision of the Stock Exchange not to restore Wan Pao's listing when it was asked to do so in March 1988, and its subsequent decision to cancel the listing in March 1989, were made many months before this application for leave to apply for a judicial review was launched. If an extension of time (which would clearly be necessary) was now to be granted, it would plainly, in my judgment, be detrimental to the interests of good administration; there must be few, if any, cases in which the necessity of prompt action is more important than in the regulation of financial markets when intervention or action by a regulatory authority is required. Except, no doubt, in cases where substantial injustice has clearly been caused to an applicant, and where the regulatory authority has clearly acted illegally, irrationally or improperly, cases in which the Court will intervene after so long a delay as took place here will be rare indeed. This is not one of those cases.

30. The minority shareholder (as I have indicated) has not formally applied for an extension of time; but I will treat such an application as before me, and I will refuse it. I will accordingly grant the application made by the Stock Exchange to set aside the order of Barnett, J. made on 19th September 1989 giving leave to the minority shareholder to apply for a judicial review. I repeat that Barnett, J. did not have the benefit of adversary argument when the matter was before him; the application of the minority shareholder to Barnett, J. was made ex parte. I have now had the advantage of such argument. This decision, therefore, should not be read in any way as expressing dissent from the course taken by Barnett, J. on 19th September 1989. In particular, it will be appreciated that Barnett J. did not have the benefit, as I have had, of an argument from the Stock Exchange as to why an extension of time ought not to be granted in the instant case.

31. In the course of this judgment I have drawn attention to the familiar principle that the function of the Court, on an application for a judicial review, is merely to see whether any allegation of illegality, impropriety or irrationality is made against the respondent; and if so, to consider whether that allegation is justified. So that there shall be no doubt about it, I shall explain what these hurdles involve. First, illegality. This involves proving that the decision was wrong as matter of law. Secondly, impropriety. This involves proving that the process by which the decision was arrived at (not the decision itself) was unfair, or otherwise flawed in some way. Thirdly, irrationality. This involves proving, not that a reasonable man could have come to a different decision, but that no rational person, properly directing himself as to the relevant law and properly appreciating the relevant facts, could possibly have come to the decision under challenge.

32. These are steep hurdles; and once the legal profession in Hong Kong starts to appreciate this, the number of hopeless applications for judicial review should be significantly reduced. At present, many of the cases which are launched for this relief in Hong Kong come perilously near to being an abuse of the process of the Court.

33. Take the present case. No allegation of illegality, impropriety, or irrationality, is really made, much less justified. An objection to a decision which you consider unfair, but which you cannot show to have been illegal, or improper or irrational, has no hope of success on a judicial review.