CHANG LI HSIEN LESLIE v. SECURITIES AND FUTURES COMMISSION

HCAL 164 of 2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST

NO 164 OF 2014

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REASONS FOR DECISION
AND
DECISION ON COSTS

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A. INTRODUCTION

1. This is the applicant’s application for leave to apply for judicial review against SFC’s decision (“the Decision”) to institute proceedings in the Market Misconduct Tribunal (“MMT”) against him (together with some others)[1] pursuant to s 252(2) of the Securities and Futures Ordinance (Cap 571) (“the SFO”).

2. The applicant challenges the Decision because, he says, it is an abuse of process by the SFC to institute the MMT proceedings against him, when at the same time, the SFC has also commenced a civil claim (“the s 213 Claim”) under s 213 of the SFO against him and the others.  The applicant emphasises that the co-existence of these on-going parallel proceedings serves no useful purposes and would cause him serious prejudice and unfairness.

3. The applicant thus says the Decision is unlawful (as an abuse of process) and in any event irrational or Wednesbury unreasonable.

4. The applicant asks in the intended judicial review for an order to quash the Decision, or alternatively an order to stay the MMT proceedings until the full and final determination of the s 213 Claim (including all appeals in respect thereof).

5. After hearing the application, I refused to grant leave with short reasons.  I indicated that I would give fuller reasons later together with my decision on costs.  This is what I do now.

B. REASONS FOR DECISION

6. It is well settled that judicial review is a remedy of last resort.  An applicant is expected to exhaust all available effective alternative remedies before seeking the court’s intervention by way of judicial review.  The court generally will not exercise its discretion to grant a remedy in judicial review where an applicant has not exhausted the available alternative remedy.  It is only in exceptional circumstances that court will allow departure from such general rule.  See: Kwok Ping Sheung Walter v the Law Society of Hong Kong (unreported, HCAL 73/2012, 27 September 2013, Au J) at paragraph 19.

7. As rightly submitted by Mr Horace Wong SC (leading Mr Jonathan Chang) for SFC (the putative respondent), in the present case, it is clear that the MMT has a power to stay the MMT proceedings in the interest of justice.  See ss 253(1)(i) and (k) of the SFO.  All the arguments raised by the applicant to say that he would suffer serious prejudice and that there is a risk of inconsistent findings by the MMT and the Court of First Instance (under the s 213 Claim) by reason of the parallel process of the MMT proceedings and s 213 Claim can all be made by the applicant before the MMT seeking a stay of the MMT proceedings.  In other words, the effective remedy now sought in the intended judicial review is available to the applicant under MMT proceedings themselves.  However, the applicant has simply not exhausted that.

8. In this respect, Mr Abraham Chan for the applicant principally contends that the stay alternative could not address the applicant’s primary relief sought, which is to quash the Decision to commence the MMT proceedings.  That, he says, is a matter squarely and only within the supervisory jurisdiction of this court.

9. With respect, this argument does not assist the applicant for this reason.

10. If one looks at the Form 86, the fundamental complaints made in support of quashing the Decision for an abuse of process are premised upon the prejudice, oppression and unfairness said would be caused to the applicant to have to “defend” two parallel proceedings at the same time (see: paragraphs 30-35 of the Form 86 under the heading: Ground of Challenge). This ground would thus be in my view rendered not reasonably arguable if there is a stay by the MMT.  In other words, the stay alternative remedy would have similarly rendered the intended judicial review seeking to quash the Decision not reasonably arguable.  Test it this way, if there is already a stay of the MMT proceedings, and the applicant still seeks to judicial review the Decision, I do not think it is reasonably arguable that the court would quash the Decision on the basis of the applicant’s above complaints.

11. Further, in light of these principal complaints, the continuation of this leave application has become even more undesirable when it is now common ground that, save the applicant, all the other defendants in the s 213 Claim (who are also respondents in the MMT proceedings and have been sought to be joined by the applicant as interested parties in this proposed judicial review) have recently consented together with SFC to have the s 213 Claim stayed pending the results of the MMT proceedings.  SFC invited the applicant to similarly consent to the stay of the s 213 Claim by a letter dated 5 February and to then withdraw his leave application.  The invitation was rejected by the applicant.

12. For these reasons and in these circumstances, it is not reasonably arguable that the court would exercise its discretion to grant the remedy under the proposed judicial review.

13. Leave must therefore be refused.

14. Given this conclusion and my view that the applicant can make an application for stay before the MMT, it would be inappropriate for me to further discuss the arguability of the proposed grounds of judicial review, notwithstanding that both sides have advanced comprehensive arguments in relation to this.  It is however pertinent to note Mr Wong’s complaint that the ground of Wednesbury unreasonableness is not even stated in Form 86[2]. It is only raised for the first time in Mr Chan’s skeleton for this hearing[3]. There is also no application to amend the Form 86 with any draft amendments.  I agree that this practice should not be adopted by an applicant for leave, who seeks to add any additional grounds to a proposed judicial review.

C. COSTS

15. SFC asks for costs of this leave application.

16. The principles governing whether costs should be awarded to a putative respondent in an unsuccessful leave application are well settled.  The general rule is that an unsuccessful applicant for leave should not be required to bear costs.  The court would only award costs against such an unsuccessful applicant where there are unusual or exceptional circumstances to justify doing so.  The discretion is a broad one but the court should exercise that sparingly.  In considering whether there are such good reasons or unusual circumstances, the court takes into account all the facts and circumstances that may be relevant to the exercise of that discretion.  See: Leung Kwok Hung v The President of the Legislative Council (unreported, FACV 1/2014, 5 December 2014, Ma CJ, Ribeiro, Tang, Fok PJJ and Sir Anthony Mason NPJ) at paragraph 17 per Ribeiro PJ.  This court, after having guidance from previous authorities, sought to set out some of those common but non-exhaustive factors in TVB v Communications Authority (unreported, HCAL 3/2013, 22 July 2013) at paragraph 6, and I do not propose to repeat them here.

17. Mr Wong says SFC should be given costs, since the leave application is clearly without merits given the alternative remedy and it is an abuse by the applicant in making the application, without first applying to the MMT for a stay (a statutory course which must be obvious to the applicant and his legal advisers).  Moreover, the application is made purely to advance the applicant’s own interest.

18. I agree with Mr Wong’s submissions that the leave application is unsustainable given the existence of the alternative remedy, in particular in light of the underlying complaints as I have explained above.  However, as Ribeiro PJ observed in Leung Kwok Hung, supra, at paragraph 17(2)-(4), given that leave applications are by the rules meant to proceed on an ex parte basis, one of the relevant factors the court should look at in considering costs is what has led the opposing party to attend the hearing.  This must also be viewed together with the underlying merits of the application and whether that party’s attendance has been of material benefit to the court, always bearing in mind that the context is the end result that the court has refused to grant leave.

19. In the present case, it must be noted that, after learning that the applicant has made an application for leave to apply for judicial review, it is SFC who have themselves written to this court asking to be heard in relation to the leave application[4]. It is on that basis that the court has asked SFC to be present at this hearing.  The court is of course grateful to the helpful assistance rendered by the presence of Mr Wong and his junior, and their detailed skeleton dealing with the alternative remedy point as well as the merits of the substantive grounds of the proposed judicial review.  However, the fact remains that the court dismisses the leave application on the basis of the availability of an effective alternative remedy, a point which the court would have looked at and asked the applicant even if SFC had not participated in the hearing.

20. In these circumstances, despite the obvious lack of merits of the leave application and the above other relevant submissions made by Mr Wong, I am marginally not convinced that there are exceptional circumstances in the present case to justify the departure from the general rule to award costs against the unsuccessful applicant.

21. I will therefore make no order as to costs of the leave application.

22. Lastly, I thank counsel for their assistance.

[1] The applicant was at the material time the Financial Director of CITIC, a listed company in Hong Kong.  The others were also directors of CITIC.

[2] The Form 86 is not signed by counsel.

[3] As pointed out by Mr Chan at the hearing, the applicant at paragraph 31 of his supporting affirmation does briefly say that the Decision is “an irrational decision”.  However, the fact is still that in the Form 86 (where all the grounds in support of a judicial review should be properly set out and stated and the applicant is bound to rely on only those grounds set out in it), the ground of irrationality or Wednesbury unreasonable is not specifically stated and set out as a ground of the intended judicial review.

[4] By a letter dated 12 December 2014, while the leave application was dated 11 December 2014.