AA AND ANOTHER v. THE SECURITIES AND FUTURES COMMISSION

HCAL 41/2016

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST

NO 41 OF 2016

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DECISION ON AMENDMENT

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1.  By summons dated 27 January 2017, the applicants applied for leave to amend the Amended Form 86 as set out in the draft Re-Amended Form 86 attached to the summons. The application arose during the course of the previous set of hearings dealing with the substantive application which has been adjourned to 26 June 2017.

2.  As directed by the Court, the application was dealt with by way of written submissions. 

3.  Once leave to apply for judicial review is granted, a line in the sand is drawn as to the terms and scope of the proceedings.  Bearing in mind the nature and ambit of the judicial review jurisdiction, dealing with issues relating to public administration brought on before the courts within a strict time frame, a material amendment of the grounds for review should rarely occur.[1]

4.  In deciding whether to grant leave to amend a Form 86, will ultimately turn on what is fair and appropriate in all the circumstances so that the real dispute between the parties can be determined.[2]  However, where the application is late the threshold is high, although the reason for it being late would be a relevant factor.[3] Other factors that may be taken into account, are the nature and substance of the amendment (including whether it is a pure point of law or a mixed point of fact and law, or a pure factual point), the lack of merit of the amendment, the relevance or significance of the amendment to the key issue of the judicial review upon which leave was granted, and the existence of an alternative procedure to deal with the matter.[4]

5.  The applicants in their written submissions dated 9 February 2017 did not address the amendments contained in the Re-Amended Form 86 but instead advanced a new ground of review, namely that “the intentional failure of the Respondent to obtain the Japanese law and to consider and apply the Engel criteria to it, is an error of law.”

6.  The applicants claim that this new ground stems from the respondent’s previous incorrect reference to Japanese law that had been repealed.  The applicants argue that the respondent, by submitting the repealed version of the law as the relevant in force provision at the material time, must have necessarily failed to apply the correct law and therefore had taken into account an irrelevant consideration or its reciprocal had failed to take into account a relevant consideration.  They further argue that this matter is relevant to the prohibition on the respondent under section 186(6) not to provide to an overseas regulator an explanation or statement made under sections 179 and 183 for use in criminal proceedings against the maker of the explanation or statement.  What is not mentioned by the applicants is that the prohibition arises if the explanation or statement might tend to incriminate the maker and he has raised such a claim before making the explanation or statement.  It is then, that the respondent should not provide evidence of this matter to an overseas regulator for use in criminal proceedings against the maker. 

7.  The general issue in this judicial review concerns whether the respondent complied with the relevant statutory requirements in its decision to provide to the Japanese regulators compelled information and materials.  More specifically, whether the respondent provided the compelled information and materials absent a binding prohibition against their use in criminal proceedings and an assurance for its secrecy.  There is also a constitutional challenge as to the validity of section 181.

8.  The respondent opposes this amendment on the grounds that it would be unfair for it to address this issue so late in the proceedings, and that the ground is wholly unarguable.

9.  The respondent argues that there is nothing in section 186(6) which requires it to consider the nature of the proceedings in Japan, and in any event the issue as to whether the proceedings in Japan are criminal in nature is a question of law for this Court to determine.

10.  It emerged during the course of the previous set of hearings that the respondent in its submissions referred to a version of the relevant Japanese law that had been repealed.  This was explained and corrected by the respondent.  The question remains for this Court to determine whether the Japanese law is criminal in nature, the relevance of which has to be considered in the context of section 186(6) and the facts and circumstances of the case.

11.  I see this amendment as moving away from the key issue brought by the applicants in these proceedings and having little merit. This amendment is refused. 

12.  The applicants did not address in their written submissions the proposed amendments set out in the draft Re-Amended Form 86. The respondent has dealt with these proposed amendments in its written submissions and I will adopt its grouping and description of them.  First, the respondent has acted unlawfully by failing to caution the applicants of their right to claim the privilege against self-incrimination in the section 181 Notice.  Secondly, the Japanese Securities and Exchange Surveillance Commission (SESC) Announcement contained confidential information provided by the respondent to the Japanese regulators.  Thirdly, the respondent has acted unlawfully in breach of its secrecy obligations by failing to properly ensure that secrecy would be observed by the Japanese regulators. 

13.  As to the first proposed amendment, it is not a key issue in the challenge mounted by the applicants in the present proceedings.  Whilst this may be a question of good practice, the decision under review is the decision of the respondent to provide to the Japanese regulators compelled information and materials.  As rightly pointed out by the respondent, this matter is tied up with a whole host of other issues concerning the language of section 181 and the factual circumstances of the case, including the applicants’ awareness of their rights and being legally represented at the relevant times.  The amendment is refused. 

14.  As to the second proposed amendment, I agree with the respondent that this is a matter that concerns new factual allegations that could have been raised in the original Form 86.  It is therefore far too late to raise it now, and it would be unfair to allow the amendment at this late stage of the proceedings. 

15.  The respondent in its written submissions advances detailed argument in addressing the subject of this amendment.  Most of the points made, will be relevant to the ground of review concerning the obligation and alleged breach of secrecy. 

16.  As to the third proposed amendment, I agree with the respondent that it lacks evidential support.  The applicants assert that the respondent was informed of the SESC Announcement a day before it was made that involved a breach of secrecy by the Japanese regulators which the respondent failed to prevent.  There is no evidence that the respondent was informed that the Japanese regulators would be divulging any confidential information in breach of their secrecy obligation.  The issue as to whether the Japanese regulators have divulged confidential information in breach of their secrecy obligation, would nevertheless come under consideration in relation to the ground of review concerning the obligation and alleged breach of secrecy. The proposed amendment is not justified and refused.

17.  In light of the foregoing, the proposed amendments are refused.  Accordingly, the summons is dismissed with an order nisi that the applicants pay the respondent’s costs.