HKSAR v. CHEN KEEN (alias JACK CHEN) AND OTHERS

HCCC 309/2019

[2023] HKCFI 2401

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CRIMINAL CASE NO 309 OF 2019

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R U L I N G

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The Application

1.  This is a joint application by the Defence to exclude the intended evidence of Mr William Wong, the Vice President of the Listing Division of the Hong Kong Stock Exchange. It is submitted that any expertise Mr William Wong may possess would relate only to the interpretation of the Listing Rules which is a question of law. As such, his opinion would be inadmissible.

2.  According to the Defence, in the trial before Deputy High Court Judge Bruce SC (“DHCJ Bruce”), Mr Wong was allowed to give evidence that the Commission Sharing Agreement (“CSA”) should have been disclosed with reference to the duty of disclosure. That is opinion evidence on an issue of law for the judge, because any expertise Mr Wong may possess would only relate to the interpretation of the Listing Rules which is a question of law. As such, his opinion would be inadmissible.

3.  He is not a witness of fact, according to the Defence submission, in relation to any relevant issue because he was not involved in this transaction. Even if Mr Wong were a witness of fact, it is trite law that a witness of fact cannot give any opinion evidence. The only purpose of calling him would be to repeat Ms Cindy Ngai (PW8)’s evidence which is already before the jury. The question is whether he should be entitled to tell the jury that the CSA is disclosable.

4.  The Defence also refer to the case of Wan Thomas [1] for the principle that the relevant question is the defendant’s belief when he made the declaration as required by the Listing Rules, and so the opinion of Mr Wong from the Stock Exchange is irrelevant.

5.  The Defence also contend that Mr Wong is not a witness of fact to any relevant issue in this trial. The evidence of fact in this case has already been given by Ms Cindy Ngai (PW8). Mr Wong has no personal knowledge as to these matters. It is unnecessary for him to give evidence about the facts of this case because that has already been given by Ms Ngai.

6.  The Defence contend that the issue in this case is a matter of law, so in light of the evidence given by Ms Cindy Ngai and Ms Katherine Chan (PW1), the representations made by the 1^st accused and the 2^nd accused, Mr Wong’s evidence should not be admitted.

7.  However, at the hearing Mr Owen KC accepts that the evidence of Ms Katherine Chan in this trial is essentially the same as her evidence in the 2021 retrial before DHCJ Bruce. He says that Ms Ngai has already given evidence about her function and her role in the preparation, the drafting and approval of the circular, and she has been taken through the relevant Listing Rules. Therefore, it is completely unnecessary for Mr Wong to give evidence. Mr Owen also contends that all of the intended evidence of Mr Wong has already been given by Ms Ngai save that the Prosecution proposes to call Mr Wong to give opinion evidence about Chapter 14A, the deeming provision and the requirement to disclose certain matters. The Prosecution wants him to give opinion evidence as to whether the CSA was a disclosable document.

8.  Mr Owen admits that the Defence had raised the same objection before DHCJ Bruce at the previous retrial but that was unsuccessful.

9.  In reply, the Prosecution submits that Mr Wong is not being tendered as an expert witness, and he will give evidence on, inter alia, some aspects of the Stock Exchange of Hong Kong and the Listing Rules, including:

(1)  The principal function and the duty of the Stock Exchange;

(2)  The requirements for announcements and circulars and the vetting process;

(3)  The duty of disclosure and the requirement to present information of the directors;

(4)  The definitions in Chapter 1, in particular “connected persons”, and the deeming provision in Chapter 14A, and the power and the requirement to “know all the facts” including those in the past; and

(5)  The contents of the Announcement (Exhibit P6), and the Circular (Exhibit P341), in particular, the declarations and the meaning of the words appearing in the declarations, and the financial information appearing in the Appendices.

10.  Mr Mitchell submits that Mr Wong is able to give evidence on a factual basis with reference to the Listing Rules. He also submits that Mr Wong, as a senior person in the Stock Exchange, can give evidence as to whether the CSA should have been disclosed to the Stock Exchange pursuant to the duties of disclosure of a director and what the effect was after the disclosure. He is able to give evidence based upon his own knowledge, his own practice and his long history of experience in the Listing Rules so, as such, his evidence would be relevant to the exercise of the Stock Exchange public duty in ensuring a fair and ordinary market.

Consideration

11.  To begin with, I have examined the position of Mr Wong as a witness in the first trial before Madam Justice Pang (as she then was) in the 2016 trial. The position of the Prosecution at that time was that Mr Wong was to be tendered as an expert witness. As one can see from the transcript at Day 58, at page 15, in which Ms Draycott said: “as long ago as the pre-trial review, I suggested that this witness would be an expert witness.”

12.  And she repeated that at page 17 of the transcript on the same day, saying that: “I indicated the problem in the pre-trial review months ago, that this man was going to be an expert.”

13.  In that trial, the Defence objected to Mr Wong giving any opinion evidence on the application and interpretation of the Listing Rules on the ground that those were matters of law. Madam Justice Pang ruled that both the Prosecution and the Defence were “entitled to explore with Mr Wong as to how the work of the Stock Exchange in respect of the acquisition would or might have been or not have been affected if certain matters were brought to the attention of the Stock Exchange at that time and how the Stock Exchange would or may have or not have taken on board the matters raised as well as which were the particular rules the Stock Exchange was or would be relying on and invoking in such circumstances.”[2]

14.  In her Ruling on this matter, Madam Justice Pang clarified her earlier comment that she “failed to see why any party should revisit precisely the same issue and seek to ask Mr Wong whether the alleged “contingent agreement” is subject to disclosure or not under the Listing Rules” was made in the context of an earlier submission about the contingent nature of the CSA, and “it cannot be taken to be of general application”. [3]

15.  She also pointed out at paragraph 17 of her judgment that [4]:

“Mr Wong certainly does not hold himself out as the person capable of giving any “definitive interpretation” of the Listing Rules. In other words, even if he were to be asked questions relating to his understanding of the Listing Rules, he would not be giving any “definitive interpretation” of those Rules.”

“Therefore, while the Listing Rules form a part of the necessary background, any breach of the rules is not the be-all and end-all of the prosecution case. Put simply, for the conspiracy counts to be proved, a mere breach of or non-compliance with the Listing Rules is not sufficient. Instead, apart from proving the making of the false representation or the deliberate concealment, the prosecution will also need to prove the accused's necessary mens rea and the existence of the conspiracy.”

and she gave reasons as to why she did not see any “definitive interpretation” of the Listing Rules being a live issue in respect of Mr Wong’s evidence at paragraphs 15-26.

16.  She then turned to “Understanding of the Listing Rules”. She turned to the question of “whether a representative from the Stock Exchange is entitled to give evidence on his understanding and application of the Listing Rules in the course of his work”. In conclusion, she ruled that Mr Wong “[can] be asked … as to what was expected to be done by 462’s directors under the Listing Rules in respect of the acquisition; what was done by the Stock Exchange; and how the work of the Stock Exchange would or might have been or not have been affected if certain matters were brought to the attention of the Stock Exchange at the time.” [5]

17.  I also note that in the transcript at Day 58, at page 40, she repeated: “He is a witness who is going to testify on both the factual issues and about the operation of the Listing Rules.” As a result, Mr Wong was called as both a factual witness and an expert witness to give expert opinion on the general operation of the Stock Exchange.

18.  The judge said at Day 55, at pages 47 and 48, of the transcript that Mr Wong “being an expert to give opinion on the general operation of the Stock Exchange. That is, when the Stock Exchange receives a request from a listed company about a VSA, how does the Stock Exchange proceed to deal with that request, what are the requirements, so on and so forth, the issue of no comment sheet and then the issue of the announcement, circular, so on and so forth.”

19.  It is to be noted that in the Court of Appeal’s Judgment of CACC 172 of 2016, the Court were in general agreement with the reasoning given by Madam Justice Pang in respect of this matter.

20.  I will now come to my observation on her summing up in respect of Mr William Wong's evidence. At pages 47-48 of the summing up Madam Justice Pang informed the jury that:

“For William Wong, actually, he was called both as a factual witness to tell you what happened in relation to the publication of the 462 circular, on the matters surrounding the publication, and as an expert on behalf of the Prosecution to testify on the operation of the Stock Exchange.

…

William Wong from the Stock Exchange has explained to you the operation of the Stock Exchange in the pre-vetting of announcements and circulars issued by listed companies as well as the Listing Rules.”

21.  At page 192 of her summing up, she told the jury that:

“Now although in these proceedings you have heard quite a lot about the duty of disclosure, this is not what this case is all about. This is not so. This is just part of it, or part of the necessary background.”

22.  And she continued about this matter at pages 194-5:

“So against such a background, and although much has been said about whether there was a need to disclose this agreement to 462 and the Stock Exchange, you have to bear in mind that this case is not about a breach of the disclosure requirement. For the conspiracy counts the breach of the Listing Rules is not the key. Even if you were to find that Jack Chen had breached the Rule by not disclosing the agreement, that breach alone is not sufficient to find any of the conspiracy counts. You can only find Jack Chen guilty if all the elements of the conspiracy offence which I have explained to you are proved beyond reasonable doubt, when you are sure.

Therefore, you may think although there was evidence about whether the agreement was disclosable or not, the core issue remains why there was no mentioning of it in the course of the acquisition by Jack Chen. Was it a deliberate and dishonest concealment on his part, pursuant to the conspiracy he had with May Wang to defraud 462 and the Stock Exchange?

Or, might it be that Jack Chen took the position or had the understanding that the agreement was in relation to a wholly different matter?

Or, might it be the case that Jack Chen thought that the agreement had already expired and/or had no application to the 462 acquisition? Or further, might it because of an unawareness of the disclosure requirement or a mere slip or inadvertence on the part of Jack Chen?

So while William Wong's opinion on the disclosure requirements concerning the commission agreement is there for your consideration, at the end of the day and after taking into account all the evidence adduced you may regard it more relevant and important to concentrate on what was Jack Chen's state of mind at the time as well as Jack Chen's relevant conduct and/or the interaction between Jack Chen and May Wang concerning this commission agreement, if any, and its relationship, if any, with the 462 acquisition. The facts are for you to find. How to approach the evidence and what is and is not important are entirely matters for you.”

23.  Before the Court of Appeal, counsel acting on behalf of the 2^nd accused raised (at Ground 6) complaint that Mr William Wong was allowed to give “opinion evidence as to the meaning and interpretation of the Listing Rules” and “opinion evidence as to what the Listing Committee would do in hypothetical situations”. The Court of Appeal were in general agreement with the reasoning given by Madam Justice Pang, and also they were satisfied that the evidence of Mr Wong was admissible as such. [6]

24.  I respectfully agree and I will follow Madam Justice Pang’s Ruling and adopt her reasons in the treatment of Mr William Wong’s evidence in this trial.

25.  However, it is to be noted that in the 2021 retrial the same matter was raised before DHCJ Bruce and, as stated above, objection to Mr Wong’s evidence was raised by the Defence on exactly the same grounds on that occasion. As a result of that objection, DHCJ Bruce ruled that the witness, Mr Wong, would be permitted to express his experience of the day-to-day operation of the Listing Division. He would be entitled to express the standards that the Listing Division expects in relation to matters such as the announcement of the arrangements between 462 and the companies controlled by the 2^nd accused, so far as the announcement and, later, the circular. He has no personal knowledge of the exchanges between relevant parties in the development of the relevant documents, but he would be permitted to say that the Listing Division has a vetting process, and how that comes about and what the consequences of not following the strictures of the Listing Division would be. [7]

26.  In his written Reason for Ruling which was given later on 12 October 2021, DHCJ Bruce said that “the issue of the construction and meaning of the Rules is an issue for direction of the Court if that became necessary.” He also gave his view that in the earlier trial before Madam Justice Pang, the issue had never arisen and did not arise. [8]

27.  I am in respectful agreement with DHCJ Bruce that the construction and meaning of the Listing Rules is an issue or is a matter of law for this Court, and if – and only if – it becomes necessary, then this Court will give the jury the appropriate direction as to the correct construction of those Rules. For example, if in the course of his evidence Mr William Wong gives a wrong interpretation of the Listing Rule, then it will become necessary for this Court to correct that in its direction to the jury, but I must emphasise that this would only arise if the situation becomes necessary.

28.  However, as Mr Owen rightly point out in the course of the argument, it appears that in the judgment of DHCJ Bruce there appears to have some “internal inconsistency” as to whether he should be treated as an expert who can give opinion evidence before the court. As rightly point out by Mr Owen, in his Ruling DHCJ Bruce said whether this is expert evidence isn't entirely straightforward. Later he said [9]:

“Having reviewed their committal depositions and their testimony at the previous hearing, I do not perceive that they were giving expert evidence to the meaning of any of the Listing Rules. They could not, in any event, give expert evidence as to the legal meaning of the Listing Rules as they are not qualified to do so. They are, on the basis of depositions and their former testimony, capable of giving evidence as to the operation of the Listing Division of the SEHK. Whether that evidence is truly opinion evidence is an interesting question. Plainly, both of these proposed witnesses [meaning Ms Cindy Ngai and Mr William Wong] are vastly experienced in the operation of the Listing Division. Expertise may be required by experience and subject to submission, it seems to me that their experience is sufficiently extensive to be characterised as expert.”

29.  In allowing Mr Wong to give the evidence before the jury, DHCJ Bruce stated in his Reason for Ruling, at paragraph 22, that he did not perceive their evidence as expert evidence relating to the meaning of any of the Listing Rules. And he said that they were capable of giving evidence as to the operation of the Listing Division of the Stock Exchange, and the day-to-day operation of the Division was very much a rules-based operation. In relation to Counts 1 and 2 of the indictment, it is alleged that the SEHK was defrauded in the sense of acting contrary to its public duty. So it is “unavoidable that Mr Wong and Ms Ngai will need to explain what they did, why they did it and why they might have acted in another way, had they been aware of other facts and given that the operation of the Listing Division is fundamentally rule-based, [they] will of necessity have to refer to their understanding of the Listing Rules.” [10]

30.  However, DHCJ Bruce pointed out that, if the position is that they give wrong evidence about their views of the Rules, then it would be necessary for the Court to give directions to the jury as to the correct position.[11] As I have said just now, I will adopt the same position if there is any error about his understanding of the Rules from the evidence of Mr Wong.

31.  I agree that, strictly speaking, the opinion to be given by Mr Wong should be classified as expert opinion. Even though DHCJ Bruce did not allow him to give the evidence in the capacity of an expert as such, but having looked at his Ruling, especially those so-called “internal inconsistencies”, I consider that indeed he was allowing Mr Wong to give expert evidence, and that was why he was allowed to express his opinion on the operation of the Listing Rules in the Stock Exchange.

Conclusion

32.  In my opinion, it is obviously clear that Mr Wong can give evidence, both as a factual witness as to what happened in relation to the publication of the Circular, or the matters surrounding the publication, and also to give opinion as an expert witness on behalf of the Prosecution regarding the operation of the Stock Exchange, and to explain the operation of the Stock Exchange in the pre-vetting of announcements and circulars issued by listed companies as well as the Listing Rules.

33.  I accept that he can be asked as to what was expected to be done by the director of 462 under the Listing Rules in respect of the acquisition; what was done by the Stock Exchange; and how the work of the Stock Exchange would or might have been affected if certain matters had been brought to the attention of the Stock Exchange at the time.

34.  So it is my view that Mr Wong is clearly entitled to give opinion evidence as an expert on those matters, as well as to give evidence as a factual witness. If the Prosecution seeks to tender him both as a factual and expert witness in due course, I am mindful to give permission for the Prosecution to do that.

35.  Having said that, I must point out that I will also give a disclosure direction similar to that given by Madam Justice Pang in the summing up to the jury at the 2016 trial to have the matter clarified, even though I allow Mr Wong to give his opinion evidence about the disclosure of certain matters. This is my conclusion.

Postscript

36.  These reasons are provided for the parties’ information only. The only part of this judgment which may be reported publicly is the above Conclusion. The remaining part of this judgment may not be reported until further order or until the conclusion of the trial.

[Subject to Reporting Restrictions as per Paragraph 36 of this judgment]