FORMER DEALING DIRECTOR OF FOREGROUND SECURITIES CO LTD v. SECURITIES AND FUTURES COMMISSION

HCA861/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO.861 OF 2006

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REASONS  FOR  DECISION

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1. On 12 September 2006, I dismissed the plaintiff’s appeal out of time against the order of Registrar Chan striking out his claim and dismissing his action with costs.  These are my reasons.

HCA2966/2004

2. The plaintiff was the principal of Foreground Securities Company Limited (“Foreground”) and was registered as a sole accredited dealer with the Hong Kong Stock Exchange.  In January 1999, the defendant revoked Foreground’s registration as a dealer under the Securities Ordinance (now repealed).  As a result, the plaintiff’s registration as Foreground’s accredited dealer was automatically revoked.  Both Foreground and the plaintiff appealed against the defendant’s decision to the Securities and Futures Appeals Panel.  The appeals were dismissed.

3. In December 2002, the plaintiff commenced HCA2966/2004 in his personal capacity against the defendant, alleging, inter alia, that the defendant had abused its power and breached the Securities Ordinance.  He sought to have his registration restored and claimed damages of HK$2,299,200 per year.

4. Upon the defendant’s application, Deputy Judge To struck out the plaintiff’s claim and dismissed the action on the ground that the plaintiff had no reasonable cause of action.  See the Decision handed down on 22 July 2005.

5. Deputy Judge To also ordered the plaintiff to pay the defendant costs of the action.  The costs were subsequently taxed and allowed at HK$158,916.84 (“the Taxed Costs”).  The plaintiff has yet to pay the Taxed Costs.

6. The plaintiff then appeal against the order of Deputy Judge To.  On 18 May 2006, the Court of Appeal dismissed his appeal.  He then applied for leave to appeal to the Court of Final Appeal, which will be heard by the Court of Appeal on 29 September 2006.

The present action

7. On 19 April 2006, the plaintiff commenced the present action.  He claimed for damages equivalent to the amount of the Taxed Costs.  He pleaded that the defendant was not entitled to engage the firm of solicitors under section 9(3) of the Securities and Futures Ordinance, Cap.571 in the application to strike out HCA2966/2004.  That task ought to have been undertaken by the defendant’s own legal department.

8. Upon the defendant’s application, Registrar Chan on 27 June 2006 struck out the plaintiff’s claim and dismissed the action with costs.

Appeal out of time

9. By notice dated 21 July 2006, the plaintiff sought to appeal against the Registrar’s order out of time.

10. It is trite that when hearing an appeal out of time, the court will take into account all relevant factors including the length of the delay, the reason for the delay, the prejudice to the other party and the merits of the appeal.

11. Mr Jamison, for the defendant, readily conceded that the delay was insubstantial and perhaps excusable and that the defendant has not suffered any prejudice as a result of the delay.  He opposed the appeal mainly on merits, to which I now turn.

No merits

12. In my view, the plaintiff does not have any cause of action against the defendant at all.

13. The plaintiff seeks, in effect, to claw back the Taxed Costs that he has been ordered to pay.  In his submissions, the plaintiff puts forward two reasons to justify his denial of liability for the Taxed Costs.

14. The plaintiff first argues that his claim should not have been struck out.  He may well be dissatisfied with the order of Deputy Judge To and the Court of Appeal.  He can appeal further, if he so desires.  That, however, does not even begin to ground any cause of action against the defendant for any damages equivalent to the Taxed Costs.

15. The plaintiff next argues that under section 9(3) of SFO, the defendant was not entitled to engage a law firm in HCA2966/2004.  Section 9(3) read :

“The Commission may engage consultants, agents and advisers to assist it in the performance of its functions.”

16. The plaintiff refers to the heading of section 9 which reads : “Staff of Commission” and argues that section 9(3) only applies to internal staff of the defendant.  His argument is plainly misconceived.  For a section heading to any statutory provision shall not have any legislative effect and shall not in any way vary, limit or extend the interpretation of any Ordinance : section 18(3) of the Interpretation and General Clauses, Cap.1.  On a proper reading of section 9(3), the defendant is entitled to engage a law firm to assist it in the performance of its functions.

17. The plaintiff also contends that its legal department could have represented the defendant in HCA2966/2004.  But if the defendant so decides, I see no reason why it is not entitled to engage a law firm in HCA2966/2004. 

18. In my view, the plaintiff’s claim is hopelessly unmeritorious.  It is plainly an abuse of process.  The claim must be struck out and the action, dismissed.  The Registrar was entirely correct in so ordering. 

Conclusion

19. For the above reasons, there is no merit whatsoever in this appeal out of time.  I therefore refused to grant leave to appeal out of time and dismissed the plaintiff’s notice of appeal.

20. Costs must follow the event.  I therefore ordered the plaintiff to pay the defendant costs of the appeal, to be taxed if not agreed.  The plaintiff should consider himself lucky.  Had Mr Jamison sought costs on an indemnity basis, I would have no hesitation in allowing it.