RE ROBIN MARK DICKER

HCMP 2844/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 2844 OF 2012

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J U D G M E N T

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The facts

1.  This is an application for admission of Mr Robin Mark Dicker QC, a London specialist in company law and insolvency, to appear on behalf of Moulin Global Eyecare Trading Ltd (in liquidation) in the company’s intended appeal from the judgment of the Court of Appeal in CACV 64/2011 dated 21 March 2012 and the relevant application(s) for leave to appeal.

2.  The facts and issues involved in the underlying proceedings may be very briefly stated.  The company’s liquidators have discovered that its former executive directors have falsified the company’s profits through the creation of false sales in the tax years from 1998/1999 to 2003/2004.  The company in fact made substantial losses in the relevant years. Based on the tax returns filed, very substantial sums of profits tax have been demanded by and paid to the Commissioner of Inland Revenue when, if accurate tax returns had been filed, no profits tax would have been payable.  The liquidators therefore sought extensions of time to file objections to the profits tax assessments for the relevant years and revisions of the company’s tax returns under sections 64 and 70A of the Inland Revenue Ordinance (Cap 112).  The applications were, however, refused by the Commissioner.

3.  The company challenged the Commissioner’s decision by way of judicial review.  It succeeded before Reyes J, whose decision ([2011] 3 HKLRD 216) was, nevertheless, reversed by the Court of Appeal ([2012] 2 HKLRD 911).  Unlike the judge, the Court of Appeal held that the knowledge of the defrauding directors that the company’s accounts were false was to be attributed to the company under the “primary rules of attribution”.  The court took the view that the “Hampshire Land principle” had no application to deny attribution where knowledge was attributed to the company on the basis that the defrauding individual was the directing mind and will of the company in relation to the activities in question. Alternatively, the court observed, a policy of certainty and finality in fiscal revenue would require that there should be “special rules of attribution” applicable in the circumstances and they took precedence over allowing an objection to be invoked on the ground of “other reasonable cause” within the meaning of section 64.

4.  Aggrieved by the Court of Appeal’s decision, the company filed an application to the Court of Appeal for leave to appeal to the Court of Final Appeal on 17 April 2012.  The hearing has been fixed for 22 February 2013.  No less than ten grounds of appeal are relied on.  The company contends that the intended appeal involves questions which, by reason of their great general or public importance, ought to be submitted to the Court of Final Appeal for decision.

The admission sought

5.  The company has throughout been represented by local senior counsel.  Given the importance of the case, the company now wants to be represented by the applicant at the leave application before the Court of Appeal.  If that application should fail, the court has been told, the company will apply to the Court of Final Appeal for leave to appeal, in which event it also wants to be represented by the applicant.  If leave is successfully obtained from either the Court of Appeal or the Court of Final Appeal, the company definitely wants to instruct the applicant to appear in the substantive appeal before the Court of Final Appeal.  Hence, the present application for admission.

The submissions

6.  On behalf of the applicant, it is said that the admission sought is supported by six principal factors:

(1)   Public interest: the case involves the need to determine the various public and tax policy questions that lie at the heart of these proceedings, namely, whether the Inland Revenue can lawfully retain windfall payments of profits tax charged on fictitious and wholly non‑existent profits, as a result of certain criminal and fraudulent acts.  Public interest is also said to be involved as the case relates to the effective conduct of insolvency proceedings.

(2)   Development of jurisprudence: the case is said to be the first of its kind which directly addresses the recoverability from the Inland Revenue of overpaid tax in circumstances already described.

(3)   Unusual difficulty and complexity: the proper construction and application of sections 64 and 70A of the Ordinance; the relevance of the rules of corporate attribution to a decision by the Commissioner on an application pursuant to the relevant sections in the Ordinance; the precise nature, scope and limit of the “non‑attribution principle”, and its applicability to cases where the primary rules of attribution apply; and the special rules of attribution.

(4)   The “CFA factor”: the leave applications are for leave to appeal to the Court of Final Appeal, and the substantive appeal (if leave is granted) will be before that court.

(5)   Expertise of the applicant: the applicant has the relevant experience and expertise and his participation in the proceedings will add a significant dimension to the case.

(6)   Continuous involvement of the local Bar: local senior counsel has been and will continue to be involved in the case.

7.  The Bar opposes the application for admission essentially on one ground of principle, namely, that this is a premature application.  The court has been told that the Bar is “unlikely” to oppose the applicant’s admission for the leave application before the Court of Final Appeal itself if and when it is taken out.  Furthermore, if either the Court of Appeal or the Court of Final Appeal is prepared to grant leave to appeal, the Bar “would not object” to the admission of the applicant to appear at the substantive hearing before the Court of Final Appeal.  However, all this, it is contended, is in the future.  The only extant application is the leave application before the Court of Appeal.  The Bar contends that a case for admission to appear before the Court of Appeal for leave has not been made out under the established principles for admission of overseas counsel.  As for the leave application before the Court of Final Appeal and the substantive appeal, if any, the admission sought in relation to them is simply premature.  Mr Gerald McCoy SC (Mr Jason Yu with him) for the Bar stresses that the “CFA factor” only applies to an actual hearing before the Court of Final Appeal.  It does not apply to a hearing before the Court of Appeal for leave to appeal to the Court of Final Appeal.  Therefore, the Bar contends, the CFA factor, which entails a less stringent test for admission, is simply inapplicable to the forthcoming leave application before the Court of Appeal.

8.  Ms Leona Cheung, for the Secretary for Justice, takes the argument one step further in her written submissions.  She submits that a distinction should be drawn between the leave application(s) and the substantive appeal (if leave is obtained). For the leave application before the Court of Appeal and (if it should become necessary) the leave application before the Court of Final Appeal, applying the established principles for admission, it is doubtful whether the applicant can make out a case for admission.  However, in relation to the substantive appeal (if leave is granted), she submits that probably there are questions of unusual complexity and difficulty involved and they would likely have a significant impact on the development of local jurisprudence, thus favouring admission.

The central issue

9.  The general principles in relation to admission of overseas counsel are well established: Re Flesch QC [1999] 1 HKLRD 506; Re McGregor QC [2003] 3 HKLRD 585.  They need not be repeated here.

10.  The present case raises a peculiar question.  It concerns the admission of overseas counsel for an application before the Court of Appeal for leave to appeal to the Court of Final Appeal in a case where it is said issues of great general or public importance are involved, issues that might impact substantially on the development of local jurisprudence, and where no overseas counsel has featured in the proceedings whether below or before the Court of Appeal in the substantive appeal.

11.  As mentioned, the Bar has very fairly indicated that if the case should reach the Court of Final Appeal for a substantive appeal, it would not oppose an application for admission by the applicant, whose eminence and experience in the relevant field cannot be doubted.  Moreover, the Bar has also through Mr McCoy indicated that it is unlikely to oppose any application for admission of the applicant to appear before the Court of Final Appeal for leave to appeal should the forthcoming leave application before the Court of Appeal be unsuccessful.  All this therefore brings into sharp focus the distinction, if any, between a hearing before the Court of Appeal and one before the Court of Final Appeal, for leave to appeal.

12.  Indeed, in final analysis, the disagreement between Ms Roxanne Ismail for the applicant and Mr McCoy boils down to this point.  Ms Ismail argues that there is no material distinction between a hearing before the Court of Appeal and one before the Court of Final Appeal.  If admission is justified for the application for leave, it does not matter whether the application is to be heard before the Court of Appeal or the Court of Final Appeal.  The issues to be involved are exactly the same, and the public interest involved that justifies admission for one hearing (as almost conceded by the Bar in relation to the Court of Final Appeal leave application) will also justify admission for the other.  In the written submissions, the Bar’s position to the contrary is said to involve an “inherent illogicality”, and represent “a form over substance approach”. 

13.  Rather, Ms Ismail submits, the sooner the courts in Hong Kong have the service of the applicant, the better for the administration of justice.  After all, the courts should be served by the best counsel available when, by definition, they are dealing with issues of great general or public importance, issues that might have a substantial impact on the development of local jurisprudence.  Allowing the applicant to appear at the leave application before the Court of Appeal is simply good case management and accords well with the intent and spirit of the Civil Justice Reform. 

14.  Ms Ismail also stresses that unlike a case where a “blanket order” for admission is sought (see Re Kosmin QC, HCMP 1865/2006, 29 September 2006, Ma CJHC, paras 7-11), the present case is one where the issues on the intended appeal have been clearly defined and presented to the court.  No new facts are likely to emerge between the two leave hearings.  Moreover, a hearing before the Court of Final Appeal, whether it be a leave application or a full appeal, is not hypothetical but is in fact inevitable. 

Different facets of the public interest

15.  These are very powerful arguments.  However, the matter must be approached from basic principles.  The ultimate or overriding consideration in this type of proceedings is that of the public interest.  There are of course different facets to the public interest.  The maintenance of a strong and independent local Bar is certainly an important consideration.  This consideration means that unless otherwise justified in terms of the public interest, generally speaking, no overseas counsel should be admitted (leaving aside any consideration of “cross-fertilization”).  The local Bar must be provided with an environment, which is conducive to the development and maintenance of a strong and independent local Bar.

16.  Another important facet of the public interest is the proper administration of justice.  The importance of the courts being adequately assisted by lawyers in the cases that they have to deal with cannot be over-emphasised.  But adequate assistance does not mean, in all cases, the best assistance available in the whole common law world.  What is normally required is professional assistance of a standard of competence and ability which is commensurate with the case concerned. Relevant considerations would include the nature and importance of the issues involved, the complexity and difficulty of the issues, the monetary amount, right or relief at stake, the level of court concerned, the availability and standard of local counsel, and so forth.  That is why in a case which involves issues of great importance, issues that may likely end up in the Court of Final Appeal, the court is more prepared to grant an admission of overseas counsel, notwithstanding the importance of the maintenance of a strong and independent local Bar.  This consideration is applicable to proceedings before all levels of court in Hong Kong, and is not restricted to a substantive appeal before the Court of Final Appeal.  This is very often known as the “CFA factor”.

17.  Yet, even in this type of situation, it does not follow that each and every proceeding in the case is one which warrants, for the sake of the proper administration of justice, the assistance of overseas counsel.  That explains why in the law reports, one finds many cases where overseas counsel are only admitted to conduct the trials or some other substantive proceedings before the court.

18.  Developing my point further with the facts in the present application specifically in mind, this particular aspect of the public interest does not mean, in the type of situation under discussion, that for an application for leave to appeal to the Court of Final Appeal before the Court of Appeal, overseas counsel must be admitted.  In such an application, all that the Court of Appeal would be concerned with is whether the case falls within one or more of the various limbs in section 22(1)(a) and (b) of the Hong Kong Court of Final Appeal Ordinance (Cap 484) for granting leave to appeal, and (so far as the discretionary limbs are concerned) whether the intended grounds are reasonably arguable.  The Court of Appeal is there to conduct a screening exercise, particularly in relation to the “great general or public importance” limb.  Whether the proper administration of justice warrants the admission of overseas counsel in such an application is a matter that must turn on the facts and issues involved in a particular case.  But generally speaking, one would expect the question to be answered in the negative.  This is particularly so when, in this digital age, overseas counsel’s input, if required, can be easily obtained via electronic means and incorporated into the written submissions.  I reiterate here my earlier distinction between the court receiving adequate assistance and the court receiving the best assistance available in the common law world.

19.  But a consideration of the proper administration of justice as an important facet of the public interest does not stop here.  Quite apart from the factor under discussion just now, namely, the importance of the issues involved in a particular case, there is a related yet distinct consideration of the proper administration of justice at play in relation to an application for leave to appeal to the Court of Final Appeal before that court itself.  This has been clearly explained by the former Chief Judge (as the Chief Justice then was) in Re Pannick QC [2004] 1 HKLRD 950:

“15. The only aspect that is relied upon by the applicant in the present case is what one can loosely term the ‘Court of Final Appeal’ ground. In Flesch QC & Another [1999] 1 HKLRD 506, Chan CJHC (in the context of an application for admission to appear in a tax case in the Court of First Instance) emphasised the weight that a court will attach to an application for admission where the relevant case involved the determination of principles that might have a substantial impact on Hong Kong jurisprudence and which may likely end up in the Court of Final Appeal: see pp.513I-514B, 516B-C (at para. (6)). The word ‘substantial’ does not appear in the judgment of Chan CJHC but it is in my view implicit.

16. The factor I have just referred to in the previous paragraph, applies to hearings at all levels of Hong Kong’s judicial system. However, what should also not be forgotten is the particular importance placed by Chan CJHC in Re Flesch QC & Another [1999] 1 HKLRD 506 on the Court of Final Appeal as being itself an independent factor: see pp.510C-E, 511F-512B, 513B-E, 515H-I (at para. (3)). Here, quite apart from important principles of law that would impact substantially on Hong Kong jurisprudence, the following points should be noted:

(1) The Court of Final Appeal is at the pinnacle of Hong Kong’s judicial system. Just as the Judicial Committee of the Privy Council represented Hong Kong’s highest court before 1 July 1997, so the Court of Final Appeal has this status now.

(2) The Court of Final Appeal, like its counterparts in the United Kingdom, Australia and New Zealand (amongst other jurisdictions), has an important, if not pivotal, role in the development of the common law worldwide. The decisions of this Court in the law of libel (Cheng & Another v Tse Wa Chun (2000) 3 HKCFAR 339), in the law of limitation (Bank of East Asia Ltd v Tsien Wui Marble Factory Ltd & Others (1999) 2 HKCFAR 349) andin the Right of Abode cases, provide ready examples of this.

(3) It is therefore right as a matter of principle that the Court of Final Appeal should have available to assist its deliberations at least the same pool of counsel that was available to the Judicial Committee of the Privy Council prior to 1 July 1997. In fact, I can see the force of the argument that perhaps the pool should be even larger, provided of course only overseas counsel of the highest calibre appears in that court.

(4)   Accordingly, in my view, where a hearing before the Court of Final Appeal is involved, the court will be more, rather than less, inclined than at any other level to admit overseas counsel.  This is provided of course that the matter is one that is substantial and in which overseas counsel is able to contribute significantly by reason of his expertise.  An application, say, for an extension of time would rarely meet these criteria.”

20.  In other words, the fact that one is dealing with a hearing or application before the Court of Final Appeal is in itself an important factor to bear in mind, in terms of the proper administration of justice as a facet of the public interest.  The Court of Final Appeal should stand in no less advantageous position, putting it at the lowest, than the Privy Council prior to 1 July 1997 in terms of the assistance that it gets from counsel.  That is of great importance to the proper administration of justice, and therefore an important consideration of the public interest.  This consideration is, rather confusingly, also sometimes referred to as the “CFA factor”.   

21.  There is of course a difference between an application for leave and an appeal proper before the Court of Final Appeal, but the difference is simply one of degree: Re Green QC, HCMP 704/2011, 18 May 2011, Hartmann JA, para 31.  This does not mean, of course, that in each and every application for leave before the Court of Final Appeal, the appearance of overseas counsel is justified in terms of the proper administration of justice.  As Ma CJHC observed in Re Jones QC HCMP 2446/2008, 17 December 2008, this second‑mentioned CFA factor (that is, where there is to be a hearing before the Court of Final Appeal), “will be in most cases decisive when it is demonstrated that the matter that is involved in the relevant hearing is a substantial one” (paragraph 6).  What is or is not a substantial matter must turn on the facts.  But it is generally not necessary to demonstrate that the relevant overseas counsel would be able to add a significant dimension to the matter, or to demonstrate that the issues to be involved at the hearing are of unusual difficulty or complexity or involve points of jurisprudential value.  When one is concerned with a hearing before the Court of Final Appeal itself, all this assumes “less importance” (Re Jones QC, para 6), in terms of determining whether the application is a “substantial” one.

22.  It can therefore be seen that there is indeed a significant distinction, for the purposes of admission, between a hearing before the Court of Final Appeal and one before the Court of Appeal, even though the nature of the hearing and the issues involved etc may be identical or similar.  This distinction is dictated by a careful consideration of the different facets of the public interest involved.  It does not represent a “form over substance approach”. 

The present case

23.  On the facts of the present case, there can be little doubt that an application for leave before the Court of Final Appeal itself is going to be a substantial one, assuming that leave is refused by the Court of Appeal.  That explains why, in my view, the application for admission of the applicant to appear before the Court of Final Appeal for leave is one that is justified by a consideration of the proper administration of justice as a facet of the public interest.

24.  This, in my view, also distinguishes that potential leave application from the application for leave now pending before the Court of Appeal.  In relation to this latter application, the second‑mentioned CFA factor is simply missing.  All one is left with is the first‑mentioned CFA factor, that is, the underlying issues are of great importance etc.  However, as discussed, the nature of the leave application before the Court of Appeal is such that the court does not have to grapple with those important issues (again) – they having been dealt with by the court in the appeal proper.  All the court has to do is to be satisfied, if such be the case, that the issues to be involved in the intended appeal are of great general or public importance etc (and are reasonably arguable).  That is a very different task and as mentioned, overseas counsel’s direct participation is, generally speaking, not required.    

25.  In my view, the present case is no exception. The potential issues of great general or public importance have already been identified in the application for leave to appeal.  I can safely proceed on the assumption that the applicant’s input has been obtained and incorporated into the papers filed.  Likewise, whatever further input that the applicant may be required to render can be easily obtained and included in the written submissions to be lodged with the Court of Appeal before the hearing.  I am not convinced that the actual appearance of the applicant before the court is required in order to satisfy it that the issues raised are of great general or public importance or are reasonably arguable.  As submitted by Ms Cheung, there is no suggestion that the outcome of the leave application itself will involve issues of unusual difficulty and complexity, or that the application itself will have any impact, significant or otherwise, on the development of local jurisprudence.  All this is separate and distinct from the question of whether the intended appeal itself, if leave is granted, will involve determination of issues of unusual difficulty and complexity or might have a significant impact on the development of local jurisprudence.

26.  I am, of course, and I stress, only concerned with a situation where overseas counsel is sought to be introduced to the local proceedings for the first time before the Court of Appeal for leave. Where counsel has already been admitted, for instance, to conduct the trial below or the appeal proper before the Court of Appeal, the consideration of continuity of representation would require the admission court to seriously consider, even though the leave application before the Court of Appeal does not by itself require the assistance of overseas counsel, whether it may be unfair to deny a party the benefit of having the same counsel who has acted previously in the same case.  Re Jones QC, para 9.  This is a matter pertinent to a consideration of the proper administration of justice as a facet of the public interest which has to be borne in mind.

27.  But this has no application in the present case.  The applicant is sought to be introduced for the first time to appear before the Court of Appeal for leave to appeal.

28.  The court of course bears in mind all other considerations, including the question of delay, urged upon it by the parties in this application.  Given the conclusion that I have reached after considering all relevant considerations, it is unnecessary for me to specifically mention them here or to say anything about the alleged delay in the making of the present application.

Disposition

29.  For these reasons, I am prepared to allow the admission of the applicant (on a contingent basis, of course) to appear before the Court of Final Appeal for leave to appeal (if that should become necessary), and if leave is granted (by either court), to appear in the appeal proper before the Court of Final Appeal.  I am not attracted by the suggestion that the present application should be refused on the ground of prematurity, thereby leaving it to the applicant to make fresh application(s) for admission at a later stage.  However, I would refuse the application for admission to appear before the Court of Appeal for leave to appeal.  I so order.

30.  I thank counsel for their assistance. In particular, I would like to thank Ms Ismail, who was drafted in at the last minute, for her helpful submissions, and her instructing solicitors for the very thorough written submissions lodged with the court before Ms Ismail was instructed.