THE SECURITIES AND FUTURES COMMISSION ("SFC") v. NEW CHUAN KONG INVESTMENT CO. LTD.

1998, No. MA 31

Headnote

The effect of s.67 of the Leveraged Foreign Exchange Trading Ordinance, Cap. 451 ("the LFETO"), read together with s.26 of the Magistrates Ordinance is as follows. In regard to any offence under the LFETO triable only summarily (namely sections 14(7), 23(10), 47(6), 48(2) and 63(7)) the time limit for making a complaint or laying an information is not the six-month period provided for by s.26 of the Magistrates Ordinance but is instead the 3 years or 12 month-period provided for by s.67 of the LFETO. But in regard to offences triable either way, on indictment or summarily, there is no time limit: neither under the Magistrates Ordinance generally nor under the LFETO specifically. There is of course the jurisdiction to prevent abuse of process by staying stale prosecutions which by reason of delay are incapable of being tried fairly.

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

(APPELLATE JURISDICTION)

MAGISTRACY APPEAL NO. 31 of 1998

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J U D G M E N T

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1. I wish to begin by recording my thanks to counsel on both sides for their assistance.

2. This is a notice of motion by which the Respondents in an appeal from the Magistrate's Court ask me to declare that the appeal is deemed to be abandoned by the operation of s. 110(3) of the Magistrates Ordinance, Cap. 227.

3. The Appellant is the Securities and Futures Commission ("the SFC"). It brought in the Magistrate's Court one charge against the 1st Respondent, New Chuan Kong Investment Ltd ("the Company") and one charge against the 2nd Respondent, Mr Fok Hiu-tong, who is a director of the Company ("the Director").

4. Both charges were laid under the Leveraged Foreign Exchange Trading Ordinance, Cap. 451. The one against the Company was of carrying on a business of leveraged foreign exchange trading without a licence, contrary to s. 3(1)(a) and 2(6). And the one against the Director was of aiding and abetting the Company in the commission of that offence or counselling and procuring it to commit the same.

5. Those charges were heard together before J. Brennan Esq. sitting in the Eastern Magistracy. The learned Magistrate acquitted on each charge. And the appeal in which this motion is taken out is one by way of case stated brought by the SFC to challenge the correctness in law of those acquittals.

6. Although each charge took a separate case number in the Magistrate's Court and the Magistrate stated a separate case for each charge, the proceedings in which this motion is taken out are in the form of a single appeal: with the SFC as the Appellant; the Company as the 1st Respondent; and the Director as the 2nd Respondent. And, as I have indicated, there is before me a single motion directed to the position of both Respondents in that appeal.

7. Section 110(3) of the Magistrates Ordinance relied upon by the Company and the Director provides that:

"The appellant shall not be entitled to have the case delivered to him unless he completes the recognizance within the prescribed time, and if he makes default in so doing the appeal shall be deemed to be abandoned."

8. The SFC has not completed any recognisance. No recognisance was taken from it. But the stated cases have been delivered to it. This brings me to sub-section (1) of the section which I have just mentioned, namely s. 110. This subsection reads:

"The appellant shall, within 3 weeks from the making of an application under section 105, enter into a recognizance with or without sureties as any magistrate may have directed, and in such reasonable sum as, having regard to the purpose of the recognizance and to his means, the magistrate may have thought necessary to fix, conditioned to prosecute his appeal with diligence to abide by and duly perform the order of the judge or Court of Appeal and to pay such costs as may be awarded by the judge or Court of Appeal or, with the magistrate's consent, he may, as respects the whole or any part of the sum so fixed, give such other security, by deposit of money with the magistrates' clerk, or otherwise, as the magistrate may deem sufficient."

9. A provision by which an appeal is deemed to be abandoned (not merely stayed until something is done) is a highly draconian one which drives the appellant - who may be an individual whose liberty is involved although the appellant here happens to be the prosecutor - from the judgment seat without any enquiry into the merits. Such a provision has to be construed narrowly.

10. Section 110(3) speaks not of "a" recognisance but rather of "the" recognisance. It contemplates therefore the existence of a recognisance which the appellant is in a position to complete but which he nevertheless fails to complete even though it is there for him to complete. The word "default" reinforces that.

11. Mr McCoy who leads for the Company and the Director has cited a number of cases showing, among other things, the mandatory as opposed to merely directory nature of provisions for recognisances from appellants. Mr Ismail for the SFC has pointed to differences between the wording of the provisions which those cases concerned and the wording of the provision which the present case concerns. More importantly Mr Ismail has pointed out that in each of those cases the amount of the recognisance had either been fixed by the court or had been stipulated in the statute.

12. In the present case there was however no recognisance which the SFC was in a position to complete. The sum in which an appellant enters into a recognisance must be fixed by the magistrate. No such sum has been fixed by the Magistrate here. Even assuming that the SFC should have asked the Magistrate to fix a sum and that the Magistrate should then have done so, still the fact remains that there was no recognisance for the SFC to complete. Where is "the" recognisance in respect of which it is in default? I see none. Is the existence of one to be deemed by some further implied deeming provision which is to be read into the statute? I do not consider it legitimate to read any such implication into the statute.

13. A complication has come into this matter in the following way. The Company and the Director, with a view to meeting the SFC's point that there was no recognisance for it to be in default of since no amount had been fixed by the Magistrate for any recognisance, contended that the SFC had "wrong-footed" the Magistrate.

14. When he opened the motion, Mr McCoy contended that the SFC had misled the Magistrate into thinking that the application to the Magistrate for him to state a case was made by or under the direction of the Secretary for Justice so that, by operation of sub-section (5) thereof, s. 110 did not apply.

15. But when Mr McCoy's junior Mr Lo came to reply, he contended that the Magistrate had in fact been misled into thinking that another Magistrate had fixed the amounts and that recognisances had in fact been entered into.

16. Although Mr Lo says that his point is in addition to his leader's point, those two contentions actually contradict each other and are mutually exclusive. The Magistrate could not at the same time have thought that the SFC did not have to enter into a recognisance and that it had in fact done so.

17. On the material before me, I do not feel able to find any "wrong-footing". It is not necessary therefore to consider what the legal effect of such a thing would be if it had taken place.

18. I decline to declare that this appeal is deemed to be abandoned. The motion is dismissed.

19. I will now hear counsel on costs and, if there are any directions as to the appeal itself which are necessary, on such directions as well.