Escolar Documentos
Profissional Documentos
Cultura Documentos
HCMA 630/2014
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BETWEEN
and
Appellant
Respondent
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JUDGMENT
Introduction
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2.The SFC seeks the amendment under sections 109 and/or 112 of the
Magistrates Ordinance so that additional questions of law
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3.The SFC under cover of letter dated 17 October 2014 applied to the
preliminary issue.
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Within 14 clear days after the hearing and determination by a magistrate of any complaint,
information, charge or other proceeding which he has power to determine in a summary way,
either party thereto or any person aggrieved thereby who desires to question by way of appeal
any conviction, order, determination or other proceeding as aforesaid on the ground that it is
erroneous in point of law, or that it is in excess of jurisdiction, may apply in writing to the
magistrate to state and sign a case setting forth the facts and the grounds on which the
conviction, order or determination was granted and the grounds on which the proceeding is
questioned, for the opinion of a judge. In the case of any determination which a magistrate has
power to determine in a summary way and which relates to or is connected with an offence the
Secretary for Justice shall notwithstanding that he may not be deemed to be a party, have a
similar right to apply for a case to be stated as that hereinbefore afforded to the parties and upon
the exercise of such right by the Secretary for Justice the complainant or informant shall cease
to be a party to any further proceedings.
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5.By virtue of section 105, any party to the proceedings or any aggrieved
person in relation to a determination by a magistrate of any
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order,
determination
or
other
summary
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and sign a case setting forth the facts and the grounds on
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which form the basis of the case stated. The powers of the
judge on appeal are set out under section 119, where
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6.A magistrate may refuse to state a case under section 111 if he is of the
opinion that the application is merely frivolous. But once a
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7.A judge may also send back to a magistrate a case stated for
amendment under section 109. The section reads:
The judge shall have power, if he thinks fit, to cause the case stated for his opinion to be sent
back to the magistrate for amendment, and thereupon the same shall be amended accordingly,
and judgment shall be delivered after the same has been amended.
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8.This provision seems to apply when a judge is seized of the case stated
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for his opinion. The judge may, if he thinks fit, cause the
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9.A judge can also direct a magistrate to state a case or amend the case
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Where a magistrate refuses to state a case or amend the case stated, the judge may, on the
application of the person who applied for a case to be stated or the case stated to be amended,
make an order of mandamus requiring the magistrate to state a case or amend the case stated.
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state a case or amend the case stated. The judge may on the
application of the person who applied for a case to be stated
or the case stated to be amended, make an order of
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11.With this in mind, it is worth noting that the power to case state under
section 105 provides a party in summary proceedings to
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Background
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The three
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13.The SFC instituted prosecution action against PME and the respondent
as a director of the company in relation to the three public
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The
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read as follows:
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Information has been laid THAT [PME], on 15 February 2008 in Hong Kong did, in purported
compliance with a requirement under section 7(1) and pursuant to section 7(3) of the Securities
and Futures (Stock Market Listing) Rules, provide to [the SFC] via the Stock Exchange of Hong
Kong Limited a copy of an announcement dated 15 February 2008 containing information
which was false or misleading in a material particular in that PME stated that save as disclosed
in PMEs announcement dated 15 January 2008 [(exhibit P4)], there were no other negotiations
or agreements relating to the intended acquisitions or realizations which were discloseable
under rule 13.23 of the Listing Rules, neither was it aware of any matter discloseable under the
general obligation imposed by rule 13.09 of the Listing Rules, and PME knew or was reckless
as to whether the information was false or misleading in a material particular, and THAT YOU,
[the Respondent], being a director of PME did aid, abet, counsel, procure, induce by, consent to
or connive at the commission of such offence by PME or that the commission of such offence
was attributable to your recklessness.
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15.On 22 November 2013, the SFC appealed by way of case stated the
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and July 2014, the stated case was drafted by the SFC with
input from the respondent and submitted to the Magistrate
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questions of law.
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(d) finding that the privilege against self-incrimination applied in the present case and
that it was not waived;
(e) finding that statements in the Four Letters were made involuntarily?
2. Is it correct that no reasonable magistrate properly directed could have found the Four Letters
to be inadmissible?
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3. Given the undisputed evidence (including but not limited the evidence of Agnes
Yeung (PW1), company resolutions, minutes, notices, letters and agreements), is it correct that
no reasonable magistrate properly directed could have found that PME and Richcom had not
manifested an intention to exercise Richcoms conversion rights to shares of Betterment at the
latest by 14 February 2008?
4. Having found that the Subscription Agreement did not fall under the definition of an option
under rule 14.72 of the Listing Rules, did I err in law in failing to consider whether the
Convertible Bond (issued on 14 February 2008) fell within that same rule?
5. Did I err in law in failing to find that the HK$64M Loan, the Subscription Agreement
together with the execution of the Convertible Bond, all completed on or prior to 14 February
2008, amounted to (either individually or collectively) a disclosable transaction pursuant to
Rules 13.23 and/or 13.09 of the Listing Rules?
6. Having accepted the evidence of PW3, did I err in law in finding that his evidence (as to his
role as PMEs Company Secretary) absolved the Respondent (as PMEs Executive Director)
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from criminal liability (as that liability is prescribed in s.390 of the Securities and Futures
Ordinance) in relation to PMEs three announcements dated 15, 18 and 20 February 2008, the
subject of the three summonses?
7. Did I err in law in failing to consider the contents of PMEs announcement dated 12 March
2008 (exhibit P40) when making the finding that there was no evidence to show that the
Respondent had in any way made an active decision not to disclose the documents (relating to
the Betterment transaction) despite knowing that it was disclosable?
8. Is it correct that no reasonable Magistrate properly directed could have acquitted the
Respondent of any of the three summonses laid against her?
read:
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The questions of law arising from the above for the opinion of this Court are:
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(ii)
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against self-incrimination.
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20.The SFC argued that the answers given by PME in the letters were
basis, that both PME and the respondent had agreed, in being
listed as a company and being a director of a listed company
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21.I note however that the SFCs arguments are somewhat inconsistent
with each other. On the one hand, the SFC argued that PME
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22.The Magistrate found that the letters were inadmissible on the basis
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This is confirmed by PW1 [Yeung Sau-han, Agnes, a former director of PME] of the voir dire
hearing and the statement of Joanna Hui in that there was an obligation to reply, failure of which
would result in disciplinary proceedings.
Hence I found that the threat of disciplinary proceedings could amount to a real threat in the
mind of the letter recipient and, in this case, it is the defendant.
I will first deal with whether there were any threats. Although there were no explicit reminders
by the Stock Exchange about threat of disciplinary proceedings in the first two letters, all letters
require the answers to be truthful and threatened criminal proceedings if false. Moreover, all
letters contained a reminder about the undertaking to the Stock Exchange. Hence, all answers
were made with the knowledge that any failure to comply may subject the person or the
company to disciplinary proceedings.
I had considered the prosecutions submissions that the sanctions of any disciplinary
proceedings were negligible such that it would not be a real threat in the defendants mind.
However, I did not accept those submissions. I am of the view that any possible sanction, even
a censure, can affect the reputation of the defendant or the company and this damage can be
irreparable.
As to whether the Stock Exchange is a person in authority, although the answers in the letters
were not provided to the SFC, they were provided to the Stock Exchange. The Stock Exchange
must have been a person in authority in the mind of the defendant as they were the ones who
could issue disciplinary action against her. Moreover, according to Joanna Hui, the Stock
Exchange had the power to refer the matter to SFC for possible consideration of criminal
offences. Hence, objectively and subjectively, the Stock Exchange must have been a person in
authority.
As to the waiver of privilege, the prosecution submitted that the defendant must have waived
the privilege. According to the listing agreement submitted by Joanna Hui at JH5 and a
directors undertaking at Exhibit P50, there is no clause in which the defendant had
unequivocally agreed to waive her right against self-incrimination in respect of criminal
proceedings. I noted that there is no statutory provision allowing such answers provided under
the compulsion to be used in criminal proceedings.
Although there is a Memorandum of Understanding between the SFC and the Stock Exchange
in respect of the exchange of information for investigation purposes, the MoU that is, the
Memorandum of Understanding is not binding on any other party except for the SFC and the
Stock Exchange. Moreover, the MoU is not legally binding even as between the parties
themselves.
Authorities in the Court of Final Appeal have clearly stated that, in cases where answers are
provided under compulsion in various civil proceedings, the court must still consider the
voluntariness of those answers for the purposes of criminal proceedings. Hence, there is no
automatic waiver of the right against self-incrimination when it comes to criminal proceedings
and any waiver of such right, that is, the right against self-incrimination, must be unequivocal.
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There is nothing in the letter of request that indicate the Stock Exchange would pass the
material on for criminal investigation and nothing to remind them of their right to silence. From
the letters, the recipient of the letter could not have anticipated the use of the same material in
criminal proceedings. Therefore, I do not accept the defendant waived her right against selfincrimination for the purposes of the present criminal proceedings.
I have considered the prosecutions submission that, since the defendant claimed the legal
professional privilege in the third letter, the failure for her to claim other privileges in other
letters amounts to wavier of self-incrimination. However, I did not accept that submission.
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two rules.
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26.It was not disputed that PME ultimately acquired Betterment and that
the transaction was disclosable.
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On 28 February 2008,
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It was
The respondent
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argued that she did not know and was not reckless as to
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28.The Magistrate found that PMEs subsidiary did not manifest its
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the relevant rules only after that date. The Magistrate also
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found that the respondent did not have the requisite mental
element prescribed by section 390. The Magistrate on this
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with
it
the
ZZNode
shares,
worth
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over
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There were no documents before 18 February 2008, save and except a solicitors letter dated 11
February 2008 which indicated Richcom had decided to convert the shares. However, in respect
of the letter dated 11 February 2008, there has been no explanation as to why the letter was
written before the resolution was passed by the board of directors and no explanation as to
under whose instructions or whose authority the solicitors wrote the letter.
Having considered the evidence and the submissions of senior counsel, I find that Richcom did
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not manifest its intention to convert the shares until the resolution was passed on 18 February
2008.
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Submissions
30.Ms Charlotte Draycott, SC, with Mr Derek C. L. Chan, counsel for the
SFC, argued that the drafting of the questions to be
considered by the appellate court in a stated case is in
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opinion.
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has
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32.I was hardly directed to any substantial contentions of law by the SFC
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stated case.
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33.Ms Draycott argued that the questions proposed by the SFC are all
proper questions of law relating to the parts of the
Magistrates reasons that were critical to her decisions as to
the admissibility of the four letters and to acquit the
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34.Mr Peter Duncan, SC, with Mr Jonathan Kwan, counsel for the
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35.I will now deal with the submissions by the parties as each of the
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1. Question 1(a)
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respondent.
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38.I agree with Mr Duncan and in my view no point of law arises from
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this matter.
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2. Question 1(b)
39.Ms Draycott noted that the respondent had previously and voluntarily
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40.Mr Duncan on the other hand, submitted that there was no need for the
Magistrate to attach any weight to this matter, as the fact of
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the earlier undertaking did not obviate the need for the
prosecution to prove that the answers were given in the
absence of any threat and that the evidence clearly showed
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41.I do not see that this question raises a point of law which the
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3. Question 1(c)
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42.Ms Draycott referred to the Magistrates finding that the SEHK was a
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against her and that the SEHK had power to refer the
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Thus, from its earliest inception in Canadian law, the question as to who should be considered
as a person in authority depended on the extent to which the accused believed the person could
influence or control the proceedings against him or her. The question is therefore approached
from the viewpoint of the accused
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The important factor to note in all of these cases is that there is no catalogue of persons,
beyond a peace officer or prison guard, who are automatically considered a person in authority
solely by virtue of their status. A parent, doctor, teacher or employer all may be found to be a
person in authority if the circumstances warrant, but their status, or the mere fact that they may
wield some personal authority over the accused, is not sufficient to establish them as persons in
authority for the purposes of the confessions rule. As the intervener the Attorney General
Canada observed, the person in authority requirement has evolved in a manner that avoids a
formalistic or legalistic approach to the interactions between ordinary citizens. Instead, it
requires a case-by-case consideration of the accuseds belief as to the ability of the receiver of
the statement to influence the prosecution or investigation of the crime. That is to say, the trial
judge must determine whether the accused reasonably believed the receiver of the statement was
acting on behalf of the police or prosecuting authorities. This view of the person in authority
requirement remains unchanged.
44.She noted that Hodgson had been applied by the High Court of
Australia in Tofilau v The Queen (2007) 231 CLR 396, and
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320. Whether the basis of the inducement rule be reliability, preventing improper state
coercion, disciplining the police, or avoiding unfair reductions in the choice of suspects to
speak, a perception by the suspect that the coercive power of the state is being used is central:
most criminal investigations are undertaken by the state, and it is then that an accused is most
vulnerable to state coercion. Where that perception does not exist, the basis of the inducement
rule is not present.
323. The Director is correct in submitting that a person to whom an accused has made
admissions cannot be a person in authority at least unless that person is perceived by the
accused, on reasonable grounds, to have the lawful authority of the state to investigate the
circumstances.
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45.Mr Duncan submitted that the finding that the SEHK amounted to a
person in authority was clearly a question of fact and that
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46.As I will explain later in more detail, the question does not raise an
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4. Question 1(d)
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48.Mr Duncan submitted that the issue was not that the privilege against
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49.I agree with Mr Duncan that it would appear that the issue was
whether the privilege was waived by the respondent which
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5. Question 1(e)
50.Ms Draycott submitted that the SFC will contend that no reasonable
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51.Mr Duncan submitted that this was a question of fact which was dealt
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52.I agree with Mr Duncan but in any event this question is basically
incorporated in Question 2 that follows and which is already
53.This question has been included in the case stated and signed by the
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7. Question 3
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55.Mr Duncan on the other hand submitted that although the SFC
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in Li Man Wai.
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8. Questions 4 & 5
57.Ms Draycott submitted that the SFCs case at trial was that PMEs
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appropriate form.
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9. Questions 6 & 7
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Secretary and who was not on the PME Board) and not the
executive directors to decide what transaction was
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PW3 could make that decision. She submitted that the SFC
will contend inter alia at the substantive hearing that:
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In any event, PMEs subsequent announcement on 12 March 2008, which set out
PMEs description of how the transaction transpired, firmly establishes that
PMEs directors (including the respondent) had made an active decision not to
disclose the transaction at the material time in mid February 2008. Therefore the
SFC will contend at the substantive hearing that the Magistrate erred in law in
failing to take into account a plainly relevant consideration.
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61.Mr Duncan argued that the respondents mens rea at the material time
was clearly a question of fact.
As to the respondents
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addressed.
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62.It seems to me that these two questions are basically factual but in any
stated.
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10. Question 8
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63.This question has been included in the case stated and signed by the
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Discussion
64.As I have already observed, the power under section 105 should be
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that the matter has been finally determined unless there has
been some clear and obvious error of law that warrants
further adjudication.
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judge is sought.
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67.It is well to refer to the comments of the Full Court in Leung Chi-kin
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(a)
the material findings of fact or, where appropriate, a statement that no finding was
made upon an issue which is alleged to be material. The evidence should not be set out unless it
is the appellants contention that the magistrate ruled wrongly that there was or was not a case to
answer or that there was no evidence to support one or more of the findings of fact: Mills v
Boddy. The facts should include the primary facts based upon [the magistrates] estimation of
the truthfulness or otherwise of the witnesses who appeared before him and any facts deduced
by him from the primary facts as so found: Attorney General v Munro-Smith:
(b)
the contentions of law of each party upon each of the issues referred for the opinion of
the Court:
(c)
a statement of the decision of the magistrate on those issues. Normally extensive
quotations from the judgment will be unnecessary and should therefore be avoided:
(d)
the questions the Court is asked to answer. They should be stated clearly and concisely
and care should be taken to ensure that the questions are not wider than is warranted by the
facts. A case stated is not to be used as a device for obtaining the opinion of the Court upon
questions which did not form the basis of the magistrates decision, and, even where a point did
form part of the basis of his decision, if it was not taken at the trial the Court will not allow it to
be argued on appeal unless it is one which no evidence could alter: Kates v Jeffery.
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68.I can understand why the Magistrate rejected the questions as framed
for the reason that they are either not addressing, or not
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law.
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the letters on the basis that they were not freely and
voluntarily made. This required the prosecution to prove
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If the
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71.I find that the questions on the admissibility of the four letters
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Duncan pointed out that it was not an issue at trial that the
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72.I should add that framing each of these questions as to whether the
Magistrate erred in law does not necessarily make them
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It is
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relating
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Betterment
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74.Whilst I can understand the Magistrate coming to the view that the
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Conclusion
75.In light of the foregoing, I refuse to direct the Magistrate to
incorporate the questions in Question 1, and Question 2 is
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14 February 2008?
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(Kevin Zervos)
Judge of the Court of First Instance
High Court
Ms Charlotte Draycott, SC and Mr Derek C.L. Chan, counsel instructed by
Securities and Futures Commission, for the appellant
Mr Peter Duncan, SC and Mr Jonathan Kwan, counsel instructed by
Messrs Maurice WM LEE, solicitors, for the respondent
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