HCMA 675/2011
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF FIRST INSTANCE
MAGISTRACY APPEAL NO 675 OF 2011
(ON APPEAL FROM ESS 5215-5217/2011)
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BETWEEN |
| | SECURITIES AND FUTURES COMMISSION | Respondent |
and |
| | CHAN CHUN WAI
(陳俊偉) | Appellant |
| ------------------------ |
Before: Deputy High Court Judge E Toh in Court
Date of Hearing: 14 March 2012
Date of Judgment: 14 March 2012
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J U D G M E N T
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1. The 1st defendant (Billion Global Asset Management Limited) and 2nd defendant (CHAN CHUN WAI) in this case were prosecuted under the Securities and Futures Ordinance, Cap 571. Both were convicted of the summonses which they faced. They both submitted appeals against conviction before the hearing today. On 7 November 2011, the 1st defendant in this case had abandoned his appeal. We are only left with the appeal against conviction by the 2nd defendant.
2. At trial, the 2nd defendant faced two summonses, it was alleged by the prosecution that he had aided and abetted the 1st defendant, Billion Global Asset Management Limited (BGAM Limited), in holding itself out as carrying on the business of the regulated activity namely “Asset Management” and had issued an advertisement in that respect.
3. There was no dispute to the prosecution’s evidence that the business advertised in (P16) related to Type 9 regulated activity, the 1st defendant did not have a licence in relation to such activity and that the 2nd defendant only had a licence for such activity but it was limited to his employment with Quam Securities Co Ltd (Quam). The only issue in this case was correctly identified by the learned Magistrate as whether the advertisement in the 1st defendant’s website (P16) was issued by the 1st defendant and or the 2nd defendant and whether they had knowledge of it.
4. Both defendants had a clear record. The prosecution called 2 witnesses. Most of the evidence of the prosecution was admitted and that was produced as exhibit P23. The undisputed evidence was that the 1st defendant company was incorporated in December 2008. The 2nd defendant was the only shareholder and director of the 1st defendant. As I have said the 1st defendant was not licensed to carry out any of the regulated activity. The 2nd defendant was licensed to carry out the asset management activity by the SFC was restricted to his employment with Quam. The 2nd defendant’s licence was revoked when his employment with Quam came to an end. In January and February 2010, The 2nd defendant registered 2 websites, with Website Solutions Ltd. One of those websites was for the 1st defendant and the other website was the 2nd defendant’s personal website. Upon the 2nd defendant’s request, the 2nd defendant’s website would be automatically transferred to the 1st defendant’s website. The 2nd defendant paid for the initial fees for both websites and the 1st defendant paid for the renewal fees of the 2 websites through the 2nd defendant.
5. According to the prosecution evidence, services provided by Website Solutions included domain registration, website hosting and site builder. The 1st defendant had provided a copy of its business registration certificate for registration of the domain name for the 1st defendant’s website. After registration and payment of fees, Website Solutions e‑mailed the site builder link, user name and password to the 2nd defendant. It was up to the 1st and 2nd defendant to design and publish the 1st defendant’s website. All along, the only contact person between the 1st defendant and Website Solutions was the 2nd defendant .
6. In March 2010, the Securities and Futures Commission (SFC) received a complaint about the 1st defendant’s website. An investigation was launched on 16 May 2010. PW1 found that the contents of the 1st defendant’s website had changed. A search warrant was executed at Quam on 17 May 2010, nothing material was found. There was no search of the 1st or the 2nd defendant’s premises. The contents of the 1st defendant’s website was subsequently deleted.
7. The learned Magistrate found as a matter of fact that the 2nd defendant was the sole shareholder and director of the 1st defendant. He had incorporated a company which contained the words “Asset Management”. The 2nd defendant registered a website for the 1st defendant with a name which contained the words “Asset Management”. There is no evidence to show that apart from the 2nd defendant, the 1st defendant had any staff. It was also a fact found by the learned Magistrate that Website Solutions only sent the user name, password and site builder link to the 2nd defendant. The 2nd defendant was the only contact between the 1st defendant and Website Solutions. So in the light of all those evidence, the learned Magistrate found that the only and irresistible inference is that the 1st and 2nd defendant had held themselves out as carrying on a business in a regulated activity; the 2nd defendant issued P16 to help the 1st defendant to hold out as carrying on a business in a regulated activity. Therefore the learned Magistrate found that the Prosecution had proved beyond a reasonable doubt the 3 summonses and convicted both defendants accordingly.
8. On the appeal against conviction on behalf of the 2nd defendant, Mr Cheung, said that in charges 2 and 3, the learned Magistrate had erred in holding out that there was a case to answer on the two informations (charges 2 and 3) against the 2nd defendant, and that there was no sufficient evidence to say that the 2nd defendant did aid, abet, counsel, procure or induce the 1st defendant to commit the offence (Charge 1) or that the offence (Charge 1) was committed with the consent or connivance of , or attributable to any recklessness of the 2nd defendant. There was no evidence, or no sufficient evidence to prove that the 2nd defendant did issue the advertisement concerned.
9. Basically, what Mr Cheung is complaining about is that there is no direct evidence pointing to the 2nd defendant, having counselled the 1st defendant to issue the advertisement and the 1st defendant website was registered about a year before the advertisement, there is no evidence to show what had happened in the company between the 1st defendant being set up and the advertisement being launched. There is no direct evidence to indicate that the 2nd defendant did it. There is a reasonable doubt as there is no direct evidence, that is why the learned Magistrate had found that the only and the irresistible inference from all the material facts proved that 2nd defendant had help others to carry on a business in a regulated activity. The 2nd defendant issued P16 to help the 1st defendant to hold out that he was carrying on the business as a regulated activity.
10. There is no doubt at all that according to the prosecution evidence, the 2nd defendant was the only person who had contact with Website Solutions on behalf of the 1st defendant. The basic fact of the matter is that the evidence showed that 2nd defendant was the only shareholder and director of the company. Mr Cheung complained that there was no evidence to show that there weren’t any other people in the company. There is no doubt that there is no evidence to show what happened in the company. The only person who really knows about what goes on is really the only shareholder and director, ie the 2nd defendant. There was no evidence from the defence in anyway to weaken the evidence of the prosecution and the learned Magistrate was entitled to draw the irresistible inference from the evidence before her. So I see no merit at all in the appeal, so the appeal is dismissed.
| (E Toh)
Deputy High Court Judge |
Mr Cheung Wai Sun, instructed by S W Wong & Associates, for the appellant
Mr Allen Lam, instructed by Securities and Futures Commission, for the respondent