HKSAR v. SADLER SIMON PETER AND OTHERS

DCCC 731/2024

[2026] HKDC 721

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO 731 OF 2024

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RULING

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Background

1.  There are two charges and three defendants (D1- D3) in the criminal trial coming up on 4 May 2026.

2.  Both counts are “insider dealing”. Count 1 is against D1 and D2; Count 2 is against D3.

3.  D1 and D2 are natural persons; D3 is a Hong Kong incorporated company licensed by the Securities and Futures Commission (the “SFC”).

4.  D3 managed some investments including the Segantii Asia Pacific Equity Multi-Strategy Fund (the “Fund”).

5.  D1 was the Director and Chief Investment Officer of D3. He was responsible for making decisions of D3 and he monitored the overall risk portfolio of the Fund; D2 was a trader employed by D3.

6.  On 15 June 2017, Merrill Lynch Far East Limited (“MLFE”) was instructed by a client Lone Pine Capital LLC (“Lone Pine”) to carry out a block trade (the “Block Trade”) of the shares of Esprit, a company listed on the Main Board of the Stock Exchange of Hong Kong. As a result, Lone Pine sold 195,644,005 shares at HK$4.68 per share to 9 institutions. D3 was one of them, acquiring 8 million shares on 15 June 2017.

7.  D3 and five of the nine institutions sold their acquired interests in Esprit on 15 June 2017. The shares closed at HK$4.51 in the market that day.

8.  MLFE later made a self-report to the SFC, alleging its employees might have mishandled the Block Trade.

9.  The SFC found out Mr. Trivedi (the then Director of Global Markets of MLFE) had told Mr Psarianos (the then Director of Equity Sales Trading Team of MLFE) about the Block Trade. Before the market opened on the previous day of the Block Trade, i.e. 14 June 2017, Mr Psarianos approached D1 and D2 to discuss the Block Trade. At 0728 hr that day, Mr Psarianos made a phone call to D2 telling him that they had a potential block situation involving 190 million Esprit shares with a target price “minus 5” (meaning a discount of 5 % off). Mr Psarianos did not mention the identity of Lone Pine. He asked if D2’s colleagues would like to further discuss the matter.

10.  Nine minutes later (0737 hr), D2 called Mr Psarianos who confirmed the full size of the Block Trade was 195 million and the seller had not been selling Esprit shares in the market prior to the Block Trade.

11.  The above two telephone calls comprise what the Prosecution calls “Information A”.

12.  At 0742 hr on the same day (14 June 2017), D2 emailed D1 and three other staff of D3 informing them that “… a seller in Esprit (330 HK) who is looking to sell 190m shares or USD131m worth and are looking for a bid. Seller appears to be lonepine#3 holder with 10.06% of the company. Indicatively they mentioned a 5% discount… and this is their full size and do not have appeared to be in the market prior”. This email is what the Prosecution calls “Information B”.

13.  Between 1 Jan 2017 and 15 June 2017, there were no news or rumours relating to the Block Trade in the public domain. The Prosecution says Information A and Information B were inside information.

14.  On 14 June 2017, between 1021 hr and 1604 hr, D1 long-sold three lots of Esprit shares (187,300 shares at $5.35; 200,000 shares at $5.30; 500,000 shares at $5.25); D2 long-sold three lots (28,600 shares at $5.30; 500,000 shares at $5.20; 155,600 shares at $5.20). The total long-sold quantity by D1 and D2 that day was 1,571,500 shares.

15.  On 14 June 2017, D2 also short-sold 132,000 shares at $5.23. He made arrangement for stock borrowing at 1044 hr that day but the shares were not eventually used for trade settlement.

16.  The next day (15 June 2017), before the market opened, D1 informed Mr Psarianos that D3 would take up 8 million Esprit shares at $4.68 from the Block Trade. MLFE then allocated the shares to D3.

17.  On the same day, D3 sold 5,962,100 Esprit shares at an average price of $4.72, representing 20.1% of the market sale volume of the day in that share.

18.  The Prosecution alleges that D1 and D2 sold the Esprit shares for the Fund operated by D3 on 14 June 2017, making use of the inside information they had acquired from MLFE to trade in those shares.

19.  D1 - D3 were indicted on 6 June 2024 and the charges were slightly amended on 12 February 2026.

20.  The trial is to start on 4 May this year. D1-D3 are separately represented.

21.  There were some disclosure arguments before the trial. The Prosecution informed the Court for the first time on 20 February 2026 during the first disclosure hearing that it would later apply for Mr Psarianos to give evidence via live-link from Australia. That witness alleged to have difficulty coming to Hong Kong to testify. The Defendants indicated their objection.

22.  As the disclosure arguments were dragging on, all parties agreed the live-link issue could be disposed of by written submission. They subsequently sent in submission and affirmation evidence.

Communication between Mr Psarianos and the SFC

23.  The email records show the SFC began contacting Mr Psarianos on the witness issue in mid-December 2025.

24.  On 16 December 2025, the SFC started to coordinate with Mr Psarianos regarding service of witness summons.

25.  The next day, Mr Psarianos replied “I will revert.”

26.  A week later (24 December 2025), Mr Psarianos said “I am still waiting for legal advice.”

27.  On 13 January 2026, the SFC sent another email to Mr Psarianos. Three days later (16 January 2026), the witness replied he no longer resided in Hong Kong. He asked if he could give evidence via video link but he did not elaborate. Mr Psarianos also asked if he would be compensated for his loss of time and travelling expenses and “what is the scale on which my compensation is determined?”

28.  On 21 January 2026, the SFC told Mr Psarianos that his “reasonable travel and accommodation expenses incurred will be reimbursed” and there would be discretionary witness allowance of HK$655 per day. The SFC told him “You will not, however, receive any remuneration for testifying.”

29.  On 23 January 2026, Mr Psarianos’ reply to the SFC staff was simply “Thank you Maggie.”

30.  On 30 January 2026 (Friday), the SFC chased Mr Psarianos for reply. The latter said on the same day “I would only be prepared to give evidence via a video link from Australia. I relocated to Australia and have numerous responsibilities and don’t have the bandwidth to give evidence in HK. I now run a commercial cattle farm that requires daily attention. I am also caring for my elderly mother.” Mr Psarianos said he had actually sent out the email on Tuesday (27 January) but it was stuck in the outbox.

31.  On 2 February 2026, Maggie of the SFC told Mr Psarianos “for the purpose of setting up video link for you to give evidence from Australia, may I know if you are generally available between 4 May to 8 June 2026, and which city in Australia you are currently residing in?” She did not ask the witness for details of his claimed difficulty coming to Hong Kong.

32.  On 4 February 2026, Mr Psarianos said “the city closest to me is Sydney, Australia. I will revert on my availability for giving video evidence after it is ascertained.”

33.  On 13 March 2026, the SFC told Mr Psarianos “We are writing to inform you that you will be required to give evidence in Court for the upcoming trial of this case… We understand that you will give evidence via video link from Sydney Australia. Please note that we are currently applying to the Court for permission…” The SFC still made no request to the witness for proof of his claimed difficulties regarding his farm and his mother.

34.  On 16 March 2026, Mr Psarianos told the SFC “In terms of dates, I would prefer to be within the first couple of weeks of May. I currently run and stay in a farm which is around 2 hour’s drive away from the city center of Sydney. Therefore, if I am required to give evidence for more than 1 day, I will need to stay in the city and the preferable days for me to give evidence are Thursday and Friday or Monday and Tuesday if a 2-day block is required. If a 3-day or 4-day block is required, then Thursday, Friday, Monday and Tuesday would be best as that will allow me to return and attend to the farm during Saturday and Sunday.”

35.  On 18 March 2026, the SFC told Mr Psarianos “the Defence has recently written to the Court objecting to you testifying via video-link. Without detailed supporting evidence, it will be difficult to convince the Court and the Defence that it is impracticable for you to come to Hong Kong to testify in person.” The SFC asked the witness to “seriously consider travelling to Hong Kong to give evidence in person in the trial. This is particularly so because your evidence is pivotal…Our rough estimate is that your attendance will likely be required only for the first few days of first week of the trial starting on 4 May 2026 (subject to the specific timeslot which is yet to be agreed by the parties).”

36.  On 20 March 2026, Mr Psarianos set out his circumstances: that he had returned to Australia in September 2020; he now has 60 heads of cattle requiring daily attention including manning an electrical pump to give water to the herd; and the farm is prone to flooding. He says he could manage a 2-day block for giving video-link evidence but could not afford travelling to Hong Kong for 5 days to be away from his farm.

37.  On 23 March 2026, the SFC asked for details of Mr Psarianos’ mother.

38.  On 25 March 2026, Mr Psarianos replied “upon further consideration of her circumstance, it may be possible for me to make alternative arrangements for her care.” As to his claimed cattle problem, Mr Psarianos provided more details, saying his farm was 185 acres and he was the sole operator working 5-7 days a week and 6-12 hours a day. He talked about cattle sickness and expressed that even going away for 2 days “is not ideal, but given the importance of the trial, I am prepared to risk issues on the farm to assist the trial... If I am away for 2 days, there will be no arrangements for the farm. Being away for 2 days is not ideal, but is manageable if there is an issue.”

Live-link application

39.  The Prosecution now applies under s.6 of the Courts (Remote Hearing) Ordinance, Cap. 654 (“CRHO”) for Mr Psarianos to give evidence via live-link from Australia. It is expected that his evidence would last for 2-3 days.

Previous visit to Hong Kong in August 2024

40.  Mr Psarianos went back to Australia in September 2021.

41.  On request of the Defendants, the Prosecution found out from the Immigration Department and Mr Psarianos’ passport that he once came back to Hong Kong between 16-19 August 2024 (4 days/3 nights).

42.  On 3 April, Mr Psarianos explained to the SFC by email that he came back in 2024 “to visit friends, visit Hong Kong and maintain my HK permanent residency status (foreigners are required to return to HK once over 3 years to maintain PR status). Back then, a friend of mine who had farming experience looked after my farm in my absence. However, that friend has relocated and would not be available to look after my farm anymore.”

Prosecution’s proposed measures

43.  The Prosecution now proposes:

(a)  PW1 [referring to Mr Psarianos] will give evidence from a neutral venue. It is proposed that he testify from a suitably equipped conference room at the Australian Disputes Centre, Lockhart Chambers, LGF, 233 Macquarie Street, Sydney, NSW 2000. There would be two cameras installed to capture the conference room (one in the front of the witness and one behind) so that the entirety of the room is visible at all times;

(b)  The Defence are at liberty to send a representative to observe the process, and the SFC will bear the reasonable expenses of such attendance. The SFC will also send an independent representative (not involved in this case) to assist with the handling of bundles and documents. These safeguards ensure that the evidence is given freely and without improper influence;

(c)  Appropriate arrangements will be made to ensure that PW1 has proper access to all documents and materials to which he may be referred in evidence. E-bundles will be prepared to facilitate the efficient presentation of documents, including transcripts of the calls and relevant emails. The Prosecution will also seek a direction that a visualiser be made available in court so that any additional hard copy documents may be shown to PW1 as required. PW1 will be able to view the documents on a monitor, and an additional monitor can be arranged if necessary. As for the audio recordings, these will be played in open court in the usual way, and PW1 will be able to hear them contemporaneously while giving his evidence.

44.  The Prosecution says the same conference room had previously been used for remote testimony in a similar situation and it would be a suitable and effective location for the purpose.

45.  The Prosecution submits the venue where Mr Psarianos would give evidence is effectively an extension of the court; all court attire and etiquettes remain in force. It also says that in light of the nature of the case and Mr Psarianos’ expected evidence, confrontation is not that crucial. And in any event, the witness is before the camera and viva voce. He can be properly cross-examined and challenged.

Defendants’ complaints

46.  The Defendants say the Prosecution’s application is late and it fails to prove Mr Psarinaos has any good reason not to testify physically in a Hong Kong courtroom. They say departure from the norm is unjustified. It is not in the interests of justice to do so as the Defence’s right to confront the witness under the solemnity of the court would be prejudiced.

The Courts (Remote Hearing) Ordinance (“CRHO”)

47.  s.6 of CRHO, Cap. 654 reads:

6. Court may make remote hearing order

(1)  The court may, on its own motion or on application by any party to a proceeding, make an order for the proceeding to be conducted through a remote medium.

(2)  Subsection (1) does not apply to an excluded proceeding.

(3)  The court may, in an order under subsection (1), specify—

(a)  in relation to the proceeding—

(i) the remote medium to be used for the proceeding;

(ii) the date and time for the hearing of the proceeding; and

(iii) the place or virtual space, or both, for the hearing of the proceeding;

(b)  in relation to the participants of the proceeding—

(i) the participants who are to attend the proceeding through a remote medium (remote participants); and

(ii) the place (whether in or outside Hong Kong) from which the remote participants are to attend the proceeding; and

(c)  any other conditions that the court considers expedient for the conduct of the proceeding.

(4)  The court may, on its own motion or on application by any party to an excluded proceeding, make an order for those parts of the excluded proceeding as specified in subsection (5) to be conducted through a remote medium.

(5)  For the purposes of subsection (4), the court may make an order for a witness (other than a vulnerable witness) to the excluded proceeding to give evidence or be examined through a remote medium.

(6)  An order may only be made under subsection (1) or (4) if the court, after considering the factors under section 9, is satisfied that, in the circumstances of the case, it is in the interests of justice to make the order.

48.  According to Schedule 1 of the ordinance, a criminal trial is an excluded proceeding.

49.  s.9 of CRHO reads:

9. Factors to be considered

In deciding whether to make, affirm, vary or revoke a remote hearing order for a proceeding under section 6, 7 or 8, the court must consider the following factors (if applicable)—

(a)  the nature, complexity and urgency of the proceeding;

(b)  the nature of the evidence intended to be adduced;

(c)  the views of the parties;

(d)  the ability of the parties to engage with and follow the proceeding (if conducted through a remote medium);

(e)  the personal or special circumstances of the parties, including any physical, visual or auditory impairment, cognitive difference and mental or psychological health issue;

(f)  the maintenance of the rights of the parties;

(g)  whether the parties are legally represented;

(h)  whether the privileged communication between the parties and their respective legal representatives may be affected;

(i)  whether the parties and the parties’ legal representatives can conduct their case effectively;

(j)  the measures to be taken to ensure that evidence is given freely without coercion or other influence;

(k)  the potential impact of the order on the assessment of the credibility of witnesses and the reliability of the evidence presented;

(l)  whether the use of the remote medium is likely to promote fair and efficient disposal of the proceeding;

(m)  whether the right to a fair trial can be effectively maintained;

(n)  the quality and security of the remote hearing facilities and their availability to the parties;

(o)  whether there is any public order, security, public health or emergency concern that makes it undesirable or impracticable for the parties to attend the proceeding in person;

(p)  any other relevant considerations.

Late application

50.  The Defendants say the Prosecution is too late to apply for a CRHO order in the circumstance.

51.  CRHO has repealed the old regime. There is no time limit set in the ordinance.

52.  The trial will start on 4 May 2026 for 25 days. The SFC began liaison with Mr Psarianos in mid-December 2025. That was four odd months before the trial. It was not too late. The witness gradually revealed he had moved back to Australia and he was not free to come to Hong Kong. He requested to testify via video link.

53.  Even if the Prosecution had tried to serve the witness summons on Mr Psarianos earlier, the situation would remain the same. The witness alleged he could not leave his farm for 5 days but he could go to Sydney to testify via live-link for two days.

54.  If anything can be criticized of the SFC, it is that Mr Psarianos was not queried immediately and sufficiently over his claim.

55.  Another criticism that can be laid against the SFC is that the Commission, after knowing more of the alleged farm problem, has not encouraged the witness to diligently find a sitter to look after the farm for a few days. The SFC could have told Mr Psarianos that reasonable expenses so incurred would be reimbursed. It seems the Commission just let the witness sort out his claimed problem all by himself.

Mother

56.  Mr Psarianos at first mentioned another difficulty apart from the farm problem. He said he had to take care of his elderly mother. However, when he was asked for more details about the lady’s situation, he gave up and said he could find alternative arrangement.

Farm-sitter

57.  The Defendants say it would not be difficult for Mr Psarianos to find alternative arrangement for his farm too. He can look for a professional sitter on the internet or to enlist help from neighbouring farms in that Kangaroo Valley.

58.  The Prosecution submits there is no guarantee that a proper sitter can be found. It also refers to Mr Psarianos’ claim that his previous experience of getting help was unsatisfactory, and the friend who helped him in August 2024 was no longer available.

59.  The Prosecution asks this Court to dismiss the farm-sitter suggestion as speculative and impractical. I do not agree. In Australia, there must be a number of cattle farms similar to that of Mr Psarianos -- basically a one-man business. Some owners would like to stick to his land and livestock as much as they can but there must be times when they have to go away for quite some days for essential trips/reasons, such as hospital stays. External assistance has to be sought then.

60.  In fact, Mr Psarianos was once away in August 2024, travelling to Hong Kong and stayed here for 4 days/3 nights. He says a friend helped him then but that friend was no longer available as he had relocated.

61.  There is no disclosure of the friend’s identity or his whereabouts now. There is also no concrete evidence of Mr Psarianos’ looking for a farm-sitter or going to the neighbours for help this time. It is mainly a bald assertion that he cannot get anyone to look after the farm if he has to be away for 5 days.

Norm

62.  The Prosecution submits CRHO “contains no requirement that the applicant must first establish some freestanding threshold of ‘rarity’ or ‘exceptionality’ before the discretion may be exercised”.

63.  There is indeed no such written requirement but it does not mean there is no norm. CRHO is a recent ordinance but remote hearing is not something new. CRHO only states the relevant law in a more succinct and comprehensive manner. It has been decided in many cases that there is a norm. For example, Anthony Chan J (as he then was) in Re Nobility school Ltd[2020] HKCFI 891, after reviewing a number of cases, makes out this clear summary:

(a)  the giving of evidence by video conferencing facilities (“VCF”) is an exception;

(b)  the starting point is that proceedings are conducted in court… this is more important when it comes to a trial;

(c)  sound reason is required to justify a departure from the starting point;

(d)  the solemnity of court proceedings and its atmosphere is highly important in the taking of evidence;

(e)  the court may be more disposed to exercise discretion to allow evidence by VCF in respect of technical or purely factual evidence which involves no serious issue on credibility or relatively unimportant evidence;

(f)  where the credibility of the witness is seriously contested, it is important for the witness to be examined under the solemn atmosphere of the court;

(g)  costs and convenience may be important considerations which the court will have to weigh in the determination of the application;

(h)  ultimately, it is a matter of judgment of the court choosing the course best calculated to achieve a just result by taking into account all the material considerations, including whether the witness is capable of attending the proceedings, any prejudice to the other party, the Underlying Objectives, any delay to the proceedings and practical considerations like the availability of the facilities (see Practice Direction 29).

64.  Giving evidence outside the courtroom is an exception rather than the norm. If the witness is not within the immediate reach of the court, there is no threat of immediate sanction if he breaches his witness’ duties.

65.  The norm is that a witness has to be physically present in the courtroom to be examined in the solemnity of court atmosphere. There must exist a sound reason for a witness to be excused of his physical presence in the courtroom.

66.  The norm is not to be discarded lightly. Otherwise, the exception would become the norm. People certainly prefer to stay in their comfortable well-equipped office, conference room or home to testify, so that their schedule would be least disrupted. They can easily claim they have non-delegable duties and nobody can replace them.

67.  Relaxing the existing rule easily and too often would lead to abuse. The floodgate must be tightly guarded and is to be opened only when it is really necessary. The established norm should be adhered to as much as possible in order to facilitate and maintain justice, which is not just about being effective, practical or convenient. It should be more about principle, rule, practice, consistency and solemnity for the final goal of justice.

Sound reason

68.  The Prosecution has to satisfy the Court that Mr Psarianos’ claim of farm difficulty is a sound one.

69.  I do not doubt Mr Psarianos has a farm with 60 cattle which he used to look after. However, I am not satisfied he has made due diligence to get assistance to replace him for a 5-day block when he has to testify here physically. It seems to me Mr Psarianos has calculated for his own convenience and thus chosen not to take the trouble to come to Hong Kong to testify in person. He prefers to stay in Australia, preparing to spend 2 days in Sydney to give evidence via live-link. His decision is one of convenience. He has not properly addressed his hardship, which does not seem to be as grave as it sounds. The farm problem is not insurmountable. Therefore, Mr Psarianos’ reason to ask the Court to excuse his presence here and to give evidence via live-link is not a sound one.

Trial

70.  The Prosecution assumes Mr Psarianos’ testimony is not that contentious.

71.  How the Defence would explore Mr Psarianos’ evidence and credibility is hardly others’ guess.

72.  Mr Psarianos’ evidence is no doubt of significance. It is a fortiori that live-link application concerning such an important witness should not be lightly entertained.

73.  The trial is coming up in about two weeks’ time. Mr Psarianos need not be called first. There can be other evidence matters to be dealt with and they would take up days, if not a week or two. There is still sufficient time for the SFC to persuade Mr Psarianos further and to advise or assist him to solve his farm issue, such as providing him with useful information about suitable farm-sitters.

74.  Mr Psarianos is outside Hong Kong jurisdiction. Nobody can compel him to come. If he refuses to cooperate, the Prosecution would have to do more to make up for his absence but it does not look like the trial would simply collapse on that.

Decision

75.  Administration of justice requires fairness to all parties. Direct confrontation in court is a significant feature of examining a witness and therefore an important aspect of court proceedings. Having said that, it does not mean no witness can be allowed to testify via live-link. However, there must be a sound reason for departing from the norm. Justice cannot be compromised simply for efficiency or convenience. The solemnity of justice should be upheld as much as possible unless there are sound reasons to justify adaptation. In this case, Mr Psarianos’ claim of farm difficulty falls short of a proven sound reason for departure from the norm. The Prosecution’s application is thus refused.

Costs order

76.  The Prosecution and the Defendants are parties to the criminal trial upcoming. There would be no separate costs order at this stage.

Ms Sarah Anne Clarke KC, Mr Derek Wong SADPP (Ag.), Ms Crystal Chan SPP, Ms June Wong SPP and Ms Kathy Sum SPP (Ag.), for HKSAR

Ms Clare Montgomery KC, Mr Derek Chan SC, Mr Benson Choi SC and Mr Sean O’Reilly, instructed by Linklaters for D1

Ms Maggie Wong SC, Mr Joseph Lee and Ms Karry Lau, instructed by Haldanes for D2

Mr Laurence Li SC and Mr Peter Chiu, instructed by Linklaters for D3