FACV No. 1 of 2010
IN THE COURT OF FINAL APPEAL OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
FINAL APPEAL NO. 1 OF 2010 (CIVIL)
(ON APPEAL FROM CACV NO. 319 OF 2008)
Between:
KAYDEN LIMITED Appellant
(4th Defendant)
- and -
SECURITIES AND FUTURES COMMISSION Respondent
_____________________
Court : Chief Justice Ma, Mr Justice Bokhary PJ,
Mr Justice Chan PJ, Mr Justice Ribeiro PJ and
Sir Anthony Mason NPJ
Date of Hearing: 15 November 2010
Date of Judgment: 6 December 2010
JUDGMENT
Chief Justice Ma :
1. For the reasons contained in the judgment of Mr Justice Ribeiro PJ, I
would allow the appeal and make the orders set out therein.
— 2 —
Mr Justice Bokhary PJ :
2. The decision of the Privy Council in Mercedes Benz AG v. Leiduck
[1996] 1 AC 284 having been mentioned, I would respectfully record my
preference for the dissenting opinion of Lord Nicholls of Birkenhead to the
view taken by the majority in that case. As appears from Mr Justice
Ribeiro PJ’s judgment, the situation in the present case is wholly different from
the situation in that case. For the reasons which he gives, I would allow this
appeal in the terms which he proposes. As he has so cogently demonstrated,
this is not the occasion for pronouncing on the point raised by Lord Pannick QC
for the Securities and Futures Commission on the true construction and
therefore scope of s.213 of the Securities and Futures Ordinance, Cap.571. The
Court may have to do so on a future occasion – unless the legislation is
amended to put the position beyond doubt, which is a matter for the legislature.
Mr Justice Chan PJ :
3. I agree with the judgment of Mr Justice Ribeiro PJ.
Mr Justice Ribeiro PJ:
4. Relying on section 213 of the Securities and Futures Ordinance
(“SFO”),1 the Securities and Futures Commission (“SFC”) persuaded Kwan J2
(as Kwan JA then was) to make ex parte orders freezing the assets of four
defendants and granting leave for three of them to be served outside the
jurisdiction. Kwan J subsequently discharged those orders at the inter partes
1
Cap 571.
2
HCMP 727/2008 (16 April 2008).
— 3 —
hearing.3 However, the Court of Appeal4 overturned her judgment and reinstated
the asset-freezing injunctions and granted the SFC leave to amend its
originating summons and leave to serve it afresh on the foreign defendants.
5. Leave to appeal was granted by the Appeal Committee to the three
foreign defendants.5 Two of them have since abandoned their appeal and the
only appellant is now the 4th defendant. However, an understanding of the
issues makes it necessary to indicate the nature of the SFC’s proceedings
against all four defendants. The SFC obtained a direction from Kwan J at the ex
parte stage that the defendants should not be named but should be designated as
“C”, “D”, “E” and “F”. As the parties accept, there is now no reason to
maintain anonymity and in this judgment, the parties are referred to by name.
6. The appellant contends in the first place that the Court of Appeal
was wrong to permit the SFC to rely upon a new and different basis for
justifying the orders obtained ex parte and wrong to reverse Kwan J on such
basis. Moreover, the appellant complains that in argument before this Court, the
SFC has purported to rely on a radically modified claim as a foundation for the
aforesaid orders. The appellant also raises two questions of law. The first is
whether, as a matter of statutory construction, the Mareva type orders obtained
fall outside the scope of section 213(2)(c) on which the SFC grounded those
orders. And the second is whether the orders obtained by the SFC under section
213 give substantive relief so as to provide a basis for foreign service of process
pursuant to Order 11 of the Rules of the High Court.
3
HCMP 727/2008 (22 October 2008).
4
CACV 319/2008 (22 May 2009), Le Pichon JA and A Cheung J.
5
FAMV 47/2009 (11 December 2009), Bokhary, Chan and Ribeiro PJJ.
— 4 —
A. Section 213
7. In so far as material, section 213 provides as follows:
(1) Where-
(a) a person has-
(i) contravened-
(A) any of the relevant provisions;
(B) ...
(C) ...
(D) ...
(ii) aided, abetted, or otherwise assisted, counselled or procured a person to
commit any such contravention;
(iii) induced, whether by threats, promises or otherwise, a person to commit
any such contravention;
(iv) directly or indirectly been in any way knowingly involved in, or a party
to, any such contravention; or
(v) attempted, or conspired with others, to commit any such contravention;
or
(b) it appears ... to the Commission that any of the matters referred to in
paragraph (a)(i) to (v) has occurred, is occurring or may occur,
the Court of First Instance, on the application of the Commission, may, subject
to subsection (4), make one or more of the orders specified in subsection (2).
(2) The orders specified for the purposes of subsection (1) are-
(a) an order restraining or prohibiting the occurrence or the continued
occurrence of any of the matters referred to in subsection (1)(a)(i) to (v);
(b) where a person has been, or it appears that a person has been, is or may
become, involved in any of the matters referred to in subsection (1)(a)(i) to
(v), whether knowingly or otherwise, an order requiring the person to take
such steps as the Court of First Instance may direct, including steps to
restore the parties to any transaction to the position in which they were
before the transaction was entered into;
(c) an order restraining or prohibiting a person from acquiring, disposing of, or
otherwise dealing in, any property specified in the order;
— 5 —
(d) an order appointing a person to administer the property of another person;
(e) an order declaring a contract relating to any securities, futures contract,
leveraged foreign exchange contract, or an interest in any securities, futures
contract, leveraged foreign exchange contract or collective investment
scheme to be void or voidable to the extent specified in the order;
(f) for the purpose of securing compliance with any other order made under
this section, an order directing a person to do or refrain from doing any act
specified in the order;
(g) any ancillary order which the Court of First Instance considers necessary in
consequence of the making of any of the orders referred to in paragraphs (a)
to (f).
(3) ...
(4) The Court of First Instance shall, before making an order under subsection (1),
satisfy itself, so far as it can reasonably do so, that it is desirable that the order
be made, and that the order will not unfairly prejudice any person.
(5) The Court of First Instance may, before making an order under subsection (1),
direct that a notice of the application made in respect thereof be given to the
persons it considers appropriate, or be published in the manner it considers
appropriate, or both.
(6) Where the Court of First Instance considers it desirable to do so, it may grant
such interim order as it considers appropriate pending the determination of an
application made pursuant to subsection (1).
(7) ...
(8) Where the Court of First Instance has power to make an order against a person
under subsection (1), it may, in addition to or in substitution for such order,
make an order requiring the person to pay damages to any other person.
(9) The Court of First Instance may reverse, vary or discharge an order made or
granted by it under subsection (1) or (6) or suspend the operation of the
order. ...”
8. The “relevant provisions” referred to in section 213(1)(a)(i)(A) are
defined as the provisions of the SFO and certain provisions of the Companies
Ordinance.
— 6 —
B. The ex parte application before Kwan J
9. On 6 June 2007, a creditor’s petition was presented to wind up Asia
TeleMedia Limited (“ATL”), a Bermudan company listed on the Hong Kong
Stock Exchange. On the following day, trading in its shares was suspended.
When trading resumed on 18th October 2007, its share price dropped by 62%.
On 17 January 2008, the SFC started a formal investigation into suspected
insider dealing and on 18 March 2008, ATL was ordered to be wound up.
B.1 The SFC’s case on the ex parte injunctions
10. About a month later, on 16 April 2008, the SFC made the ex parte
application before Kwan J. It was supported by an affirmation of that date made
by Wong Mei Mei (“Ms Wong”), an officer of the SFC’s Enforcement Division.
In it Ms Wong set out the SFC’s allegations against the defendants which may
be summarised as follows:
(a) The first defendant, Mr Lu Ruifeng (“Mr Lu”), is a resident of
Shenzhen in the PRC. He was chairman, chief executive officer
and a substantial shareholder of ATL.
(b) The 2nd defendant, Tin Yin Kwan (“Madam Tin”), is the wife of
Yao Wen Pei (“Mr Yao”), who was referred to as “X” below. Mr
Yao is the father of ATL’s then financial director, Charles Yiu Hoi
Ying.
(c) Beginning on 24 April 2007, the day after the petitioning creditor
had served a statutory demand on ATL, Mr Lu began to sell off his
ATL shares in the market. He sold a total of 51.25 million shares
during the month or so that followed and realised about $37.5
million from such sales. Mr Yao, acting as Mr Lu’s nominee, sold
— 7 —
a total of 48.61 million shares during the same period, realising
about $39 million. Those sales, according to the SFC, constituted
insider dealing and were made in order to avoid anticipated losses.
(d) Madam Tin, Clear Excel Limited (“Clear Excel”, the 3rd defendant)
and Kayden Limited (“Kayden”, the 4th defendant and the present
appellant) became involved in the insider dealing by receiving the
proceeds of those sales.
(e) Mr Lu paid a total of about $23.65 million into his personal
account from which he transferred $25 million into Kayden’s
Singapore bank account. Kayden is a BVI company.
(f) Mr Yao paid about $37.8 million into the Hong Kong bank account
of his wife, Madam Tin, who then transferred $32.4 million of that
amount into Kayden’s Singapore bank account. Madam Tin is a
Hong Kong resident and has been served with the proceedings in
Hong Kong.
(g) Mr Yao also paid about $1.25 million into Clear Excel’s bank
account in Hong Kong, Clear Excel being a BVI company whose
sole shareholder and director is Mr Lu.
11. Ms Wong explained that the application was made under
section 213(1)(b), that is, on the footing that it appeared to the Commission that
the defendants had either contravened or become involved in contravention of
the insider dealing provisions in sections 270 and 291 of the SFO. 6 This was
6
Affirmation §§3 and 5.
— 8 —
reiterated by counsel then instructed (not Lord Pannick QC) for the SFC in their
skeleton argument.7
12. The SFC’s case, as Counsel explained, was that the interim
injunctions to freeze the defendants’ assets being sought came within section
213(2)(c), adding that the Court also had jurisdiction under section 213(6) to
grant such injunctions pending the determination of a section 213(1)
application. 8 They cited Kwan J’s judgment in Securities and Futures
Commission v A,9 as providing guidance on the threshold requirements for such
interim orders and submitted:
“There is no doubt that the Court has jurisdiction to grant an injunction to freeze a
sum equal to the loss avoided by persons suspected of engaging in insider dealing,
just as the same section applies to injunctions freezing profits or penalties.” 10
13. Ms Wong set out the SFC’s calculation of loss allegedly avoided by
Mr Lu in the sum of $43,661,568.11 She stated:
“Without the grant of an injunction, it is very likely that Lu will not have sufficient
funds to satisfy any order for the disgorgement of loss avoided by the Market
Misconduct Tribunal or any other order of the Court.”
B.2 The SFC’s case for service out of the originating summons
14. The SFC sought leave to serve Mr Lu, Clear Excel and Kayden
outside the jurisdiction with an originating summons (subsequently issued on 18
April 2008) claiming orders:
7
Skeleton §30-§31.
8
Skeleton §§32-34.
9
[2008] 1 HKC 89.
10
Skeleton §38.
11
Affirmation §40.
— 9 —
(a) “pursuant to section 213” against Mr Lu, Madam Tin and Clear
Excel, restraining them from removing from Hong Kong or
disposing of or dealing with their assets in Hong Kong up to the
value of $43,661,568, including assets listed in a schedule; or
diminishing the value of such assets;
(b) restraining Kayden in like terms, save that in its case, the order was
to apply to its assets worldwide; and,
(c) requiring disclosure by the defendants of information as to the
location, value and other details of their assets.
No other relief was sought against the defendants.
15. Ms Wong stated in her affirmation12 (and counsel confirmed13) that
the SFC was relying on O 11 r 1(1)(b) of the Rules of the High Court as the
ground for service out of the jurisdiction. The rule materially states as follows:
“(1) ...service of a writ out of the jurisdiction is permissible with the leave of the
Court if in the action begun by the writ ... (b) an injunction is sought ordering the
defendant to do or refrain from doing anything within the jurisdiction (whether or not
damages are also claimed in respect of a failure to do or the doing of that thing)...”
B.3 The order made
16. The ex parte injunctions granted by Kwan J were identical to the
orders sought in the originating summons. Thus, it was ordered that Mr Lu,
Madam Tin and Clear Excel:
“must not:-
12
Affirmation §50.
13
Skeleton §81.
— 10 —
(a) remove from Hong Kong any of their assets which are within Hong Kong, ... up
to the value of $43,661,568; or
(b) in any way dispose of, deal with, or diminish the value of any of their assets
which are within Hong Kong ... up to the value of $43,661,568. This prohibition
includes in particular any money in the accounts listed in Schedule 2 and the assets
listed in Schedule 3 to this Order”.
17. A like injunction was granted against Kayden except that it was
applicable to “any of its assets, whether within or outside Hong Kong”. These
were accordingly injunctions in the familiar Mareva form and contained the
usual notices to third parties affected, and so forth.
18. The Order was to remain in force until the return day, then stated to
be 2 May 2008 unless varied or discharged in the meantime. The SFC was also
granted leave to serve Mr Lu, Clear Excel and Kayden outside the jurisdiction,
giving those defendants 14 days to acknowledge service.
C. The defendants’ responses
19. On 21 April 2008, the SFC took out an inter partes summons for
continuation of the injunctions and for the disclosure orders sought in the
originating summons. The riposte of Mr Lu, Clear Excel and Kayden was, on
30 April 2008, to apply under O 12 r 8 for service to be set aside and for the ex
parte orders to be discharged on the grounds that the SFC’s claims did not fall
within Order 11 and that there had been material non-disclosure.
20. Madam Tin was served in Hong Kong and on 22 May 2008,
consented to an order discharging the ex parte order on her undertaking not to
deal with sums “deriving from the sum of HK$37,778,751.77 paid into her
HSBC account on 8 June 2007” and to disclose what she knew of the
whereabouts of sums deriving from that payment.
— 11 —
21. In support of its O 12 r 8 application, Kayden filed an affidavit
sworn on 7 July 2008 by Charles Simon Hotton (“Mr Hotton”), one of its
directors. Mr Hotton stated that he was managing director of ING Trust
Company (Jersey) Limited (“ING Jersey”) and that Mr Lu, as settlor, had
established a Jersey law discretionary trust on 4 July 2006. ING Jersey was the
trustee and the beneficiaries were Mr Lu and his three children. The trust was
revocable during Mr Lu’s lifetime and allowed him to direct investments but not
withdrawals or distributions, which were only made upon the exercise by the
trustee of its discretion.
22. Mr Hotton explained that Kayden was a BVI company which was an
asset of the trust and used as a holding company. Its shareholders were nominee
companies belonging to the ING Jersey group and its directors were ING Jersey
employees. He asserted that there were no and had never been any assets of the
trust or Kayden in Hong Kong. He identified four sums totalling HK$60.9
million paid by Madam Tin and Mr Lu respectively into Kayden’s bank account
with ING Asia Private Bank in Singapore in June and July 2007, but denied
knowledge of the matters complained of by the SFC.
23. Mr Hotton also pointed out that the SFC had obtained documents so
that at the time of making the ex parte application, it was aware of the fact that
Kayden was held by the trust and not owned by Mr Lu, a matter not disclosed to
Kwan J.
D. Kwan J’s judgment on the inter partes hearing
D.1 The problems faced by the SFC
24. Given the way the application and the originating summons had been
constituted, the SFC faced formidable problems when trying to sustain the ex
— 12 —
parte orders obtained at the inter partes stage. As we have seen, the application
against the foreign defendants proceeded solely in reliance on section 213(1)(b)
in combination with section 213(2)(c) which, it was claimed, together justified
service out of the jurisdiction under O 11 r 1(1)(b).
25. In other words, it was being asserted merely that it “appeared to” the
Commission that Mr Lu had contravened the SFO by engaging in insider
dealing (bringing the SFC within section 213(1)(b)), so as to trigger its claim for
an order freezing the defendants’ assets (under section 213(2)(c)). Since an
order “restraining or prohibiting a person from acquiring, disposing of, or
otherwise dealing in, any property specified in the order” under section 213(2)(c)
was in substance an injunction, a claim for such relief enabled the SFC, so it
was argued, to invoke the extra-territorial jurisdiction of the court under O 11
r 1(1)(b) which permits service out where the action is for an injunction
ordering the defendant to do or refrain from doing something within the
jurisdiction.
26. The first major problem faced by the SFC, as Kwan J recognized,14 is
that the application so constituted was plainly for relief which was interim in
nature, mirroring pure Mareva relief. It did not involve the institution of any
proceedings seeking final or substantive relief for insider dealing or for any
other contravention of the SFO. The position could hardly be otherwise since
the SFC was not suggesting that it had proven or was seeking to prove a
contravention (whether in the Market Misconduct Tribunal (“MMT”) or
elsewhere, whether pursuant to the originating summons or some other
originating process). Its case rested on section 213(1)(b) as the basis for
14
At §§34-46.
— 13 —
seeking the relevant orders under section 213(2) asserting suspected
contraventions or involvement. The originating summons as issued merely
sought orders identical to the interim orders obtained ex parte (and adjectival
disclosure orders) and no final relief based on a determination of contraventions
under section 213(1).
27. This entirely undermined its application under O 11 r 1(1)(b). As
Lord Mustill pointed out in the Privy Council on appeal from Hong Kong in
Mercedes Benz AG v Leiduck,15 “it is not enough simply to say that since a
Mareva injunction is an injunction it automatically falls within Ord 11, r 1
(1)(b)”. Emphasising that Order 11 is premised on there being an “action begun
by writ”16 and that O 11 r 4 requires the affidavit leading the application to state
the belief of the deponent that the plaintiff has “a good cause of action”, his
Lordship explained:
“...the purpose of Ord 11, r 1 is to authorise the service on a person who would not
otherwise be compellable to appear before the English court of a document requiring
him to submit to the adjudication by the court of a claim advanced in an action or
matter commenced by that document. Such a claim will be for relief founded on a
right asserted by the plaintiff in the action or matter, and enforced through the
medium of a judgment given by the court in that action or matter. The document at
the same time defines the relief claimed, institutes the proceedings in which it is
claimed, and when properly served compels the defendant to enter upon the
proceedings or suffer judgment and execution in default. Absent a claim based on a
legal right which the defendant can be called upon to answer, of a kind falling within
Ord 11, r 1(1), the court has no right to authorise the service of the document on the
foreigner, or to invest it with any power to compel him to take part in proceedings
against his will.”17
He added:
15
[1996] 1 AC 284.
16
Or by originating summons: O 11 r 9(1).
17
At 301.
— 14 —
“Thus, at the centre of the powers conferred by Order 11 is a proposed action or
matter which will decide upon and give effect to rights. An application for Mareva
relief is not of this character. When ruled upon it decides no rights, and calls into
existence no process by which the rights will be decided. The decision will take place
in the framework of a distinct procedure, the outcome and course of which will be
quite unaffected by whether or not Mareva relief has been granted.” 18
28. Another basic problem faced by the SFC concerned Kayden in
particular. The evidence filed by the latter (which was not challenged) was that
it had no and had never had any assets in Hong Kong. Accordingly, as Kwan J
noted,19 any injunction against Kayden restraining the disposal, etc, of its assets
would not involve “ordering the defendant to do or refrain from doing anything
within the jurisdiction”, taking the case in any event outside O 11 r 1(1)(b).
This particular objection was not available to Mr Lu or to Clear Excel since
there was evidence that they had bank balances totalling about $3.5 million in
Hong Kong at the time of the ex parte orders.20
29. Thirdly, as Kwan J quite properly found,21 there had been material
non-disclosure by the SFC in respect of Kayden. It was aware that “there was a
trust structure and an express exclusion of power in the limited power of
attorney for [Mr Lu] to withdraw cash or securities from [Kayden’s] accounts”
but did not disclose those obviously material facts to the court.
D.2 The SFC’s attempts to modify its case before Kwan J
30. Counsel then acting for the SFC sought to salvage the position by
suggesting three responses. First, in an attempt to conjure up something which
18
At 302.
19
At §58.
20
Kwan J at §90.
21
At §§95-96.
— 15 —
Kayden might be ordered to do or refrain from doing within this jurisdiction, an
amendment to the originating summons was proposed so as to claim against
Kayden an order requiring it to:
“...return to Hong Kong and maintain the same in a designated account the funds
representing the monies and securities in the accounts listed in Schedule 4 hereto [this
should be a reference to Schedule 3]. The sums in such designated account shall not
be disposed of or encumbered in any way other than as the Court shall direct.”22
31. That was misconceived and rightly rejected. It involved asking for
an order directing someone to do something outside Hong Kong, ie, to transfer
funds to Hong Kong (which the court lacked jurisdiction to do in the first place),
so that thereafter, there would be assets for the injunction to bite on within this
jurisdiction, in the hope of founding an argument for the applicability of O 11 r
1(1)(b).
32. Secondly, without proposing any amendment, counsel sought to
argue that the relief claimed in the existing originating summons was not
confined to Mareva type injunctive relief but included relief under
section 213(2)(b) which permits the court to make:
“... an order requiring the person to take such steps as the Court of First Instance may
direct, including steps to restore the parties to any transaction to the position in which
they were before the transaction was entered into...”
33. It was argued that no amendment was required since the SFC had
listed in the margin of the originating summons, not only section 213(1)(b) and
section 213(2)(c), but also section 213(2)(b), now sought to be relied on.
34. In my view, the attempt to rely on section 213(2)(b) was rightly
rejected, even if one assumes that a claim under that section was properly before
22
Kwan J at §61.
— 16 —
Kwan J. In the first place, as with injunctive orders under section 213(2)(c),
orders under section 213(2)(b) may be sought on an “appearance” or
“suspicion” basis. The SFC’s case as then advanced was undoubtedly such a
case, seeking purely interim relief pursuant to section 213(1)(b). Even if one
assumes (without deciding) that it is possible to institute a claim under
section 213(2)(b) as a claim for final or substantive relief, that is not the type of
claim being asserted by the SFC before Kwan J. It therefore would have fallen
foul of Mercedes Benz AG v Leiduck23 by lacking any substantive claim within
Order 11, as discussed in Section D.1 above in relation to Mareva type relief.24
35. Secondly, the SFC’s attempted reliance on section 213(2)(b) runs
counter to the principles developed in the line of cases commencing with Parker
v Schuller.25 There, the plaintiff had obtained leave to serve a foreign defendant
alleging breach of a contract within the jurisdiction consisting of a failure to
deliver goods at Liverpool. It later sought to allege instead that the breach was
of an obligation to deliver the documents required under the CIF contract. The
English Court of Appeal refused to entertain the new basis for establishing
jurisdiction. Romer LJ stated:
“... an application for leave to issue a writ for service out of the jurisdiction ought to
be made with great care and looked at strictly. If a material representation upon
which the leave was obtained in the first instance turned out to be unfounded, the
plaintiff ought not to be allowed, when an application was made by the defendant to
discharge the order for the issue of the writ and the service, to set up another and a
23
[1996] 1 AC 284.
24
Kwan J was inclined to this view at §53.
25
(1901) 17 TLR 299. It was applied in Hong Kong by the Court of Appeal in The
“Artemis” [1983] HKLR 364; although Huggins VP and Barker JA disagreed as to
the result on the facts.
— 17 —
distinct cause of action which was not before the Judge upon the original
application.”26
36. The need for a strict approach is dictated by at least three related
considerations. First, it is grounded on recognition of the need for special care
given the extraordinary nature of the long-arm jurisdiction asserted under
Order 11. As Lord Mustill pointed out, it involves seeking to compel a foreign
defendant to submit to adjudication by the court or suffer judgment and
execution in default.27
37. Secondly, as indicated in the passage from Parker v Schuller cited
above, the court acts on the faith of the plaintiff’s representations made to it ex
parte when granting leave for service of process abroad. Given the
extraordinary nature of the jurisdiction which the court would thereby be
asserting, it insists on special care on the plaintiff’s part and full disclosure of
the basis upon which that jurisdiction is invoked.
38. Thirdly, as Neill LJ pointed out in Excess Insurance Co Ltd v Astra
SA Insurance and Reinsurance Co:28
“ ... it is not only the court which must be apprised of the cause of action alleged. The
defendant must know the basis of the claim which he has to meet so that, if so
advised, he can challenge the order which asserts the court's jurisdiction over him.”
39. In Metall und Rohstoff AG v Donaldson Lufkin & Jenrette Inc, 29
Slade LJ emphasised the need for strict adherence to the legal basis advanced in
support of service out but was prepared to admit of a possible exception:
26
At 300.
27
Mercedes Benz AG v Leiduck [1996] 1 AC 284 at 301. And see Siskina (Cargo
Owners) v Distos [1979] AC 210 per Lord Diplock at 254-255.
28
[1997] CLC 160 at 166.
— 18 —
“...if the draftsman of a pleading intended to be served out of the jurisdiction under
Ord 11, r 1(1)(f) (or indeed under any other sub-paragraph) can be reasonably
understood as presenting a particular head of claim on one specific legal basis only,
the plaintiff cannot thereafter, for the purpose of justifying his application under Ord
11, r 1(1)(f), be permitted to contend that that head of claim can also be justified on
another legal basis (unless, perhaps, the alternative basis has been specifically referred
to in his affidavit evidence, which it was not in the present case). With this possible
exception, if he specifically states in his pleading the legal result of what he has
pleaded, he is in our judgment limited to what he has pleaded, for the purpose of an
Order 11 application. To permit him to take a different course would be to encourage
circumvention of the Order 11 procedure, which is designed to ensure that both the
court is fully and clearly apprised as to the nature of the legal claim with which it is
invited to deal on the ex parte application, and the defendant is likewise apprised as to
the nature of the claim which he has to meet, if and when he seeks to discharge an
order for service out of the jurisdiction.”
40. Applying those principles to the present case, Kwan J was entirely
justified in refusing to allow the SFC to rely on section 213(2)(b) as an
alternative basis for upholding leave to effect foreign service. The SFC had a
duty to make clear to the Court exactly what the basis of its invocation of the
Order 11 jurisdiction was. A mere reference to the section in the margin of the
originating summons could not possibly be sufficient. As we have seen, 30 the
body of the originating summons sought nothing other than Mareva type relief.
The affirmation leading the application and counsel’s skeleton argument both
clearly confined themselves to justifying Mareva type relief. It was on that
representation that Kwan J granted leave and the possible exception referred to
by Slade LJ does not arise.
41. Section 213(2)(b) is open-textured, authorising the ordering of “such
steps as the Court of First Instance may direct”. If an order was being sought
under that provision, the Court and the defendants were entitled to know exactly
(continue ...)
29
[1990] 1 QB 391 at 436.
30
In Section B.2 above.
— 19 —
what steps the defendants were to be directed to take. If it had to do with
restoring “the parties to any transaction to the position in which they were
before the transaction was entered into”, the Court and the defendants had to be
told what against which persons the order was to be directed, what transactions
were involved, who the parties to those transactions were and the legal basis for
seeking to reverse those transactions. None of this featured in the SFC’s leave
application. Here, it was not even a case of ambiguity. The alternative basis
sought to be relied on was not even hinted at in the affirmation in support.
There was simply nothing put before the Court beyond a marginal reference to
section 213(2)(b).
42. The third response suggested by the SFC at the inter partes hearing
was aimed at meeting the difficulty that there was nothing to restrain Kayden
from doing within the Hong Kong jurisdiction so as to come within O 11
r 1(1)(b). It was submitted that leave to serve out could be justified under O 11
r 1(1)(c) which relevantly provides:
“...service of a writ out of the jurisdiction is permissible with the leave of the Court if
in the action begun by the writ ... the claim is brought against a person duly served
within or out of the jurisdiction and a person out of the jurisdiction is a necessary or
proper party thereto...”
43. It was submitted that Kayden could be served as a necessary or
proper party to the proceedings brought against Mr Lu and Clear Excel or to
those brought against Madam Tin. Kwan J rejected this suggestion since she
had held that Mr Lu and Clear Excel had not been duly served and since there
was “no live issue” in the proceedings between the SFC and Madam Tin to
which Kayden might be a “necessary or proper party”. Her Ladyship was
plainly correct. On the proceedings as instituted – seeking purely interim relief
against Madam Tin – there were no live issues as she had agreed to give
undertakings in terms of the orders sought.
— 20 —
E. Proceedings in the Court of Appeal
E.1 The amended notice of appeal
44. The SFC’s appeal to the Court of Appeal was argued on the basis of
the un-amended originating summons. However, in its amended notice of
appeal, it sought leave to serve Kayden out of the jurisdiction pursuant to O 11 r
1(1)(c), that is, as a necessary or proper party. The amended notice stated that
the Judge had erred in holding that there was no live issue as between Mr Lu,
Madam Tin and Clear Excel on the one hand, and Kayden on the other, but did
not identify the action brought against each of them which had allegedly been
duly served upon the same. As there was no mention of any reliance upon
section 213(2)(b), the amended notice of appeal could only have proceeded on
the footing that the action duly served on those three defendants was the SFC’s
claim for injunctive relief under section 213(2)(c).
45. The SFC accordingly approached the Court of Appeal on the basis
that (i) Kwan J was wrong to hold that the asset-freezing injunctions sought
under sections 213(1)(b) and 213(2)(c) were not in the nature of final or
substantive relief and therefore wrong to hold that they fell outside O 11
r 1(1)(b); (ii) that she was wrong to refuse the SFC leave to serve Kayden out of
the jurisdiction as a necessary or proper party to the claims for injunctive relief
against the other three defendants; and (iii) that she was wrong to find that there
had been material non-disclosure.
— 21 —
E.2 The Court of Appeal’s decision
E.2.a Service on Mr Lu and Clear Excel
46. Le Pichon JA (with whom A Cheung J agreed) held in the SFC’s
favour on the “substantive relief” point regarding Mr Lu and Clear Excel and
concluded that Mercedes Benz AG v Leiduck was distinguishable. Her
Ladyship’s reasoning ran as follows:
“37. As the judge recognised, an order granting an injunction under section 213 does
not require an underlying claim ‘as the jurisdictional basis is all found in section 213’.
It is sui generis. Nevertheless, the wrongdoing which founds the relief would
invariably have taken place in Hong Kong since that is the relevant market regulated
by the SFC and within which the acts constituting such wrongdoing ‘has occurred, is
occurring or may occur’. It is in respect of such wrongdoing within the jurisdiction
that the relief would be sought.
38. Another relevant consideration is the fact that relief under section 213(2) is
entirely free-standing and is not contingent or conditional on there being proceedings
in the Market Misconduct Tribunal. Further, while an order under section 213(2)(c) is
not an end in itself in that, sooner or later, the assets frozen will have to be dealt with,
subsection (9) enables the court ‘to reverse, vary or discharge’ such an order. Thus
the relief sought in section 213 proceedings is entirely self-contained.
39. It will have become apparent that the juristic nature of an order made under
section 213(2)(c) is intrinsically very different from that of a Mareva injunction
although the form of the order may be similar. Jurisprudentially, relief by way of a
free-standing injunction is a creature of statute and available only in respect of a
certain type of wrongdoing. In proceedings for an order under section 213(2)(c), the
substantive relief to be decided can only ever be whether an order should be granted
and that would depend entirely on whether the SFC can establish its statutory
entitlement to the relief sought by showing that the conditions set out in
section 213(1) are satisfied. In my view, the Mercedes-Benz case is distinguishable
and its reasoning does not apply to injunctions specifically created by statute.”
47. I am, with respect, unable to agree. As pointed out above, the appeal
was argued on the basis of the un-amended originating summons which sought
– and sought only – interim orders pursuant to section 213(2)(c) to restrain the
defendants from acquiring, disposing of, or otherwise dealing in the property
specified, founded on the assertion that it appeared to the SFC that there had
been contraventions of the Ordinance (in accordance with section 213(1)(b)).
— 22 —
Accordingly, for the reasons developed in Section D.1 above, only interim, and
not substantive or final, relief was being claimed and the problems identified in
the Mercedes Benz case came squarely to the fore.
48. In holding that the relief claimed was substantive, her Ladyship
stated:
“Section 213(1) empowers the court to make a range of substantive orders on the
application of the SFC if the SFC is satisfied that the contravention of any of the
relevant provisions ... ‘has occurred, is occurring or may occur’.” 31 (Italics supplied)
49. However, I am respectfully unable accept that the statutory intention
is to permit the court to make substantive orders affecting legal and equitable
rights and obligations – as opposed to granting interim relief – merely on the
basis of what appears to the SFC to be the position or, to use her Ladyship’s
words, if the SFC – rather than the court or the MMT – is satisfied that there has
been a contravention.
50. It is not to the point to describe the injunctive relief claimed under
section 213(2)(c) as “sui generis” (as stated in §37 quoted above). The same
was said of Mareva injunctions by Lord Mustill in Mercedes Benz AG v
Leiduck.32 Nor is it to the point to say that insider dealing occurred within the
jurisdiction. The relief sought in the originating summons concerned the
freezing of assets and not any action or claim for insider dealing within the
jurisdiction. If it had advanced such a claim, the question would have arisen as
to whether an action based on insider dealing falls within any of the paragraphs
of Order 11 r 1 (1). That was not in issue.
31
At §35. The same applies to §39.
32
[1996] 1 AC 284 at 301.
— 23 —
51. A certain ambivalence is apparent in §§38 and 39 quoted above. On
the one hand, her Ladyship asserts that “relief under section 213(2) is entirely
free-standing and is not contingent or conditional on there being proceedings in
the Market Misconduct Tribunal” and that it is “a free-standing injunction” and
“a creature of statute ... available only in respect of a certain type of
wrongdoing”; but on the other hand, she accepts that in the context of this case
“an order under section 213(2)(c) is not an end in itself in that, sooner or later,
the assets frozen will have to be dealt with”, pointing out that section 213(9)
“enables the court ‘to reverse, vary or discharge’ such an order”.
52. I respectfully agree that the Ordinance does not require MMT or
some other court proceedings first to have been instituted before an order under
section 213(2)(c) can be sought, and in that sense, it is not contingent on there
being such proceedings. However, as her Ladyship acknowledges, such an
order, when interim, is not an end in itself. It was the SFC’s express
representation to Kwan J that its aim was to preserve funds belonging to Mr Lu
with a view to anticipated disgorgement proceedings in the MMT or to
satisfying some other order of the Court. But, as noted above, the originating
summons as served sought the abovementioned interim orders and nothing else.
The fact that section 213(9) gives the court power to discharge or vary it does
not make a section 213(2)(c) order substantive. On the contrary, a final order
affecting legal or equitable rights would not normally be subject to a
discretionary variation by the court. A discharge or variation under
section 213(9) might be sought, for instance, after the conclusion of substantive
insider dealing proceedings in the MMT and a variation might be sought for
discretionary reasons pending their determination.
53. The difficulty in the Court of Appeal’s reasoning is evident from its
conclusion on this point:
— 24 —
“So far as [Mr Lu and Clear Excel] are concerned, since the acts constituting the
alleged wrongdoing in respect of which redress is sought occurred in Hong Kong and
there are proceeds of that wrongdoing that are within the jurisdiction, Order 11
rule 1(1)(b) plainly applies.”
54. The originating summons did not allege or seek redress for any
wrongdoing occurring in Hong Kong but, as noted above, merely sought asset-
freezing orders and disclosure. Nor was any such wrongdoing the basis on
which the Order 11 jurisdiction was invoked. The fact that there were proceeds
in Hong Kong was, as held in the Mercedes Benz case, insufficient to found
jurisdiction here. It is therefore my view that the Court of Appeal did not have
any proper basis for overturning Kwan J’s ruling in relation to Mr Lu and Clear
Excel that the relief sought was not substantive and that service out was invalid
for the reasons stated in the Mercedes Benz case. Although Mr Lu and Clear
Excel have abandoned their appeal, this remains relevant because of the SFC’s
case on serving Kayden as a “necessary or proper party” to claims against those
defendants.
E.2.b Service on Kayden
55. The SFC accepted in the Court of Appeal that Kayden could not be
served outside the jurisdiction under O 11 r 1(1)(b), no doubt because there was
nothing to order it to do or refrain from doing within Hong Kong. The focus
was instead on the SFC’s application for leave to serve Kayden as a necessary
or proper party to the proceedings against Mr Lu, Madam Tin and Clear Excel.
In approaching that question, the Court of Appeal did not give any weight to
Kayden’s objections based on the Parker v Schuller line of cases, to which I
shall return.
56. Since Kwan J had held, in my view correctly, that there was no
jurisdiction to serve the proceedings as constituted on either Mr Lu or Clear
— 25 —
Excel, there could be no basis for saying that they had duly been served so as to
permit the SFC to found jurisdiction against Kayden under O 11 r 1(1)(c) as a
necessary or proper party.
57. Madam Tin, on the other hand, had been duly served in Hong Kong
but Kwan J had found that Kayden was not a necessary or proper party to the
SFC’s proceedings against Madam Tin since there were no live issues between
them: only interim relief had been sought against her and she had given
undertakings equivalent to such relief leading to discharge of the orders by
consent. Le Pichon JA held that Kwan J was wrong to find that there were no
such live issues:
“...the action against the second defendant is still extant: there has been no court order
made in relation to the second defendant and the action has not yet been disposed of.
While, as earlier explained, the matter to be decided can only ever be whether the
SFC is entitled to the order that it seeks, it may nevertheless require determination by
the court should the second defendant wish to be released from the undertakings given
and the SFC were to refuse.”33
58. With respect, that proposition proceeds on the basis, which I cannot
accept, that in the proceedings as constituted, there was some “action” waiting
to be determined by the Court. The orders against Madam Tin had been sought
and granted on the “appearance” or “suspicion” basis under section 213(2)(b)
and were necessarily interim in character. There was furthermore no suggestion
that Madam Tin would seek to be released from her undertaking. If she had
wished to contest the order, she would not have tendered an undertaking in the
first place.
59. In any case, on the footing that the claim against Madam Tin was
solely for injunctive relief, it is hard to see how Kayden can possibly have been
33
At §47.
— 26 —
a necessary or proper party to that claim. The validity or otherwise of the SFC
obtaining orders to freeze Madam Tin’s assets in Hong Kong have nothing
whatever to do with Kayden. It follows that the claims against Madam Tin and
Kayden as set out in the un-amended originating summons do not, in my view,
afford any ground for permitting Kayden to be served as a necessary or proper
party under O 11 r 1(1)(c).
60. The Court of Appeal, however, did not regard the case against
Madam Tin as confined to a claim for such injunctive relief. Although the
amended notice of appeal made no mention of section 213(2)(b), it approached
the case as if an order was being sought against Madam Tin under that section.
And it evidently thought that Kayden could validly be treated as a necessary or
proper party to such a claim.
61. Thus, at §36 of her judgment, Le Pichon JA stated:
“For the purposes of this appeal, in addition to section 213(2)(c) the effect of which
has already been considered, the relief afforded by section 213(2)(b) is also relevant.
It was indorsed in the margin to the originating summons issued by the SFC. Section
213(2)(b) enables an order to be made that would restore all the parties to the
transaction to their respective former positions. In other words, it is restitutionary in
nature and, in conjunction with an order under section 213(2)(c), would provide
compensation to those who have sustained losses through the wrongdoing in question,
in the present case, insider dealing.” (Emphasis added)
62. And in §48, she said:
“Given the fact that it was to [Kayden] that [Madam Tin] had channelled over 87% of
the $37 million of the proceeds from the alleged insider dealing, [Kayden] is plainly a
proper party to the claim against [Madam Tin].”
63. Furthermore, in §49 her Ladyship stated:
“As regards relief, the provisions of section 213(2)(b) are also relevant. It has already
been explained that the relief, if granted, which is restitutionary in nature could
operate (in conjunction with an order under section 213(2)(c)) to provide
compensation to those who have sustained losses by the alleged wrongdoing.”
— 27 —
64. The aforesaid approach is highly problematical since it envisages the
introduction of section 213(2)(b) into the present proceedings as a substantive or
final restitutionary claim aimed at providing “compensation to those who have
sustained losses through” insider dealing. That is of course a vastly different
case since the SFC as plaintiff was obviously not claiming that it had suffered
any losses as a result of the suspected insider dealing and was not seeking
restitution. The SFC’s case for Mareva type relief as set out in the originating
summons and the inter partes summons, as explained ex parte to Kwan J, was
based essentially on the need to secure Mr Lu’s assets with a view to potential
disgorgement proceedings.
65. Nevertheless, to enable the SFC to serve Kayden as a necessary or
proper party, the Court of Appeal granted the SFC leave to amend the
originating summons “to demonstrate its claim under section 213(2)(b)”, with
the observation that there was no prejudice to Kayden:
“...since the SFC’s claim under section 213(2)(b) was included in the margin to the
originating summons (served before the discharge of the ex parte injunctions) and
thus put the defendants on notice of such a claim.” 34
66. The order as drawn up granted the SFC leave to amend its
originating summons “to demonstrate its claim under section 213(2)(b)” and to
serve it afresh out of the jurisdiction. And the injunctions imposed at the ex
parte stage against Mr Lu, Clear Excel and Kayden were re-imposed. It should
also be noted that leave to amend was granted without the Court of Appeal
being shown any formulated draft amendment, a matter to which I shall return.
67. As noted above, Kwan J had exercised her discretion against
permitting the SFC to rely on a claim pursuant to section 213(2)(b) as the basis
34
At §50.
— 28 —
for service out on Kayden as a necessary or proper party. She did so on the
basis that it was a new case not sufficiently put forward by means of the
marginal reference to that sub-paragraph and that such reliance ought to be
disallowed adopting the strict approach prescribed by the Parker v Schuller line
of authorities. However, the Court of Appeal overrode that discretion, seeking
to distinguish “the authorities relied on, such as Metall und Rohstoff AG v
Donaldson Lufkin & Jenrette Inc,”35 on the basis that they “were cases where
the amendment was made to introduce a cause of action not previously
specified” and that: “That is not the present case”.36
68. I do not think that Le Pichon JA was suggesting that a claim brought
under section 213(2)(b) as opposed to section 213(2)(c) was not a different
cause of action. It plainly involves a claim for different relief on the assertion
of different facts, particularly if viewed as giving rise to a restitutionary claim
aimed at compensating those who had suffered loss. What her Ladyship
evidently had in mind was the reference to section 213(2)(b) in the margin of
the originating summons as a sufficient basis for considering such a claim as
something that had been “previously specified”.
69. With respect, for the reasons given in Section D.2 above, that
marginal reference was quite inadequate and the Court of Appeal was not
entitled to interfere with Kwan J’s discretion which was, in my view, entirely
properly exercised.
35
[1990] 1 QB 391.
36
At §45.
— 29 —
F. The hearing before this Court
70. It is the general practice of the court not to give leave to amend any
originating process or pleadings without having sight of a formulated
amendment. That is obviously as it should be since the court ought to be clear
as to how precisely the applicant is seeking to modify its existing case and the
other party ought to have a proper opportunity to object to the amendment. The
Court of Appeal departed from that sound practice in the present case when
giving leave to the SFC “to demonstrate its claim under section 213(2)(b)”.
71. The SFC’s amended originating summons 37 purportedly served
pursuant to the leave granted in fact made far-reaching modifications to its case
which, in my view, went significantly beyond the scope of such leave. Some of
its principal features are as follows:
(a) Whereas its case had previously proceeded merely on the
“appearance” or “suspicion” ground pursuant to section 213(1)(b),
the SFC now seeks declarations by the Court that Mr Lu “has
contravened” sections 291(1)(a) and (b) and 291(8) of the SFO –
that is, that he has committed the criminal offence of insider
dealing – and is “a person within section 213(1)(a)(i)(A)”.
(b) The same applies to Madam Tin, Clear Excel and Kayden,
declarations now being sought as to their actual involvement in Mr
Lu’s alleged contraventions. In Kayden’s case, the declaration
37
There was subsequently an order that the matter proceed as if commenced by writ.
The prayer of the statement of claim served is in the same terms as the amended
originating summons.
— 30 —
sought is that it “has, directly or indirectly, been knowingly
involved in” such contraventions.
(c) In a re-amendment effected pursuant to leave granted by Master
Levy on 22 September 2010, the SFC added a claim for an order
requiring the defendants “to take such steps as the Court may direct
including to restore the parties to the transactions in the dealing
referred to [in relation to Mr Lu’s alleged insider dealing] to the
position in which they were before the transactions entered into”,
tracking section 213(2)(b). However, the amendment proceeded to
seek “alternatively ... financial compensation or restitution in such
sums and to such persons as the court may direct, being persons
who entered into the transactions in the dealings pleaded ...”
(d) Returning to the amendment, the SFC now seeks an account of
profit gained or loss avoided by the defendants; the appointment of
a receiver to whom the defendants should pay such sums and who
in turn should distribute such sums “among such persons as the
court may direct”, being persons appearing to have entered into
transactions involving Mr Lu’s alleged insider dealing; with all
“further proper accounts, inquiries and directions”.
(e) Finally, the SFC claims “alternatively, if on the true construction of
section 213(2)(b), an account of profits and a class distribution are
not available”, an inquiry (presumably by the Court) “in relation to
each transaction” as to who the parties were; “the nature of the
transaction”; “what assets or money each party to the transaction
had paid or transferred to others”; “whether each investor is
willing that there should be a rescission of the transaction in
— 31 —
question ... and willing and able to return any shares or money
received under the transaction”; among other matters.
72. There can be no doubt that these changes incorporate a profoundly
different case from that which had grounded leave for service out of the
jurisdiction on Kayden and the other foreign defendants. The Court is being
asked for the first time to determine whether Mr Lu did in fact contravene the
criminal insider dealing provisions of the Ordinance (in the context of a civil
case) and whether the other defendants were involved (knowingly in relation to
Clear Excel and Kayden). The case is no longer being put merely on the
“appearance” or “suspicion” basis. For the first time, there is a claim for relief
in the nature of orders requiring the defendants to account for “profit gained or
loss avoided” and to pay money found due to a receiver appointed by the court
on an improvised class action to benefit investors having individual claims for
loss caused by the alleged insider dealing. There is also an alternative claim for
the Court to conduct an inquiry so as to build up from scratch a body of
claimants to whom distribution of recovered funds might be made.
73. Lord Pannick QC, who came into the case with Mr Roger Beresford
only at the present stage of the proceedings, sought to justify service out of the
jurisdiction on Kayden on the basis of the case as reconstituted by the
amendments. However, as emerged at the hearing, it is a case which is not only
new and different, but one which raises numerous difficult questions of law and
statutory construction, not least as to whether the court has jurisdiction to
adjudicate on alleged contraventions under section 213 and to grant orders of
the kind sought in the amendments – questions which have not previously been
canvassed or ruled upon in the courts below. It would be quite inappropriate for
this Court to entertain such questions without a proper foundation for their
exploration having been laid.
— 32 —
G. Conclusion
74. It is plain that the SFC does not now seek to defend its service out of
the jurisdiction on Kayden on the original basis but seeks to rely (impermissibly)
on its reconstituted case. This renders moot for present purposes the first of the
two questions of law identified at the start of this judgment, namely as to
whether the Mareva type orders obtained fall outside the scope of section
213(2)(c). As to the second question, namely, as to whether the orders
originally sought give final or substantive relief and provide a basis for service
of process abroad pursuant to Order 11, the SFC now seeks to justify service out
on the basis of its reconstituted case which expressly purports to seek final relief.
As indicated above, I consider that the question of whether final relief can
validly be sought under section 213 has not properly been brought before the
Court and therefore has to be kept open. However, the position adopted by the
SFC renders that second question (which was formulated with the approach of
the Court of Appeal based on the un-amended originating summons in mind)
also moot in the present context.
75. In my view, the radically altered nature of the SFC’s case exposed
by the purported amendments amply confirms the correctness of Kwan J’s
adoption of the strict Parker v Schuller approach in the present case. The SFC’s
attempt to sustain service out on Kayden on the basis of such a fundamentally
different case cannot be countenanced.
76. It is unnecessary to deal with the complaint concerning material non-
disclosure.
77. I would accordingly make the following orders in respect of the
appellant Kayden, namely, that:
(a) Kayden’s appeal be allowed;
— 33 —
(b) the orders of the Court of Appeal dated 22 May 2009 granting
leave to amend the originating summons in respect of Kayden and
leave to serve it afresh on Kayden be set aside;
(c) the order of the Court of Appeal re-imposing on Kayden the
injunction which Kwan J had discharged be set aside;
(d) its order nisi for costs and any consequent order as to costs against
Kayden in favour of the SFC be set aside;
(e) all subsequent procedural orders and directions given in these
proceedings in respect of Kayden, including the order of Master
Levy dated 22nd September 2010 granting the SFC leave to re-
amend the originating summons and statement of claim be set aside;
and
(f) there be an order nisi that the SFC pay Kayden’s costs here and
below, with liberty to the parties to lodge written submissions as to
costs within 21 days of the date of this judgment, such order to
stand as an order absolute in default of such submissions.
Sir Anthony Mason NPJ :
78. I agree with the judgment of Mr Justice Ribeiro PJ.
Chief Justice Ma :
79. For the above reasons, the Court unanimously allows the appeal and
makes the orders set out in the final paragraph of the judgment of Mr Justice
Ribeiro PJ.
— 34 —
(Geoffrey Ma) (Kemal Bokhary) (Patrick Chan)
Chief Justice Permanent Judge Permanent Judge
(RAV Ribeiro) (Sir Anthony Mason)
Permanent Judge Non-Permanent Judge
Mr Abraham Chan (instructed by Messrs Wilkinson & Grist) for the appellant
Lord Pannick QC and Mr Roger Beresford (instructed by Securities & Futures
Commission) for the respondent