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HCMA000675_2011

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                                                              HCMA 675/2011
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                   IN THE HIGH COURT OF THE
C          HONG KONG SPECIAL ADMINISTRATIVE REGION                               C

                    COURT OF FIRST INSTANCE
D                                                                                D
                MAGISTRACY APPEAL NO 675 OF 2011
                (ON APPEAL FROM ESS 5215-5217/2011)
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                                ------------------------
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    BETWEEN
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              SECURITIES AND FUTURES COMMISSION                   Respondent
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                                         and

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                          CHAN CHUN WAI (陳俊偉)                       Appellant
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                                 ------------------------

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    Before: Deputy High Court Judge E Toh in Court
L   Date of Hearing: 14 March 2012                                               L

    Date of Judgment: 14 March 2012
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N                                 JUDGMENT                                       N
                               --------------------------
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    1.           The 1st defendant (Billion Global Asset Management Limited)
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    and 2nd defendant (CHAN CHUN WAI) in this case were prosecuted under
Q   the Securities and Futures Ordinance, Cap 571. Both were convicted of        Q

    the summonses which they faced. They both submitted appeals against
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    conviction before the hearing today.             On 7 November 2011, the
S   1st defendant in this case had abandoned his appeal. We are only left with   S

    the appeal against conviction by the 2nd defendant.
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                                      - 2 -
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    2.           At trial, the 2nd defendant faced two summonses, it was
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                                                                     st
    alleged by the prosecution that he had aided and abetted the 1 defendant,
C   Billion Global Asset Management Limited (BGAM Limited), in holding               C


D
    itself out as carrying on the business of the regulated activity namely          D
    “Asset Management” and had issued an advertisement in that respect.
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    3.           There was no dispute to the prosecution’s evidence that the
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    business advertised in (P16) related to Type 9 regulated activity, the
G   1st defendant did not have a licence in relation to such activity and that the   G

    2nd defendant only had a licence for such activity but it was limited to his
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    employment with Quam Securities Co Ltd (Quam). The only issue in this
I   case was correctly identified by the learned Magistrate as whether the           I

    advertisement in the 1st defendant’s website (P16) was issued by the
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     st                       nd
    1 defendant and or the 2 defendant and whether they had knowledge of it.
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    4.           Both defendants had a clear record. The prosecution called
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    2 witnesses. Most of the evidence of the prosecution was admitted and
M   that was produced as exhibit P23. The undisputed evidence was that the           M

    1st defendant company was incorporated in December 2008.                  The
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     nd                                                              st
    2 defendant was the only shareholder and director of the 1 defendant.
O   As I have said the 1st defendant was not licensed to carry out any of the        O

    regulated activity. The 2nd defendant was licensed to carry out the asset
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    management activity by the SFC was restricted to his employment with
Q   Quam. The 2nd defendant’s licence was revoked when his employment                Q

    with Quam came to an end.            In January and February 2010, The
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     nd
    2 defendant registered 2 websites, with Website Solutions Ltd. One of
S   those websites was for the 1st defendant and the other website was the           S

    2nd defendant’s personal website.    Upon the 2nd defendant’s request, the
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     nd
    2 defendant’s website would be automatically transferred to the
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                                              - 3 -
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    1st defendant’s website. The 2nd defendant paid for the initial fees for both
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                          st
    websites and the 1 defendant paid for the renewal fees of the 2 websites
C   through the 2nd defendant.                                                       C


D                                                                                    D
    5.           According to the prosecution evidence, services provided by
E   Website Solutions included domain registration, website hosting and site         E

    builder. The 1st defendant had provided a copy of its business registration
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                                                                     st
    certificate for registration of the domain name for the 1 defendant’s
G   website.   After registration and payment of fees, Website Solutions             G

    e-mailed the site builder link, user name and password to the 2 nd defendant.
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                               st        nd                                     st
    It was up to the 1 and 2 defendant to design and publish the 1
I   defendant’s website. All along, the only contact person between the 1 st         I

    defendant and Website Solutions was the 2nd defendant .
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K   6.           In March 2010, the Securities and Futures Commission (SFC)          K

    received a complaint about the 1st defendant’s website. An investigation
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    was launched on 16 May 2010.               PW1 found that the contents of the
M   1st defendant’s website had changed. A search warrant was executed at            M

    Quam on 17 May 2010, nothing material was found.               There was no
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                     st             nd
    search of the 1 or the 2 defendant’s premises.            The contents of the
O   1st defendant’s website was subsequently deleted.                                O


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    7.           The learned Magistrate found as a matter of fact that the
Q   2nd defendant was the sole shareholder and director of the 1 st defendant.       Q

    He had incorporated a company which contained the words “Asset
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                                    nd
    Management”.          The 2 defendant registered a website for the
S   1st defendant with a name which contained the words “Asset Management”.          S

    There is no evidence to show that apart from the 2 nd defendant, the 1st
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    defendant had any staff.             It was also a fact found by the learned
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    Magistrate that Website Solutions only sent the user name, password and
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                                   nd                    nd
    site builder link to the 2 defendant.           The 2 defendant was the only
C   contact between the 1st defendant and Website Solutions. So in the light        C


D
    of all those evidence, the learned Magistrate found that the only and           D
                                          st        nd
    irresistible inference is that the 1 and 2 defendant had held themselves
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    out as carrying on a business in a regulated activity; the 2 nd defendant       E


F
    issued P16 to help the 1st defendant to hold out as carrying on a business in   F
    a regulated activity.        Therefore the learned Magistrate found that the
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    Prosecution had proved beyond a reasonable doubt the 3 summonses and

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    convicted both defendants accordingly.                                          H


I   8.           On the appeal against conviction on behalf of the                  I

    2nd defendant, Mr Cheung, said that in charges 2 and 3, the learned
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    Magistrate had erred in holding out that there was a case to answer on the
K   two informations (charges 2 and 3) against the 2nd defendant, and that there    K

    was no sufficient evidence to say that the 2nd defendant did aid, abet,
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                                               st
    counsel, procure or induce the 1 defendant to commit the offence
M   (Charge 1) or that the offence (Charge 1) was committed with the consent        M

    or connivance of , or attributable to any recklessness of the 2nd defendant.
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    There was no evidence, or no sufficient evidence to prove that the
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    2nd defendant did issue the advertisement concerned.                            O


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    9.           Basically, what Mr Cheung is complaining about is that there
Q   is no direct evidence pointing to the 2nd defendant, having counselled the      Q

    1st defendant to issue the advertisement and the 1st defendant website was
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    registered about a year before the advertisement, there is no evidence to
S   show what had happened in the company between the 1st defendant being           S

    set up and the advertisement being launched. There is no direct evidence
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                            nd
    to indicate that the 2 defendant did it. There is a reasonable doubt as
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    there is no direct evidence, that is why the learned Magistrate had found
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    that the only and the irresistible inference from all the material facts
C   proved that 2nd defendant had help others to carry on a business in a        C


D
    regulated activity. The 2nd defendant issued P16 to help the 1st defendant   D
    to hold out that he was carrying on the business as a regulated activity.
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    10.          There is no doubt at all that according to the prosecution
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                     nd
    evidence, the 2 defendant was the only person who had contact with
G   Website Solutions on behalf of the 1st defendant. The basic fact of the      G

    matter is that the evidence showed that 2nd defendant was the only
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    shareholder and director of the company. Mr Cheung complained that
I   there was no evidence to show that there weren’t any other people in the     I

    company. There is no doubt that there is no evidence to show what
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    happened in the company. The only person who really knows about what
K   goes on is really the only shareholder and director, ie the 2nd defendant.   K

    There was no evidence from the defence in anyway to weaken the
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    evidence of the prosecution and the learned Magistrate was entitled to
M   draw the irresistible inference from the evidence before her. So I see no    M

    merit at all in the appeal, so the appeal is dismissed.
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Q
                                                          (E Toh)                Q
                                                  Deputy High Court Judge
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    Mr Cheung Wai Sun, instructed by S W Wong & Associates,
     for the appellant
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    Mr Allen Lam, instructed by Securities and Futures Commission,
T    for the respondent                                                          T


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