Value Convergence Holdings Ltd v Zhou Quan Co Ltd [2019] 3 HKLRD 568

Vincent Chen appeared for the plaintiff in the Court of First Instance in Value Convergence Holdings Ltd v Zhou Quan Co Ltd [2019] 3 HKLRD 568.

P, a listed company providing brokerage, corporate finance and asset management services to a broad base of clients in the Greater China region, fell victim to an e-mail fraud allegedly perpetrated by D resulting in a loss of over HKD3.5 million. In a recovery action against D, P obtained and applied to continue an ex parte anonymity order (the Anonymity Order), arguing that disclosure of the fraud would likely cause a drop in its share price.

Held, refusing to continue the Anonymity Order, that:

(1) An anonymity order or hearing in camera was plainly improper on the facts. Restrictions on the open administration of justice, in any form or to any extent, should not be lightly applied for unless properly and adequately justified. (See para.2.)

(2) One of the facets of open administration of justice was to make available orders and judgments containing full details, including the parties’ identities, to the public. Any restriction on open administration of justice necessarily compromised important interests, rights and freedoms, and must be justified by considering and balancing the same (Asia Television Ltd v Communications Authority [2013] 2 HKLRD 354 applied). (See paras.11-12.)

(3) Publicity of litigation leading to embarrassment and inconvenience or economic damage were normal incidences of the public nature of proceedings, which the initiating party was regarded as having accepted (Re Wong Tung Kin [1989] 1 HKLR 93, R v Chief Registrar of Friendly Societies, ex p New Cross Building Society [1984] QB 227, R v Dover Justices, ex p Dover District Council and Wells (1992) 156 JP 433, R v Legal Aid Board, ex p Kaim Todner [1999] QB 966, Asia Television Ltd v Communications Authority [2013] 2 HKLRD 354 applied). (See para.13.)

(4) As for P’s bare assertion that public knowledge of the HKD$3.5 million loss would cause its share price to fall, it was difficult to anticipate any or any significant movement in the share price of a company like P merely because it had suffered such a one-off, relatively modest loss through no fault of its own. (See paras.16, 19.)

(5) It was ironic that P sought to prevent disclosure of its identity by relying on para.40 of the Securities and Futures Commission’s “Guidelines on Disclosure of Inside Information” (2012 ed). Paragraph 40 requires a listed corporation to make prompt disclosure of circumstances that might affect the price of its listed securities. Independent of proceeding with this action in the usual manner consistent with open justice, P should also proactively seek to discharge its disclosure obligation under para.40. (See paras.8, 20.)

(The above is taken from the headnote in HKLDR.)

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