Case Note

• Citation: (2012) 24 SAcLJ 566
• Published date: 01 December 2012
• Date: 01 December 2012

JUDICIAL REVIEW OF SGX-ST'S PUBLIC REPRIMAND POWERS

Yeap Wai Kong v Singapore Exchange Securities Trading Ltd

[2012] 3 SLR 565

One of the thorny issues in administrative law is when the right of judicial review would be available in relation to decision-making bodies that perform both public and private functions. This note discusses the court's approach in Yeap Wai Kong v Singapore Exchange Securities Trading Ltd[2012] 3 SLR 565, which considered the nature of the Singapore Exchange Securities Trading Ltd's public reprimand powers and whether a fair hearing had been accorded to the applicant in that case as mandated by the rules of natural justice.

I. Introduction

1 The fundamental aim of judicial review is to ensure that the powers of decision-making bodies are exercised lawfully. If a decision-maker exercises his powers outside the jurisdiction conferred on him in a manner which is procedurally irregular or which is unreasonable in the Wednesbury sense,1 he is acting ultra vires his powers and therefore unlawfully.2 Judicial review, where available, is concerned with the process in which a decision is reached and not the merits or correctness of the decision. It is the limited means through which the court holds

decision-making bodies exercising a “public” function to the fundamental standards of legality.3

2 Traditionally, the test for determining whether a decision was susceptible to judicial review was a straightforward one: it required the court to consider the source of the respondent's power in making the decision that the applicant sought to impugn (the “Source Test”). If the source of that power was in a statute or subsidiary legislation, the decision would be susceptible to judicial review.4

3 The recent High Court decision of Yeap Wai Kong v Singapore Exchange Securities Trading Ltd5 (“Yeap Wai Kong”), however, continues the trend of recent cases in Singapore that have recognised the expanding role of judicial review in the modern world. The Yeap Wai Kong decision highlights the increasingly hybrid nature of many of the functions performed by decision-making bodies such as the Singapore Exchange Securities Trading Ltd (“SGX-ST”), which have both public as well as private dimensions.

4 This note discusses the court's approach in Yeap Wai Kong which centred upon the nature of the SGX-ST's public reprimand powers and whether a fair hearing had been accorded to the applicant in that case in accordance with the rules of natural justice.

II. Brief facts and decision in Yeap Wai Kong

5 The applicant, Yeap Wai Kong (“Yeap”), was a non-executive, independent director and member of the Audit Committee of China Sky Fibre Chemical Ltd (“the Company”). The Company was incorporated in the Cayman Islands and listed on the SGX-ST.

6 After noticing discrepancies in the Company's financial statements in April 2011, the SGX-ST required the Company to furnish certain information. The information sought continued to be withheld from the SGX-ST despite repeated requests. On 23 August 2011, the SGX-ST sent a “show cause” letter addressed to the Company and collectively its board of directors, which asserted that the Company was in breach of the Listing Rules due to non-disclosure of information. The “show cause” letter expressly referred to the SGX-ST's intention to issue a public reprimand and invited the Company to show cause why

relevant disciplinary actions should not be taken. This was followed by a document directive from the SGX-ST, addressed to the Board of Directors on 3 November 2011, requiring the Company to deliver specific documents to the SGX-ST. The SGX-ST subsequently also ordered a special auditor to be appointed by the Company but both directions were not complied with.

7 On 16 December 2011, the SGX-ST publically reprimanded all the directors of the Company, including Yeap. Yeap subsequently applied for and was granted leave to apply for a quashing order to overturn the SGX-ST's public reprimand (“SGX-ST Reprimand”).6 The essence of Yeap's complaint was that he was not accorded a fair and proper hearing by the SGX-ST and that the “show cause” letter was not addressed to Yeap as an individual director of the Company.

8 Yeap Wai Kong therefore concerned two main issues. First, whether the SGX-ST Reprimand was susceptible to judicial review. Second, whether Yeap had been accorded a fair hearing as required by the rules of natural justice.

9 On the first issue, the court held that to determine whether the decision of a body was susceptible to judicial review, both the Source Test as well as the Nature Test had to be considered.7 To recapitulate, the Source Test stipulates that if the source of power of the decision-making body originated in statute or subordinate legislation under a statute, then the body has a public nature and would thereby be subject to judicial review. Conversely, on the other end of the spectrum, if the source of power was purely contractual, then the body would not be subject to judicial review. The Nature Test applies in between the aforesaid extremes: if the nature of the power of the body involves exercising public law functions, or the exercise of its functions have public law consequences, then that may be sufficient to make the body in question subject to judicial review.8

10 In applying the Nature Test, the court in Yeap Wai Kong observed that non-statutory bodies may perform public law functions and may therefore be subject to judicial review in respect of those functions. Factors indicating whether a body performs public functions

and would thus be subject to judicial review in respect of these functions include:

(a) the extent to which the decision-making body has been interwoven into a system of governmental regulation;

(b) the extent to which there is any statutory recognition or underpinning of the body or the function in question; and

(c) the nature of the function.9

11 In determining whether the SGX-ST Reprimand was susceptible to judicial review, the court in Yeap Wai Kong first considered the extent to which the SGX-ST had been interwoven into governmental regulation. In undertaking this enquiry, the court observed, inter alia, that the SGX-ST operated a securities market.10 As an approved exchange under s 16 of the Securities and Futures Act11 (“SFA”), the SGX-ST, in discharging its obligations under the SFA, was to:

(a) have regard to the interests of the investing public;

(b) maintain business and listing rules which make satisfactory provision for a fair, orderly and transparent market; and

(c) enforce compliance with its business and listing rules.

Section 25 of the SFA went further by providing a statutory enforcement process whereby the SGX-ST's rules may be enforced or effected further by a court order.12

12 As regards whether there was any statutory underpinning in connection with the SGX-ST Reprimand, the court noted that SGX-ST's powers to publicly reprimand directors of listed companies for non-compliance with the SGX-ST Listing Manual (“Listing Manual”) stemmed from r 720(4) of the Listing Manual, which was properly enacted and approved by the Monetary Authority of Singapore (“MAS”) pursuant to s 23 of the SFA.13

13 In considering the nature of the reprimand function of the SGX-ST, the court adopted the approach in Re Pergamon Press Ltd,14 which concerned inspectors' reports issued under the English Companies Act 1948.15 Notwithstanding that the inspectors under the English

statute only had powers to “investigate and report”, the findings of fact which they made could potentially cause grave damage to those concerned, such as ruining reputations or careers. The English Court of Appeal held that these inspectors were bound by the rules of natural justice to give the persons they investigated a fair opportunity for correcting or contradicting what was said against them.16 By analogy, the court in Yeap Wai Kong had regard to the potential ramifications of any public reprimand of a listed company's directors by the SGX-ST, both domestically and internationally, including adverse business reputational implications, implications on their continued service on board committees and directorships of other listed companies, and other professional and financial services licence implications.17

14 Based on the above factors, the court concluded that the reprimand power of the SGX-ST would properly be characterised as a public function within the Nature Test and consequently susceptible to judicial review.18

15 Having established that the SGX-ST's Reprimand was susceptible to judicial review for minimum compliance with the standards of “legality, rationality and procedural propriety”, the second issue considered by the court was whether the applicant was accorded a fair hearing as required by the rules of natural justice, in compliance with procedural propriety.

16 The court in Yeap Wai Kong held that while the common law prescribes minimum standards of procedural propriety by requiring a fair hearing and the absence of bias, there was no one-size-fits-all template for a fair hearing. What would constitute a fair hearing depended on the nature and context of the decision.19

17 Applying the approach in R v Secretary of State for the Home Department; Ex p Doody,20 the court in Yeap Wai Kong concluded that a fair hearing, in the context of directors failing to comply with the relevant exchange rules to disclose material information – when timely and accurate disclosure of material information was crucial – required the person affected to be informed of the case against him and to be provided with an opportunity to make representations before the decision.21 On the facts of Yeap Wai Kong, the issue then turned on whether Yeap was given adequate notice that the SGX-ST was intending

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