By this subsequent decision dated 30 October 2020 ( HKCT 9), the Tribunal ordered the 9th respondent be disqualified as a director of the 5th respondent for a period of 1 year and 10 months.
On 14 October 2020, the Tribunal held that the 9th respondent was ordered to be disqualified as a director pursuant to s102 of the Ordinance ( HKCT 8).
The Tribunal took into account the following factors:-
- The purpose of a disqualification order is protective (protecting shareholders, investors and the public), and not punitive, and it serves a deterrent purpose.
- The punishment should reflect the gravity of the conduct, so that a message can be sent to businessmen, that is, if they breach the trust of others, they will receive an appropriate punishment.
- S101 of the Ordinance provides that the disqualification period shall not exceed 5 years. The Tribunal considers that it be divided into the following categories:-
- Highest category: Disqualification period of 4-5 years, applicable to the most serious of situations, such as knowingly committing a contravention (s103(2)(a)), substantial involvement, re-contravening, inciting others to contravene;
- Lowest category: Disqualification period of less than 2 years, appropriate for less serious cases; and
- Middle category: Disqualification period of 2-3 years. The seriousness of the contravention falls between the 2 categories above.
- The Commission submitted that the lowest category should be applicable to s103(2)(c), whereas the middle category should be applicable to s103(2)(b). However, the Tribunal ruled that there should be no such differentiation, because the intention of s103(2) is not to differentiate between the seriousness of the conduct, but between the appropriateness of the disqualification order. Sub-ss(b) and (c) specifically requires the Tribunal to consider whether the director had knowledge of the conduct of the company. Hence, for instance, under s103(2)(b), the highest category will be applicable if a director has reason to suspect contravention has taken place, but proceeds nevertheless, and the contravention affects a large number of persons.
- The above categories are of general guidance, and each case turns on its own facts. In addition to considering the gravity of the contravention, the Court will also consider a range of factors, such as: the numbers and the degree of the shareholders and members of the public affected, whether the director participated in any conduct in connection with any other contravention of a competition rule (s103(1)(b) of the Ordinance), the degree and mode of participation, whether there is any personal benefit, whether there was any attempt to stop or rectify the illegal conduct, whether there was any admission to the liability, whether there was any cooperation with or assistance to the Commission. These factors are not exhaustive, and it is not necessary for the Tribunal to consider them point-by-point.
- The 5th respondent was the 10th respondent in Competition Commission v W Hing Construction Co Ltd & Ors ( HKCT 3) (“W Hing Case”). At that time, the 9th respondent was its director. The 9th respondent thus had some connection with another contravention of a competition rule, contrary to s103(1)(b) of the Ordinance.
- Although the 9th respondent did not have direct knowledge of or was not involved in the contravention of the first conduct rule, the 9th respondent had reason to believe suspect that the 5th respondent was acting in contravention of the first conduct rule. This was because the 8th respondent (acting as a representative of the 5th respondent) was already interviewed by the Commission on 8 March 2017, and the renovation license was only granted to the 5th respondent 1 month after the said interview. Moreover, the renovation was not completed even after commencement of the legal proceedings of the W Hing Case. However, the 9th respondent failed to carry out any conduct to stop or rectify the anti-competitive conduct, thus fell foul of s103(2)(b) of the Ordinance.
- The 8th respondent admitted that whenever the 5th respondent sub-contracted works to them, the 9th respondent would remind the 8th respondent not to contravene any laws. The Tribunal believed that the 9th respondent did not understand and did not remind the 8th respondent not to contravene competition laws.
- The 9th respondent is currently 74 years old and with limited literacy. He has only 1 private limited company, and he and his son are the sole directors and shareholders.
- Overall, the Tribunal concluded that the severity of the conduct of the 9th respondent fell within the lower-end of the middle category. The Tribunal considered that the Commission’s application for 2 years’ disqualification is an appropriate starting point.
- However, the Tribunal accepted the following as mitigating factors: –
- The 9th respondent admitted responsibility at the onset, saving the Commission and Tribunal time and costs; and
- If not for the fact that the 1st respondent objected to the use of the Carecraft procedure and the pandemic, the 9th respondent’s application could have been dealt with sooner.
The Tribunal therefore reduced the total disqualification period by 2 months.