YIFUNG DEVELOPMENTS LTD v. LIU CHI KEUNG RICKY AND OTHERS

HCA 3020/2015

[2018] HKCFI 1279

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 3020 OF 2015

____________

____________

______________

D E C I S I O N

______________

1.  This is the hearing of the defendants’ summons filed on 19 April 2018 for certain case management directions.

2.  On 10 September 2010, the plaintiff as borrower and Manchester Securities Corp as lender executed a facility agreement for a loan facility of US$39 million.  Full repayment was ultimately not effected.  An event of default was as a result triggered under the facility agreement.  These and other related events gave rise to various proceedings in the High Court.  This is one of them.  The Writ was taken out by the plaintiff on 18 December 2015.  The defendants were three of its former directors.  The plaintiff claims against them for breaches of their duty to act in the best interests of the plaintiff and to exercise reasonable care, skill and diligence in relation to the repayment of that loan.  For fuller details of this and other related actions, I respectfully refer to the Judgment of G Lam J dated 29 August 2016 whereby he dismissed the defendants’ application for an order to strike out the plaintiff’s claim herein.

3.  On 15 March 2016, the defendants took out a summons for an order that the plaintiff’s claim herein against them be struck out. The hearing of that summons took place before G Lam J on 23 August 2016.  Upon conclusion of the hearing on the same day, His Lordship dismissed the application.  Reasons for Decision was handed down on 29 August 2016, which was the Judgment I referred to in the preceding paragraph.

4.  On 19 September 2016, the defendants issued a Third Party Notice against Hidemoto Kawai (“the Third Party”).  Directions on the further conduct of both that Summons and the main action were given by Master Ho on 19 May 2017.  I am not concerned with the details of that set of Directions, except to observe that pursuant to those Directions, the time for the plaintiff and the defendants to take certain steps to progress the main action (discovery, inspection, exchange of witness statements, seeking counsel advice, etc) will only start to run after the exchange of lists of documents in respect of the Third Party Notice between the defendants and the Third Party (such exchange being the first step dealt with in those Directions).

5.  On 29 June 2017, the Third Party took out a summons for an order that the Third Party Notice be struck out (“TP Strike Out Application”).  Directions on the conduct of the same were given by DHCJ Sakhrani on 25 July 2017.  Under this set of Directions, the time for the defendants and the Third Party to exchange lists of documents, which forms part of the Directions given by Master Ho as explained above, is extended to the date falling 28 days after the date on which an order determining the TP Strike Out Application is made, with consequential time extensions in respect of the deadlines for the steps that follow.  The net effect of the Directions given by Master Ho and DHCJ Sakhrani is that any delay to the resolution of the TP Strike Out Application will correspondingly delay the further progress of the main action.

6.  The TP Strike Out Application has been set down to be heard before me on 26 June 2018.

7.  On 27 March 2018, the defendants took out a further summonsfor an order that the claim herein against them be struck out (“Ds’ 2^nd StrikeOut Application”).  No explanation has been provided in the affirmationsin support as to why the application was only taken out some 27 months afterthe commencement of the action, and some 19 months after the dismissal of their first application to strike out.

8.  On 13 April 2018, parties attended before Master KC Chan forthe call-over hearing of Ds’ Strike Out Application.  Despite the defendants’ request for the same directions which they are seeking by the present summons (which I will explain), Master KC Chan refused to so direct. In respect of the listing of the Ds’ Strike Out Application, he only gave the usual direction that “the substantive hearing of the Summons be fixed for argument before a Judge with 1 day reserved.”  There has been no appeal against that decision and direction.

9.  On 19 April 2018, the defendants took out the present summons.  They seek thereby directions from me that (1) Ds’ 2^nd Strike Out Application be heard before me on 26 June 2018 with one day reserved; and (2) TP Strike Out Application which has been set down to be heard that day be adjourned pending the final determination of Ds’ 2^nd Strike Out Application (including any appeals).

10.  Mr David Chen, who appears for the defendants, submits that adjourning TP Strike Out Application until the final disposition of Ds’ 2^nd Strike Out Application would save time and costs.  Should the defendants be successful with Ds’ 2^nd Strike Out Application, TP Strike Out Application would become unnecessary.  He further submits that no prejudice would be caused to the parties, the potential delay would not be substantial, and the directions sought would be the most sensible case management option.

11.  Both the Third Party and the plaintiff opposes the present summons.

12.  I have considered counsel’s submissions and balanced all necessary considerations.  For the following reasons, I reject the defendants’ application:  

(a) The defendants are seeking to set aside the Direction given by Master KC Chan on the listing of Ds’ 2^nd Strike Out Application.  I see nothing wrong with the Direction, and further see no reason to set it aside in the interest of justice;

(b) The proposed course upsets the hearing date of TP Strike Out Application, which is a milestone date that was fixed a long time ago.  It ought not to be upset save in most exceptional circumstances, which I see none;

(c) No reason has been tendered as to why Ds’ 2^nd Strike Out Application could not have been taken out earlier;

(d) I have been informed, in relation to Ds’ 2^nd Strike Out Application, that the plaintiff requires more time to file evidencein opposition as issues of BVI law are involved.  It will not be ready for hearing on 26 June 2018.  Mr Chen submits that it is a short point.  I am not prepared to jump to that conclusion on the materials before me.  I can see the grievance on the plaintiff’s part if it were to be unreasonably pressured in terms of time constraints to deal with Ds’ 2^nd Strike Out Application;  

(e) Bearing in mind the directions given by Master Ho and DHCJ Sakhrani, adjourning TP Strike out Application pending the final disposition of Ds’ 2^nd Strike Out Summons (including any appeals) has the effect of staying the main action for an uncertain period of time, which period might be lengthy;

(f) Mr Chen submits that if the Court is not prepared to issue the directions as sought, he is content to have a shorter stay till my decision on Ds’ 2^nd Strike Out Application.  But even that cannot overcome the factors I have set out above and will set out below;

(g) I agree with the submissions made by Mr Bartlett on behalf of the plaintiff, that:

(i) the proposed course, by postponing TP Strike Out Application and hence the main action, does not increase the cost-effectiveness of the procedure to be followed in relation to the main action.  While some costs might be saved as between the defendants and the Third Party, I have to underline the word “might”;

(ii) the proposed course would not ensure that the case be dealt with as expeditiously as is reasonably practicable; and

(iii) elevating satellite litigations to having priority over the progress of the main action does the opposite of what the Underlying Objectives of the Rules of the High Court seek to achieve.

13.  Accordingly, I decline to make the directions sought.