張才奎所託管中國山水投資有限公司股份 AND ANOTHER v. 張才奎 AND ANOTHER

HCA 1661, 1766, 2191/2014 &
HCA 623, 939, 1564/2015 (Consolidated)

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NOS 1661, 1766, 2191 OF 2014 AND
623, 939, 1564 OF 2015

________________________

________________________

(Consolidated pursuant to the Order of
The Honourable Mr Justice G Lam dated 20 August 2015)

  _________________

  D E C I S I O N

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Introduction

1.  There are altogether 6 actions brought by a total of 2,631 plaintiffs for the return of their shares in China Shanshui Investment Company Limited 中國山水投資有限公司 (“CSI”) which the plaintiffs claim are held on trust for them by the 1^st defendant Zhang Caikui張才奎 (“D1”) and the 2^nd defendant Li Yan Min李延民 (“Li”).

2.  The claims and allegations in the 6 actions (“6 Actions”) are identical.  The 6 Actions have been consolidated pursuant to an order of G Lam J of 20 August 2015 with HCA 1661 of 2014 being the lead action.

3.  All along, all 2,631 plaintiffs in the 6 Actions (“Ps”) have been legally represented by K&L Gates (“KLG”). However, a solicitors firm CWL & Partners (“CWL”) purportedly acting for 323 plaintiffs in the 6 Actions filed Notices of Change of Solicitors/Notices of Withdrawal (“CWL Notices”) on behalf of the 323 plaintiffs (“Subject Ps”) in different batches before and after August 2015.

4.  Ps then issued 12 identical summonses (2 summonses in each of the 6 Actions, respectively on 30 July 2015 and 8 September 2015) to challenge the authority of CWL to act for the Subject Ps and to strike out the CWL Notices (“Striking Out Summonses”).  CWL is the Interested Party in the Striking Out Summonses. 

5.  Ps’ Striking Out Summonses were not served on D1, and on 9 September 2015, D1 issued a summons to intervene in the hearing of the Striking Out Summonses (“Intervention Summonses”).

6.  On 10 September 2015, Master H Au-Yeung adjourned the Striking Out Summonses to a hearing for directions, at the same time as the hearing of the Intervention Summonses.

Brief Background 

7.  There have been a number of interlocutory applications between the parties.  In particular, G Lam J had delivered two decisions earlier this year, one on 13 May 2015 (“Jurisdiction Decision”), and the other one on 20 May 2015 (“Receivership Decision”). 

8.  The salient facts have been set out in the Jurisdiction Decision.  I shall adopt the abbreviations in the Jurisdiction Decision, unless otherwise indicated.

9.  Ps’ primary claim is an “ownership claim” in respect of the shares in CSI held by D1 on trust for them individually.  In addition, there was also a “corporate misconduct claim” by Ps against D1. Under the Jurisdiction Decision, D1 was successful in setting aside the leave granted to Ps for substituted service and the leave for service out of jurisdiction in respect of the “corporate misconduct claim”, but not the “ownership claim”. Thereafter, under the Receivership Decision, Ps were granted, among other things, an order for appointment of interim receivers in respect of the relevant shares in CSI. 

10.  Ps were employees in a state-owned enterprise Jinan Shanshui under PRC laws and were said to have contributed, under a stock ownership scheme of Jinan Shanshui, to the capital of a new company set up in PRC in August 2001, Jinan Innovation, for the purpose of taking over part of the business and assets of Jinan Shanshui.  Jinan Innovation was later renamed as Shandong Shanshui.  Through certain re-structuring, Ps’ ownership of the shares in Shandong Shanshui was converted into shareholding in CSI.

11.  CSI is a company incorporated in Hong Kong, which currently holds 25.09% of the shareholding in China Shanshui Cement Group Company Limited (“CSC”), a Cayman company listed in Hong Kong (stock code 691).

12.  It is Ps’ case that whilst previously 161,902 shares in CSI were similarly held by Li on trust for the employees as D1, those shares were later transferred from Li to D1 without their consent/knowledge.

13.  It is not disputed that 456,325 shares in CSI are held by D1 as trustee for Ps.  As seen in the Receivership Decision, D1 does not assert any absolute beneficial interest in these CSI shares[1].

14.  It is Ps’ claim that there was breach of trust on the part of D1, and that without the consent of Ps, D1 and Li wrongfully placed those shares beneficially owned by Ps into two BVI discretionary trusts, as a result of which Ps’ equitable interest in the shares in CSI was converted into a mere hope/expectancy under the BVI Trusts[2].

15.  As seen further in the Receivership Decision, G Lam J had considered that there were “exceptional” circumstances, ie there was evidence of breach of the trust on the part of D1 and of oppression exerted upon Ps by D1[3].  As a result, the Learned Judge appointed Messra Stephen Liu, David Yen and Sammy Koo of Ernst & Young as the Receivers over 432.861 shares (43.3%) in CSI registered under the name of D1[4]

16.  Subsequently, on 14 July 2015, Queeny Au-Yeung J further appointed the Receivers over 23,464 shares (ie 2.35%) in CSI in HCA 1564/2015, one of the 6 Actions.

17.  The Intervention Summonses were issued under Order 15 rule 6(2)(b) of the Rules of the High Court (RHC) and under the inherent jurisdiction of the court.

General Legal Principles on Jointer/Intervention

18.  As stated in the case of The University of Hong Kong v Hong Kong Commercial Broadcasting Co Ltd (unrep) HCMP 2801/2015, 30.11.15, the starting point is that in any private law action, a plaintiff/applicant is prima facie entitled to choose the persons against whom to proceed, and that he cannot be compelled to proceed against other persons whom he has no desire to sue[5].

19.  In the University case, the ex parte injunction initially granted between the University and the 1^st defendant was discharged by consent, and the action against the 1^st defendant was discontinued on certain undertakings.  The action then continued solely as against the 2^nd defendant who were person or person unknown.  At the first return date of the injunction, various persons had sought to take part in the proceedings either seeking to intervene or to be joined as a defendant.

20.  As pointed out by G Lam J, the question of joinder of parties, whether as an additional defendant or as intervener, is generally governed by Order 15 rule 6 of RHC, and that Order 15 rule 6(2)(b) requires some interest in the matter by the would-be intervener which is directly related to the subject matter of the action, and a mere commercial interest in its outcome divorced from the subject matter of the action is not enough[6].

21.  In that case, eventually, the Learned Judge considered only two joinder applications, one by the Hong Kong Journalists Association, to be “live” in the further conduct and the trial of the action.  He was of the view that neither of them came within Order 15 rule 6(2)(b).  The Learned Judge, however, said the arguments at trial would likely to concern competing public interests and the proper balance between them, and that the court would likely to be assisted by arguments on both sides.  He then exercised the court’s inherent jurisdiction and directed that one of the intended joinders, the Hong Kong Journalists Association, be permitted to take part in the trial of the action to the extent of being served with the relevant papers and making submissions to the court.

22.  As said by DHCJ Hartmann, as he then was, in Chong Kai Man v Kwan Yau Hang & Ors HCA 1298/2011, unreported, 30/09/11, the fundamental purpose of Order 15, rule 6 and the inherent jurisdiction is to ensure that, on the one hand, there is no proliferation of actions arising out of a single cause and at the same time, to ensure that an action brought by a plaintiff should not be overburdened by the adding of layers of a dispute, thereby turning a clearly defined cause of action into something far greater and, in practice, amorphous[7].

23.  Further, the then DHCJ Hartmann had said that in determining an application for joinder/leave to intervene, a balance must be struck between a plaintiff and the intended intervener as to their proposed interests, it being remembered that a plaintiff should not have to be vexed against his or its will by having to face more than one opponent at trial, thus adding to the time and expense of action[8].

24.  Order 15 rule 6(2) states as follows:

“(2) Subject to the provision of this rule, at any stage of the proceedings in any cause or matter the Court may on such terms as it thinks just and either of its own motion or on application-

(a) order any person who has been improperly or unnecessarily made a party or who has for any reason ceased to be a proper or necessary party, to cease to be a party;

(b) order any of the following persons to be added as a party, namely-

(i) any person who ought to have been joined as a party or whose presence before the Court is necessary to ensure that all mattes in dispute in the cause or matter may be effectually and completely determined and adjudicated upon, or

(ii) any person between whom and any party to the cause or matter there may exist a question or issue arising out of or relating to or connected with any relief or remedy claimed in the cause or matter which in the opinion of the Court it would be just and convenient to determine as between him and that party as well as between the parties to the cause or matter.”

25.  P’s Senior Counsel Ms Eu referred to a number of authorities in relation to Order 15 rule 6(2)(b)(ii), namely Building Authority v Appeal Tribunal (Buildings) and Real Estate Developers Association of Hong Kong (Intended Intervener) [2013] 3 HKC 79, Wong Chun Loong Tony v Ada Ltd [1991] 1 HKC 86, Re Farbenindustries AG Agreement [1944] 1 Ch 41, Sanders Lead Co Inc v Entores Metal Brokers Ltd [1984] 1 WLR 452, and Shanghai Land Holdings Ltd (in receivership) v Chau Ching Ngai [2005] 3 HKC 302.  These authorities demonstrated that, among others, in order to justify the leave for intervention, the burden is on the intended intervener to show that he possesses some legal interest which is in some way directly related to the subject matter of the action and a mere commercial interest would not be enough.

26.  It can also been seen in Gurtner v Circuit [1968] 2 QB 587 that a person can be allowed to intervene when he can show that he will in some way be compelled to foot the bill depending on the outcome of the action[9]. 

27.  Mr Siu did not really dispute the general legal principles set out in the above authorities in relation to application for intervention/ joinder under Order 15 rule 6 of the RHC but relied on two Australian cases to submit that D1 should also be allowed to participate to protect his reputation.  I will consider these cases later in this decision.

Whether the Striking Out Summonses needed to be served on D1

28.  Notwithstanding that the Intervention Summonses were stated to be issued under Order 15 rule 6 of RHC and the inherent jurisdiction of the court, Mr Siu had argued at the outset that the Intervention Summonses were not typical joinder applications pursuant to Order 15 rule 6 of RHC, in that D1 is already a party in the 6 Actions, and that the Striking Out Summonses should have been served on D1 and that D1 was seeking leave to participate in the hearing of the Striking Out Summonses and for consequential directions.

29.  Mr Siu referred the court to Order 32 rule 3 of RHC and submitted that a summons must be served on every other party, and that it is for Ps to justify their position of not serving the Striking Out Summonses on D1.

30.  Order 32 rule 3 states as follows:

“A summons asking only for the extension or abridgement of any period of time may be served on the day before the day specified in the summons for the hearing thereof but, except as aforesaid and unless the Court otherwise orders or any of these rules otherwise provides, a summons must be served on every other party not less than 2 clear days before the day so specified.”

31.  Ms Eu had however relied on Re Creehouse Ltd [1983] 1 WLR 77, a case which involved solicitors and their client.  In Creehouse, solicitors applied to withdraw from acting for their client in a chancery case. The application was served on their client but not on other parties to the chancery case.  After the court granted the application, one of the parties to the case sought to have the order set aside on the ground that they had not been served with the application to withdraw and hence not given the opportunity to attend the hearing of the application.  The English Court of Appeal held that although the relevant rule in the then Rules of Supreme Court, as in this case,  stipulated service on “every other party”, only such parties as were affected by the application, not every party in the case, needed to be served.  

32.  Templeman LJ had said:

“… when RSC Ord. 32, r.3 requires a summons to be “served on every other party not less than two clear days before the day so specified” it means, in my judgment, every other party to the summons, not necessarily every other party to the litigation in the course of which the summons is issued. If the relief sought by the summons does not affect certain parties to the litigation then there is no need to serve them, but if a party is served with a summons he must have two clear days’ notice[10].”

33.  Ms Eu further relied on the following passage from Lawton LJ in Creehouse:

“In my judgment, when Ord. 67, r. 6, is read as a whole, it is clear what is intended. The solicitor must serve his own client. … He must then bring the matter before the court. That is what they did. The application must be supported by an affidavit. Their application was so supported. The court then decides what shall be done. It is appropriate, so it seems to me, that this should be done without bringing the other parties into the matter at all, because in many cases the contents of the affidavit may reveal matters which are confidential between solicitor and client. A typical example is where the client feels that it would not be right for a solicitor to go on acting for him when the solicitor by his advice has shown that he has no confidence in the client’s case. Many clients in those circumstances feel that a change of solicitor would be to their advantage. That sort of information clearly ought not to be brought to the attention of the other side. It is true, as Mr. Brodie pointed out, that the court, in the exercise of its discretion, can always exclude confidential matter from the attention of another party to litigation if it is so minded. Nevertheless, the whole purport of this rule is to see what is the best thing to be done as between solicitor and client. There is really no room whatsoever for third parties to be brought in[11].”

34.  Ms Eu had also referred the court to Armco Inc and Others v NPV Limited and another,HCA 13168/1998, unreported, judgment 26/03/99, a case on D1’s list of authorities.  One of the applications before the court in Armco was an application by the 2^nd defendant therein to set aside an order called the NPV-Nevis Order, and the issue was whether that order should have been served on the 2^nd defendant under Order 32 rule 3 of the then RHC.  In that case DHCJ ZE Li followed  what was held by the English Court of Appeal in Re Creehouse Ltd [1983] 1 WLR 77 and held that the NPV-Nevis Order needed not be served on the 2^nd defendant.  In Armco, DHCJ ZE Li had in fact expressed the plain wisdom of what was held in Creehouse[12].  

35.  Further, as to whether D1 would be “affected” by the Striking Out Summonses and thus he should be allowed to intervene, it is noted that in Armco, the 2^nd defendant therein had argued that he would be an affected party.  However, DHCJ ZE Li accepted that the plaintiff’s Counsel’s analysis as compelling in that one should not take the word “affected” literally as parties and non-parties would be affected somehow one way or another, and that an affected party should be understood as a party or non-party to the case who had his legal right impinged upon, and that in Armco, although the 2^nd defendant therein might be prejudiced in the sense that he might suffer some adverse consequences but none of his rights had been impinged by the NPV-Nevis Order.

36.  I share the same view as the Learned Judge.

37.  As said in the University case, a plaintiff is prima facie entitled to choose the persons against whom to proceed.

38.  Following Armco and Creehouse, and also for reasons set out later in this decision, I am of the view that D1’s legal right is not impinged upon by the Striking Out Summonses and that the Striking Out Summonses need not be served on D1.  I also reject the argument that it is for Ps to justify their position of not serving the Striking Out Summonses on D1.

Order 15 rule 6 (2)(b)(i) – the 1^st Limb

39.  The issue under this limb is whether D1’s participation would assist the court in effectually and completely determine and adjudicate upon all matters in dispute in the Striking Out Summonses[13].

40.  According to D1’s draft 10^th affirmation, he came to know about there being the following allegations made against him by Ps/KLG in relation to the Striking Out Summonses through his solicitors Messrs Deacons, who were in turn informed by CWL :

(1) When KLG were in the course of meeting with some 2,700 Ps to sign engagement letters and confirmation letters in June/ July 2015 in Shandong in Mainland China, D1 had engaged rascals to disrupt one of the meetings.

(2) D1 had caused his staff to bully and pressurize Ps to withdraw their claims in the 6 Actions by threatening to terminate their employment, as a result of which some of the Ps had filed the Notices of Withdrawal.

(“Alleged Bullying Actions”)

41.  D1 denied the Alleged Bullying Actions.  Mr Siu had argued that CWL, the only counter-party to the Striking Out Summonses, would be in no position to give evidence to rebut these very serious allegations against D1.  It was D1’s case that neither CWL nor the Subject Ps could deal with these personal allegations against him on his behalf.

42.  Mr Siu further submitted that without hearing the evidence of D1, the court would not be able to determine whether Ps’ allegations were true, and whether the Alleged Bullying Actions could be relied on by Ps in the Striking Out Summonses. 

43.  It would appear that Ps had made earlier allegations against D1 of the same nature as the Alleged Bullying Acts and there had been references to such allegations in various judgments.

44.  Mr Gao Yang, one of the Ps in the 6 Actions, had prepared a draft 12^th Affirmation in opposition to D1’s Intervention Summonses.  He had referred to paragraphs in the Receivership Decision in which G Lam J had referred to a “grave and most disturbing matter”[14], namely  since the hearing before the Learned Judge on 1 April 2015, another solicitors firm Siao, Wen & Leung had claimed to be acting for 489 of Ps in the first 4 actions and had delivered pro forma letters said to have been signed by those 489 plaintiffs to KLG purporting to revoke KLG’s authority to act and asking for all proceedings to be terminated and withdrawn, and that subsequent investigation by KLG indicated that, among other things, some of the 489 plaintiffs had never heard of Siao, Wen & Leung and that some of them claimed they were forced by their superiors in the group to sign the pro forma letters.  Thereafter, 335 of the 489 Ps had since executed further written retainers confirming their instructions to KLG to continue to prosecute the actions.

45.  It further appeared in the Receivership Decision that D1 had in his draft 4^th affirmation stated that he himself did not force or threaten those 489 Ps and did not take any part in the matter of their signing revocation letters to KLG, and that as 335 of the Ps had since re-confirmed their instructions to KLG and 220 of those Ps had stated they had not authorized Siao, Wen & Leung, D1 had apparently also said that those were matters between those Ps and those solicitors’ firms on which he had no comment[15].

46.  In the Receivership Decision, G Lam J had in fact commented on D1’s then evidence before him, namely that there was no denial at all that some of the Ps had been bullied and threatened, and that D1 had not seen fit to inform the court whether he had tried to find out what had happened and if so his findings, and that all he said was that he did not personally exert any threat, he did not take any part, and that he declined to comment further[16].

47.  Thereafter, after G Lam J granted an order for receivership, in a decision of Queeny Au-Yeung J dated 23 July 2015 made in relation to an application by the Receivers, the Learned Judge had also referred to allegations of pressure having been put on Ps to withdraw their actions by D1 or his associates and that such pressure and bullying had intensified[17].

48.  Mr Gao also cited paragraphs from a judgment of DHCJ Seagroatt dated 9 October 2015 in which the Learned Judge had also considered and commented on the conduct of D1[18].

49.  In reply to what was said by Mr Gao, D1 pointed out in his draft 15^th affirmation that Queeny Au-Yeung J had also referred to evidence of coercion by Ps’ representatives to some of the withdrawing Ps, and that the Learned Judge had said that it was not for the court to weigh the truthfulness of each side’s story at this stage. Further, in relation to what was said by DHCJ Seagroatt, D1 said his application for leave to appeal was due to be heard on 26 January 2016, and D1 categorically denied any knowledge or involvement with any of the Alleged Bullying Actions, which he said had nothing to do with those paragraphs cited by Mr Gao from the judgment of DHCJ Seagroatt[19].

50.  In so far as I could see apart from a categorical denial to the Alleged Bullying Actions, D1 had not given other details.  Again, there was nothing to indicate as to whether D1 had tried to find out what had happened and if so his findings[20]. 

51.  I accept at this stage D1 had not yet been allowed to intervene in the Striking Out Summonses, but in my view the Alleged Bullying Acts, seen in the background of earlier allegations, were clearly not something new, but so far as I can see, there was no further evidence from D1 on the Alleged Bullying Actions apart from a simple denial that he had any knowledge or involvement.  There was nothing to indicate to this court that there would be any further useful evidence he could give to assist the court.

52.  So far as I could see, there is nothing to prevent CWL to either refer to D1’s 15^th affirmation at the hearing of the Striking Out Summons, or to arrange for an affirmation from D1 to be filed to support CWL’s case in the Striking Out Summonses, if such be deemed necessary.  

53.  It is for D1 to demonstrate as to why, if allowed to intervene, his presence before the court would assist the court in effectually and completely determine and adjudicate upon all matters in dispute in relation to the Striking Out Summons.  I am of the view that he has not been able to demonstrate this, and he is thus not able to satisfy Order 15 rule 6(b)(1).

Order 15 rule 6(2)(b)(ii)

54.  The issue under the 2^nd limb is whether there is a question or issue arising out of or relating to or connected with the relief sought in the Striking Out Summonses between Ps and D1[21].

55.  The sole subject matter of the Striking Out Summonses is whether CWL have authority to act for the Subject Ps and the Subject Ps’ legal representation.  There is no relief sought in the Striking Out Summonses against D1. 

56.  Further, the Striking Out Summonses are said to be premised upon, among other things, whether CWL’s purported representations have been in breach of the Guide to Professional Conduct of the Law Society of Hong Kong, in particular Guide 5.11 and 5.4[22]. 

57.  Mr Siu accepted that Guide 5.11 would not be relevant to D1, but submitted that Guide 5.4 would be by reason of the Alleged Bullying Actions.

58.  Guide 5.4 states that “A solicitor must not continue to act where he suspects after reasonable enquiry that his instructions have been given by a client under duress or undue influence”. 

59.  With respect, I am unable to see why this would be relevant to D1, as in my view, the issue under Guide No 5.4 is whether CWL has conducted enquiry and whether CWL would have any suspicion after reasonable enquiry. 

60.  Mr Siu submitted that there had been very serious allegations made against D1 which would impeach upon the integrity of D1.  If the court hearing the Striking Out Summonses makes adverse findings against D1 (and D1 has no opportunity to rebut them), such findings would impact on subsequent hearings in the 6 Actions.  In short, what Mr Siu was submitting was that any findings on the conduct of D1 would have serious ramifications on the subsequent development of the 6 Actions, and that D1 should be allowed to rebut those allegations against him at the hearing of the Striking Out Summonses.

61.  It is unlikely that any court would make findings of fact at an interlocutory stage without oral evidence or cross examination.  In any event, as pointed out by Ms Eu, irrespective of any view or decision involving D1’s conduct regarding the Striking Out Summonses, this would not be binding on D1, if he is not privy to the application.

62.  Mr Siu had also argued that D1 should be entitled to participate in the hearing of the Striking Out Summonses to protect his reputation.  He had referred the court to 2 Australian decisions.

63.  In the more recent case of VBN v Australian Prudential Regulation Authority (2005) 44 AAR 192, it was held that a trustee can join in the proceedings as it has an interest in maintaining its reputation, and the findings of the tribunal may have adverse reflection on its reputation[23].

64.  As pointed by Ms Eu, the application for joinder in VBN was made pursuant to s 27(1) of the Administrative Appeals Tribunal Act 1975 (Cth) which contained the specific words “whose interests are affected by the decision”[24].  The Deputy President of the Tribunal set out the considerations on what is meant by those words, in relation to s 27(1), namely that, among other things, the interest must be a “sufficient interest” in the proceeding and more than a general interest, but the necessary interest need not be a legal, proprietary, financial or other tangible interest[25].  

65.  I am of the view that VBN can be distinguished from the present case as the considerations therein were in connection with a particular statutory provision, which wording is different from our Order 15 rule 6 (2) (b).

66.  As for Mam v Delaney and Another (1994) 53 FCR 481, this was a case which concerned election for a zone representative under the Aboriginal and Torres Strait Islander Commission Act 1989.  After the election, the petitioner Mam petitioned under the Act for, among others, orders declaring that the first respondent Delaney was not duly elected. The Australian Electoral Commission was given leave to appear on the petition.  Mr Watson, one of the candidates for the election, sought leave to be joined as a party to be heard.  Neither Mam nor Delaney objected, and only the Commission opposed.

67.  The court dismissed Mr Watson’s application for joinder, although earlier without having formally ruled on Mr Watson’s application for leave for joinder, he was given the opportunity to make substantive submissions by his counsel on the issues raised in the petition at the hearing. 

68.  The court held that Mr Watson was not a necessary party to the proceedings and that no allegation was made against him in the proceedings the determination of which could adversely affect his reputation or any right or interest he held, and in this sense his presence was neither necessary nor desirable as a party.[26] 

69.  Ms Eu pointed out that the court also held in Mam that there was no inherent power in the court to allow Mr Watson to intervene, and D1 should not be allowed to rely on one part of the judgment and not another.  Anyway, what the court held in Mam would not in my view necessarily support the corollary, namely that if there were allegations the determination of which could adversely affect the reputation of Mr Watson, then his joinder application would have been allowed.  In any event, as I have said earlier, there is unlikely going to be a “determination” or finding of the factual allegations of the Alleged Bullying Acts against D1 at an interlocutory stage.  Any determination of whether CWL had authority to act for the Subject Ps in the Striking Out Summons would not in my view adversely affect D1’s reputation.

70.  I am thus of the view that neither VBN or Mam really assists D1.

71.  It is also D1’s case that he has other interest in the Striking Out Summonses, and that it is in the legitimate interest of D1 that fewer Ps are bringing claims against him.  Thus, when certain Ps have filed notices of withdrawals, which are challenged by other Ps, D1 is entitled to make submissions as to why such filing of notices is legally valid.

72.  The validity of the notices of withdrawals depends on whether CWL had/have authority to act for the Subject Ps, and this is a matter of Ps’ legal representation, and in my view, no concern of D1.

73.  The fact that D1 is the only active defendant in the 6 Actions is again either here nor there, as the dispute in the Striking Out Summons is essentially one between CWL and KLG, which has nothing to do with D1.

74.  D1 also claimed in his draft 10^th affirmation that as Ps/KLG had made serious allegations against him, he should have a legal right to be heard under Article 10 of the Bill of Rights Ordinance and Article 35 of the Basic Law.

75.  As seen from those authorities referred to the court by Ms Eu, the test for granting joinder/leave to intervene does not depend upon whether a serious allegation has been made against a person, and that the test for Order 15 rule 6(2)(b)(ii) remains whether D1 can demonstrate a legal interest directly related to the subject matter of the Striking-out Summonses.  I accept Ms Eu’s submission that if D1 fails to demonstrate such legal interest, he cannot intervene, and there is no question of any breach of natural justice or denial of D1’s right to be heard.

76.  Further, as pointed out by Ms Eu, even if the allegation of oppression were to become relevant in the resolution of the Striking-out Summonses, there is no reason why D1 should be allowed to intervene as a party to the Striking-out Summonses, for CWL can always apply to call D1 as a witness[27].

77.  It is D1’s contention that the Striking Out Summonses do not concern merely legal representation, as the Subject Ps’ shares are currently under receivership, and if the Subject Ps did withdraw their claims, their shares would be transferred from the Receivers to D1 as trustee of the shares.  Thus, it is D1’s case that he would be affected and that his right would be impinged by the Striking Out Summonses.  In this respect, he relied on the Armco case.

78.  The order for receivership was made on 20 May 2013, prior to the CWL Notices were filed. As pointed out by Ms Eu which I accept, if D1 has any claims for the Subject Ps’ shares from the Receivers, this should be resolved after the resolution of the Striking Out Summonses in any subsequent applications that D1 makes in the main proceedings, rather than in the Striking Out Summonses.  I am of the view that D1 would not be affected by the determination of the Striking Out Summons in the sense that his legal right would not be impinged upon by such determination.

79.  In any event, having considered D1’s evidence, I am not satisfied that he possesses any legal interest which is directly related to the subject matter of the Striking Out Summonses, or that he falls within Order 15 rule 6(2)(b)(ii).

Inherent Jurisdiction

80.  D1 has also relied on the court’s inherent jurisdiction if the court is to come to the view that the Intervention Summonses do not fall within either limb of Order 15 rule 6(2).

81.  In the University case, the Learned Judge has considered various factors, including that the arguments at trial are likely to concern competing public interests and the proper balance between them, the issues are relatively novel in Hong Kong and that the only defendant remaining being “Unknown Person”, the court is likely to be assisted by arguments on both sides.  It was in that context that the Learned Judge in the end exercised his discretion under inherent jurisdiction to direct that the Hong Kong Journalists Association be permitted to take part in the trial of the action to the extent of being served with the relevant papers and making submissions to the court[28].

82.  The present matter does not involve any public interest.  D1 has said that Ps’ Striking Out Summonses is misconceived and bad in law, and that his counsel will make legal submissions, if allowed to intervene, to assist the court to reach a fair disposal of Ps’ application[29]. No doubt, CWL’s own counsel will be making their own legal submissions in this respect.  What D1 said is not sufficient to justify the grant of leave to D1 to intervene.  I see no other reason to justify granting such leave.

Privilege

83.  Ps had raised against D1’s participation in the Striking Out Summonses on the ground that if allowed to intervene, D1 would be granted access to privileged information.   

84.  As the subject matter of the Striking Out Summonses concerns legal representation of Ps, I do not agree with Mr Siu that Ps’ concerns over privilege are “misplaced” or “a very farfetched speculation”.

85.  Mr Siu, however, pointed out that once privileged information has been relied on or deployed in Court, there is a waiver of privilege (including documents in the hearing bundle but not read out or referred to in court).  In this respect, he referred the court to passages in Thanki: The Law of Privilege (2^nd Ed 2011)[30] and Passmore: Privilege (3^rd Ed 2013).  It was his submission that if the affirmations filed on behalf of Ps contained any privileged information as alleged, there had already a waiver of privilege, as the direction hearing before Master H Au-Yeung was open to public.

86.  It appears from the preamble of the order that Master H Au-Yeung had read the affirmations filed on Ps’ behalf[31], and that any privileged information as contained in those affirmations may have been waived.

87.  Ms Eu submitted that even if privilege in those affirmations placed before Master Au-Yeung had been waived, this would not mean that privilege in any further evidence to be filed would be waived.  CWL have not yet filed their affirmation/s in opposition to the Striking Out Summonses, and there may be affirmation/s in reply filed by Ps, which may contained privileged information. 

88.  Mr Siu said this is speculation as to what is going to happen in the future.

89.  Due to the subject matter of the Striking Out Summonses, I am, however, unable to rule out any possibility that there may be privileged information/documents produced in reply to CWL’s affirmation/s in opposition.

Conclusion

90.  As I have said earlier, D1 has not been able to satisfy the court that he comes within either limb of Order 15 rule 6(2)(b) or that the court should exercise any inherent jurisdiction in his favour.  To allow D1 to intervene will be overburdening the Striking Out Summonses by adding further layers of dispute and unnecessarily complicating the issues.  Having considered the parties’ submissions, and balancing all the factors, I am not satisfied that this court should exercise its discretion to allow D1 to intervene in the Striking Out Summonses.

91.  I dismiss the Intervention Summonses.   I order that costs to be paid by D1 to Ps forthwith, with certificate for 2 counsel, to be taxed if not agreed.  This is an order nisi which will be made final after 21 days.

92.  As for directions for the Striking Out Summonses, Counsel for the Interested Party CWL, Mr Ryan Law, has submitted a list of proposed directions.  Although I indicated that I would fix a 9:30 am direction hearing for the Striking Out Summonses, I understand that G Lam J has in fact been assigned the docket judge for the 6 Actions.  I therefore direct Ps to fix a 30 minute directions hearing before G Lam J.