FONG WING SENG v. SHAHAAN SAKALIN AND OTHERS

HCA 1390/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1390 OF 2013

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D E C I S I O N
(Variation of Costs Order Nisi)

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1. The main action concerns the beneficial ownership and occupation of an office premise (“Property”).  On 23 September 2013, this court handed down a judgment (“23.09.13 Judgment”) granting the Injunction Order sought by P against D3 and D4, retraining them from, among other things, acting as directors of Mega Grade, the 5^th defendant and registered owner of the Property.

2. Further, on 22 July 2014, this court handed down another judgment dismissing D3’s summons (“Summons”) for, among other things, P and / or his agents and/or servants to be forbidden to enter and / or required to vacate the Property (“22.07.14 Judgment”), and ordered D3, on a nisi basis, to pay P the costs of the Summons, such costs to be summarily assessed and paid forthwith (“Order Nisi”).

3. D3 took out the present application to vary the Order Nisi and asked for costs of her summons to be reserved to be determined until the outcome of the trial.

4. I have set out in the two judgments the background leading to the dispute between the parties which I will not repeat here.  As set out in the 22.07.14 Judgment, the issues in the main action, in so far as I can make out, are:

(i) Whether D1 held / holds any of his shares in Mega Grade on trust for P and D2, and if so, the extent of P’s beneficial interest in Mega Grade;

(ii) Whether Mega Grade had granted P a right to occupy the Property exclusively subject to P paying all upkeep and outgoings, and if so, whether P had in fact been conducting business at or otherwise occupying the Property;

(iii) Whether D3 and D4 were validly appointed as directors of Mega Grade.

5. It was not disputed that D3 and D4 held no beneficial interest in Mega Grade and were nominee directors.  As I have said in the 23.09.13 Judgment, according to D3, she was a nominee director for her brother WTC, and D4 appeared to be a nominee director for WTC / the Wan family.  The issue was whether they had ever been validly appointed as directors under Article 7 of the Articles of Association of Mega Grade.

6. As I have also mentioned in the 23.09.13 Judgment, the Wan family seemed to become involved with Mega Grade in about 2003 / 2004 as a result of an Alleged Loan Agreement.  The present available evidence before this court would indicate that D3 and D4 had no connection with D1 or D2 or that they even knew D1 or D2. 

7. It was accepted by D3’s Counsel Ms Herbert that D3 or D4 would not have a cause of action in their personal / individual capacity, and she submitted that D3 took out the Summons in her capacity as director of Mega Grade.  However, under the 23.09.13 Judgment, D3 had been restrained from acting as director of Mega Grade.  Anyway, the Summons was clearly issued by D3 in her personal capacity and not as director or otherwise on behalf of Mega Grade.

8. As it was D3 who took out the Summons, the burden was on her to satisfy this court that she had the capacity / locus standi to issue the Summons, and in the 22.07.14 Judgment, I accepted P’s Counsel Mr Chong’s submissions that D3 did not have such capacity.

9. Since the 23.09.13 Judgment, D1 had been served out of jurisdiction, and he had filed a brief defence acting in person, claiming that he was / is the 100% equitable and beneficial owner of Mega Grade, and that he had never authorized and / or allowed any one to enter, possess, lease, sub-lease, mortgage and / or assign any interest of the Property.

10. D2 had also been served and had filed a defence in person and his case was that he had no beneficial interest in Mega Grade at all, and that there was no trust relationship between him and P and D1.

11. No matter how void of particulars D1’s defence was, D1’s case clearly contradicted P’s case.  Further, D2’s case also did not lend any support to P’s case.  Ultimately, if P were not able to prove that he was / is a beneficial owner of Mega Grade / the Property or that he had been granted a right by Mega Grade to occupy the Property, P would not have any capacity to bring the present action in the first place.

12. Having considered all the above and both Counsel’s submissions, I have come to the view that a fairer order for costs of the Summons including any reserved costs on 4 December 2013 and the costs hearing should be P’s costs in the cause.  I will thus exercise my direction and vary the Order Nisi accordingly.