KOMAL PATEL AND OTHERS v. CHRIS AU AND OTHERS

HCMP 1959/2015

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO. 1959 OF 2015

(ON AN INTENDED APPEAL FROM HCA NO. 183 OF 2014)

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JUDGMENT
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Hon Lam VP (giving the Judgment of the Court):

1.  This is the 3^rd Defendant’s application for leave to appeal against the decision of Zervos J [‘the Judge”] on 7 July 2015 refusing to vary the injunction granted against it. The Judge refused leave on 6 August 2015. The trial of the case before the Judge shall commence on 9 September 2015. Counsel for the 3^rd Defendant asked this court to deal with the matter on an expedited basis as the 3^rd Defendant could not engage lawyers for the trial without funds to be released from the assets frozen by the injunction.

2.  However, as submitted by solicitor for the Plaintiffs in the letter of 17 August 2015 (which for all intent and purposes can be treated as a statement of opposition), the focus of the application before the Judge was not to seek funds for payment of the lawyers at the trial. 

3.  Having read the pleadings and the judgments of the Judge (including his earlier judgment of 11 July 2014), it appears to us that the real protagonists in this action are the 1^st Defendant and the Plaintiffs.  The present application was made however by the 3^rd Defendant which was simply a corporate vehicle used by these protagonists for their business purposes.  Mr Clark had not advanced any submission to show why in the present circumstances it is in the interest of the 3^rd Defendant to take an active role in the trial.  Bearing in mind the approach in Re Crossmore Electrical and Civil Engineering Ltd (1989) 5 BCC 37 and Core Pacific-Yamachi International v Yuanta Securities Asia Financial Services Ltd HCMP 3231 of 2003, 17 October 2003, and given that the Plaintiffs had already offered on 30 July 2015 to underwrite the costs of a firm to be appointed jointly by its directors to adopt a neutral stance in the action, we do not accept that the need for funds to have proper legal representation for the 3^rd Defendant at the trial as the justification for the intended appeal.

4.  We are also of the view that, regrettably, the application is not made in good faith.  As submitted by the solicitor for the Plaintiffs, the real objective of getting a variation of the injunction was to use the assets of the 3^rd Defendant to cover past legal expenses incurred when the lawyers were acting for the benefit of the 1^st Defendant and/or the 2^nd Defendant, see paragraph 12 of the judgment of 6 August 2015.  There was no disclosure as to the means of the 1^st and 2^nd Defendants to pay for such legal fees. 

5.  Further, we are of the view that the intended appeal is wholly devoid of merits.  In alleging that the Judge erred in failing to cap the injunction at the 3^rd Defendant’s reckoning of the monetary limits of the claims, Mr Clark had failed (as the Judge pointed out in his judgment of 7 July 2015) to take account of the full extent of the Plaintiffs’ claims. 

6.  In the circumstances of the present case, we do not think it is reasonably arguable to suggest that the Judge was wrong to preserve the whole of the assets of the 3^rd Defendant in the wake of the disputes between the protagonists.

7.  In light of our comments on the proper role of the 3^rd Defendant in this action, the arguments of Mr Clark on the lack of provision for legal fees of the 3^rd Defendant do not have any reasonable prospect of success.

8.  For these reasons, though we do not see the justification for urgency, we are able to dispose of the application for leave.  Bearing in mind the history of the matter, it is also in the interest of all the parties that we should make a determination on the application here and now though the time for the Plaintiffs to file the statement of opposition has not expired.  We do not find the intended appeal to be reasonably arguable, nor do we see scope for granting leave in the interest of justice, we refuse to grant leave.  We are also of the view that the application is totally without merit.  Pursuant to Order 59 Rule 2A(8), the Rules of the High Court, we make an order that no party may request our refusal of leave to be reconsidered at an oral hearing inter partes.

9.  As we said the application is wholly without merit and not made in good faith.  We agree with solicitor for the Plaintiffs that the application smacks of a collateral strategy to derail the trial.  We order the 3^rd Defendant to pay costs to the Plaintiffs in this action on indemnity basis.  We provisionally fix such costs at $40,000 in view of the urgent compilation of the documents and the preparation of the letter of 17 August 2015.  Either party may request within 5 days by written submissions (not more than 3 pages) for such assessment of costs to be reviewed on paper.