KWOK HIU KWAN v. CONVOY GLOBAL HOLDINGS LTD

HCMP 1578/2020

[2020] HKCFI 2874

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 1578 OF 2020

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BETWEEN

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J U D G M E N T

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A. Introduction

1.  These proceedings were commenced by the plaintiff (“Kwok”) by originating summons dated 28 September 2020.  The matter now before the Court arises on Kwok’s application made by inter partes summons dated 20 October 2020 (“Summons”).  Against the chronology of events, which I will set out below, directions were given on 23 October 2020 providing for a tight timetable for the filing of evidence and submissions for the substantive hearing.

2.  Despite there being only 22 days between the date of the Summons and the date fixed for the substantive hearing, the parties have somehow thought it fit and appropriate to generate and to provide the Court with 22 lever arch files of pleadings, affidavits and exhibits. As it happens, relatively little reference was made to the vast majority of that material in either the written or oral submissions.  This is because the main battleground is essentially one of the correct legal approach to the factual situation that has arisen.

3.  To that end, I have also had the benefit of written skeleton submissions, and a combined [four] volumes of photocopies of legal authorities, from Counsel for the parties.  Kwok is represented by Mr Johnny Mok SC, leading Ms Frances Lok.  The defendant company, Convoy Global Holdings Ltd (“Convoy”), is represented by Mr William Wong SC, leading Mr Christopher Chain and Mr Lai Chun Ho.

4.  These proceedings arise in the context of the ongoing various litigation relating to Convoy.  I will necessarily set out some of that context below.

5.  Put shortly, Kwok’s application is for Convoy to be restrained, however it acts, from interfering with, obstructing, abating, disregarding or otherwise prejudicing the exercise over 4,468,184,000 shares in Convoy (“Kwok Shares”) held by or under the control of Kwok.  The restraint is sought in particular in relation to an extraordinary general meeting of Convoy (“2020 EGM”) scheduled to be convened at 6pm on Thursday, 26 November 2020.  The restraint is sought to prevent any denial or frustration of Kwok’s right to vote the Kwok Shares, and to have those votes counted, at the 2020 EGM.  It is Kwok who has requisitioned the 2020 EGM.

6.  The application is characterised by Mr Mok as a quia timet injunction application.

B. Some Context

7.  Convoy is a Cayman Islands company, formerly listed on the Main Board of the Hong Kong Stock Exchange.

8.  Kwok is the registered owner of 29.91% of the issued shares of Convoy, ie. the Kwok Shares.

9.  In other proceedings, HCA 2922/2017 (“Main Action”), Convoy and two other group companies as plaintiffs allege that certain shares allotted by Convoy in October 2015 were void or voidable. Of the now 41 defendants in the Main Action, Kwok is named as the 27^th defendant.

10.  The plaintiffs in the Main Action allege that the Convoy shares that Kwok purchased from the open market via CCASS can be traced from the disputed allotment, and ought to be rescinded as being null and void or invalid.  It is alleged that following a raid conducted on Convoy’s offices by the SFC in June 2017, Kwok knowingly acquired the Kwok Shares from associates, nominees, and/or agents of Roy Cho in July to October 2017. It is said that although the Kwok Shares were acquired from the open market, there were matching buy and sell orders whereby Kwok’s acquisitions were matched with a co-ordinated disposal by Roy Cho’s associates, nominees, and/or agents (reflected inter alia by the unusual availability of a controlling stake, unusually high trading volumes, and minimal fluctuations in price).

11.  The starting point of the claim is the allegation that over several years up to 2017, a wrongdoer and fraudster called Roy Cho wrongfully and illicitly acquired and maintained secret ownership in and control over Convoy.  In a recent Court of Appeal Decision, in CACV 197/2020 [2020] HKCA 537, a description of the main underlying premise for all the claims of the plaintiff Company subsidiary in that action was given as that:

... Roy Cho exercised control and acquired ownership in Convoy through appointment of his associates, nominees and/or agents to occupy key positions in Convoy without himself holding a formal position. Through such secret control and ownership, he was able to commit the serious wrongs complained of, which in many respects involved manipulations of the corporate affairs of Convoy and other listed companies in a dishonest manner. As can be seen from the summary above, the scale of these wrongdoings is very substantial and sophisticated. Most of them were carried out through complicated schemes with dishonesty and fraud practised not only against Convoy or CCL, but also the other shareholders of the listed companies involved. In our judgment, the concealment of a person’s actual ownership and control over the affairs of a listed company in the manner that Roy Cho allegedly did in order to evade one’s fiduciary obligations to listed companies and site-step compliance with the rules imposed by regulatory authorities designed for the protection of the general investing public is a serious form of dishonest deception.

12.  The plaintiffs in the Main Action seek various declarations and injunctions so as to restrain Kwok from exercising the voting rights of, or transferring or otherwise dealing with his interest in, the Kwok Shares.  But, it is to be noted that Convoy has never sought an interim injunction in the Main Action or in any other action.

13.  In October 2017, Kwok requisitioned for an EGM to be held by Convoy to reconstitute its board of directors (“Board”).  In November 2017, Convoy gave notice that an EGM would be convened on 29 December 2017 (“2017 EGM”).

14.  On 7 December 2017, the trading of Convoy’s shares was suddenly suspended.  Trading has never resumed.  On 8 December 2017, Convoy announced that three of its executive directors (including its then Chairman) were arrested by the ICAC.  Various new appointments were made to the Board, including the current Chairman, Mr Johnny Chen (“Johnny Chen”).

15.  Kwok refused a request by Convoy to withdraw his requisition for the 2017 EGM, made on or around 18 December 2017.  On the same day, Convoy and two of its subsidiaries commenced the Main Action.  It might be noted that since the inception of the Main Action, Convoy is now alleging that 47.93% (as opposed to the originally pleaded 26.7%) of its total issued shares, namely 7,160,300,000 shares, allotted in the 2015 Allotment are null, void, invalid and/or rescinded.

16.  The 2017 EGM as requisitioned by Kwok took place on 29 December 2017 as scheduled.  Article 63 of Convoy’s Amended and Restated Articles (“Articles”) provides that the chairman of Convoy shall preside as chairman at every general meeting.  The 2017 EGM was chaired by Johnny Chen, then Interim Chairman of Convoy’s Board who was appointed on 9 December 2017.  Kwok gave his proxies for the 2017 EGM which were accepted by Convoy and counted as part of the quorum of that meeting. But, following a Mr Lam’s objection to Kwok’s voting right, citing the legal actions against him to allege that the Kwok Shares were “problematic”, Johnny Chen relied on Article 74 of the Articles to decided to exclude all of Kwok’s votes in respect of his 4,468,182,000 shares cast in that meeting. If Kwok’s shares votes had been counted, the proposed resolutions would have been passed (resulting in the removal of, among others, Roy Cho, NWF and Mr Chen from the Board).

17.  On 11 January 2018, Kwok commenced HCMP 41/2018 to set aside Johnny Chen’s decision made in the 2017 EGM and to have his 4,468,182,000 votes counted.  Harris J dismissed Kwok’s application in for a declaration that Johnny Chen’s decision was unlawful, void and of no legal effect.  He held that (1) the EGM chairman has the power under Article 74, in the meeting, to rule on a substantive objection to a registered member’s voting right and make a decision to disallow his votes; (2) the EGM chairman’s decision under Article 74 is final and conclusive; (3) so that the decision can be subsequently overturned in a court of law only if it is proved that the chairman made the decision in bad faith, that is, dishonestly, or for ulterior motive; (4) otherwise, the chairman’s decision once made cannot be subsequently overturned in a court of law even if it was wrong as a matter of law, irrational, or Wednesbury unreasonable.

18.  That ruling is subject to an application for leave to appeal which has yet to be heard.  But there is another appeal, which will be heard by the Court of Appeal on 17 and 18 November 2020, against a further decision of Harris J given on 20 March 2020 after trial.  In that decision, Harris J rejected any allegation that Johnny Chen’s decision was made in bad faith, and declined to imply a term to include qualifications to the operation of Article 74 as put forward by Kwok.

19.  I shall return to the two decisions of Harris J later in this Judgment.

20.  As earlier noted, suspension of trading in Convoy’s shares occurred on 7 December 2017.  No annual general meeting has been convened since then, and no financial results or annual reports have been published since 2017.

21.  On 22 March 2018, the Stock Exchange imposed conditions for the resumption of trading in Convoy’s shares.  The conditions included that there should be (a) disclosure of irregularities; (b) demonstration of adequate internal control systems; (c) no regulatory concern about management integrity; (d) publication of outstanding financial results) and (e) provision to the market of any material information.

22.  On 24 August 2018, Convoy and a subsidiary commenced HCA 2000/2018 against Kwok (as 1^st defendant). Convoy claimed for declarations that Kwok contravened section 131 of the Securities and Futures Ordinance Cap 571, and a final injunction prohibiting the Plaintiff from exercising the voting rights in his shares.  In my Decision of 10 July 2020, [2020] HKCFI 1496, I struck out the action.  That ruling is also subject to an appeal, but no hearing date has yet been fixed.

23.  By mid-2020, none of the conditions for the resumption of trading in Convoy’s shares, as imposed by the Stock Exchange more than two years beforehand, had been satisfied.  Therefore, on 5 June 2020 the Listing Committee of the Stock Exchange publicly announced its decision to delist Convoy’s shares, on the ground of its failure to have complied with those conditions for resumption of trading.

24.  On 28 September 2020, Kwok again requisitioned for an EGM to be convened by Convoy for the purpose of reconstituting the Board.  On the same day, he also started these proceedings.

25.  On 6 October 2020, Kwok wrote to Convoy’s Board to request a confirmation in writing that (1) the requisitioned EGM would be convened by the Board, and (2) Convoy would not, pending the resolution of this Action, whether by itself, its directors, chairman and other officers, agents and servants or otherwise howsoever, interfere with, obstruct, abate, disregard or howsoever prejudice the exercise of rights over the Plaintiff’s shares in respect of the requisitioned EGM, including the rights to attend and to vote at such meeting, and to have the votes of the Plaintiff’s shares counted, in the absence of an appropriate declaration against the Plaintiff made by a competent court or any court order restraining the Plaintiff and his agents from exercising their respective rights as shareholders of Convoy.

26.  Convoy did not reply. However, on 18 October 2020, Convoy issued a Notice (signed off by Johnny Chen) that the 2020 EGM will be convened on 26 November 2020.

27.  On 19 October 2020, Convoy filed a summons to strike out this Action.  That application has not yet been fixed for substantive argument.  The first call-over hearing is listed for 11 December 2020.

28.  Kwok says that in light of what happened in the 2017 EGM and Convoy’s reaction to this Action, it is clear that Convoy maintains its position that Kwok is not entitled to vote his shares in Convoy, and it will again disregard his rights as a shareholder in the 2020 EGM.  So, on 21 October 2020, Kwok issued the Summons to take out the present application.

C. The Relief Sought

29.  The originating summons seeks the determination of the Court on the questions set out in Part I of it, and to claim the relief set out in Part II.

30.  The question asked to be determined is (italics in original):

Whether, in the absence of an appropriate declaration made by a competent court against [Kwok] or any court order restraining them from so doing, [Kwok] as a duly registered holder of 1,500,000,000 ordinary shares and his Agent, a brokerage firm holding 2,968,182,000 ordinary shares through CCASS on [Kwok’s] behalf in the capital of [Convoy], are entitled to exercise their respective rights as shareholders of [Convoy] and [Convoy] (whether by itself, its directors, chairman and other officers, agents and servants or otherwise howsoever) are entitled to disregard all refused to give effect to (i) the status of [Kwok] and his agent as shareholders of [Convoy]; or (ii) the exercise of rights over the shares respectively of [Kwok] and his Agent, including but not limited to the right to receive dividends, the right to attend the general meetings of [Convoy], the right to vote in such meetings and have the respective votes counted, as well is the right to receive information which a duly registered shareholder of [Convoy] is entitled to seek, on the basis that there is in existence legal proceedings in which allegations made against [Kwok] as regards the validity of the said shares (with the exception of the 2,000 ordinary shares purchased on 7 August 2020 by [Kwok]).

31.  The relief sought is essentially to prevent the Convoy acting in the way complained of, in the absence of an appropriate declaration made by a competent court against Kwok or any court order restraining them from doing so.  As will be seen, this condition of a prior court declaration or order is one key to the argument put forward by Mr Mok.

32.  The Summons seeks an interim injunction to the same effect.  In light of the fact that the 2020 EGM is scheduled to take place on 26 November 2020, just 14 days after the substantive hearing of the Summons, it might be thought that the Summons in effect seeks final relief.

33.  Though I shall return to the point later, it can be noted now that there is some force in Mr Wong’s submission that Kwok effectively seeks injunctive relief to be allowed definitely to vote the Kwok Shares at the 2020 EGM, unless Convoy first obtains an injunction against him.  Noting that Kwok has not applied for a direct injunction for Convoy to recognise his voting rights at the 2020 EGM, an inference is that Kwok wishes to circumvent considerations of finality and the high evidential threshold that would demand to be met.

D. The Evidence Filed

34.  Kwok filed an affirmation dated 28 September 2020, in support of his originating summons of the same date.  That affirmation sets out the factual basis of the concerns giving rise to the claim in the action, and to the interim injunction sought by the Summons.  There is also a 2^nd affirmation, apparently only in draft, albeit dated 20 October 2020.  It includes the offer of a cross-undertaking as to damages.

35.  In response, Convoy has filed four affirmations, all dated 2 November 2020, being:

(1) the 2^nd affirmation of Yap E Hock: Mr Yap’s affirmation is 57 pages long with a further 17 pages of annexures, and I think it fair to say it essentially repeats the allegations made in the Main Action;

(2) the affirmation of Tom Smith QC: Mr Tom Smith is a Silk in London, but with a practice in the Cayman Islands, and his affirmation offers expert opinion on the question whether, on the construction of Convoy’s Articles of Association, Convoy has a right to treat Kwok not as a ‘duly registered’ holder of the Kwok Shares for the purposes of Articles 58 and/or 73(1) and/or generally under the Articles, after the Main Action was commenced, but in the absence of any court order/interim injunction/declaration against Kwok as to his standing as a member;

(3) the affirmation of Hau Pak Sun (which essentially exhibits a copy of Mr Smith’s affirmation); and

(4) the affirmation of Clive Rigby: Mr Rigby’s affirmation offers his independent opinion and observations on the trading data of the shares of Convoy from July to August 2017, in support of Convoy’s factual allegations against Kwok.

36.  In reply, Kwok has filed four affidavits/affirmations signed or dated 8 or 9 November 2020, being:

(1) Kwok’s 3^rd affirmation;

(2) the affirmation of Ip Tin Chee, Arnold: Mr Ip’s affirmation is put forward in response to Mr Rigby’s affirmation;

(3) the affirmation of Stephen Smith QC: Mr Stephen Smith is a Silk in London, also with a practice in the Cayman Islands, and his affirmation is to offer his expert opinion on the issues of Cayman law first raised in Mr Tom Smith’s affirmation; and

(4) the 2^nd affidavit of Hui Cheuk Kit Frederick (which essentially exhibits copies of Kwok’s 3^rd affirmation and Mr Stephen Smith’s affirmation).

37.  There is some argument, to which I shall return below, as to whether any of the material offered as expert opinion is admissible for the purposes of the present application.  In respect of the opinions offered by Messrs Smith, I shall deal with that in the section relating to the Duly Registered Member Point below.

38.  But as to the evidence of Mr Rigby and Mr Ip, that does seem to me to go directly to the factual contest which is the subject matter of the Main Action.  Plainly, I am in no position to resolve that contest in these proceedings.  Nor do I think it helpful, or necessary, even to form a view as to which assertions are to be preferred at this stage. Therefore, with respect to both Mr Rigby and Mr Ip, I do not propose to consider their evidence any further for the purposes of this application.

E. Applicable Principles – Quia Timet Injunctions

39.  The principles relating to applications for a quia timet injunction are well-established.  They were summarised by me in Secretary for Justice v Persons Unlawfully and Wilfully Conducting Themselves in any of the Acts Prohibited under Paragraph 1(a) and (b) of the Indorsement of Claim [2019] HKCFI 2809 at §§25-26.

40.  Such injunctions can be granted where it is reasonably certain that what the defendant is threatening and intending to do will cause imminent and substantial harm.  The required degree of probability of future injury depends on all the circumstances, but the greater the prejudice caused by the apprehended injury, the more readily the Court will intervene.  Even absent an express threat, a defendant’s actions may indicate that he intends to act unlawfully, particularly where a defendant has stated that it is within his rights to do the particular acts complained against.  The ultimate test, under section 21L of the High Court Ordinance Cap 4, is whether it appears to the Court to be just or convenient to grant the injunction sought.

41.  If an interim injunction is granted, it is ordinarily a requirement that the applicant gives a cross-undertaking as to damages.  Sometimes, such a cross-undertaking may require fortification.

42.  The legal principles applicable to fortification are well-settled.  The court has a general power to order fortification where it appears just and proper to protect the defendant by making such an order. Usually, the competing merits of the parties’ cases are not a necessary consideration. However, if the plaintiff has a strong case, it may not appear just and proper to make the protection available to the defendant.

43.  The burden of showing the need for fortification and the appropriate quantum falls on the party seeking fortification.  He must demonstrate the likelihood of a significant loss arising as a result of the injunction, and a basis for believing that the other party will be unable to make good that loss.  The court will approach these issues by taking a broad view of the evidence, usually without the need of a detailed enquiry.

44.  Whilst there is no obligation on a plaintiff to give full and frank disclosure of his own financial means, circumstances might arise where the absence of financial disclosure by a plaintiff might entitle the Court to draw an adverse inference as to his ability to meet his cross-undertaking in damages.

F. Submissions and Analysis

45.  It is trite that a share in the capital of a company is a bundle of rights, which includes the right to vote and have one’s vote counted.  In general, the right of a shareholder to vote his shares is a right of property which the shareholder is free to exercise in what he regards as his own best interests.  He is not obliged to cast his vote in what others may regard as the best interests of the general body of shareholders, or in the best interests of the company as an entity in its own right.

46.  Therefore, Mr Mok submits, and I agree, that it logically follows that any determination upon an ‘objection’ at an AGM/EGM that a registered shareholder’s votes should not be counted is a decision which (a) interferes with the exercise of a property right, and (b) might – subject to the terms of the Articles, to which I shall return – be thought to abrogate that right altogether for the purposes of the AGM/EGM.  It does so even if the decision does not determine the underlying dispute which gave rise to the ‘objection’.

47.  Mr Mok also relies on the proposition, which is well established, that a power or discretion given to a party to a contract which on its face is unqualified is generally to be read as being subject to an implied requirement that it can only be exercised in good faith, rationally and for a proper purpose, and not arbitrarily or capriciously or in a manner which is not bona fide.

48.  Mr Mok relies on a ‘trilogy’ of cases.  The first is the Hong Kong case of Tadjudin Sunny v Bank of America NA (unreported, CACV 12/2015, 20 May 2016) at §§46 and 55.  That case makes good the proposition, and explains that the rationale is that such restrictions are implied in order to give effect to the reasonable expectations of the parties to the contract.

49.  Mr Mok then relies on the decision of Leggatt J in Andrew Brogden v Robert Reid [2014] EWHC 2785 (Comm) at §100, for the proposition that the implied constraints are applicable (he says ‘even’) where the decision is final and binding on the other party in the sense that a court will not substitute its own judgment for that of the party who makes the decision.  That case arose in the employment context, and it is perhaps better to look at the whole passage, which states:

Both on the authorities and as a matter of principle, it seems to me that where a contract gives responsibility to one party for making an assessment or exercising a judgment on a matter which materially affects the other party’s interests and about which there is ample scope for reasonable differences of view, the decision is properly regarded as a discretion which is subject to the implied constraints that it must be taken in good faith, for proper purposes and not in an arbitrary, capricious or irrational manner. Those limits apply in circumstances where the decision is final and binding on the other party in the sense that a court will not substitute its own judgment for that of the party who makes the decision. …  The concern … is that the decision-maker’s power should not be abused.  The implication is justified as a matter of construction to give effect to the presumed intention of the parties.  In the employment context it is further reinforced by the obligations of good faith and fair dealing which … are a necessary incident of the employment relationship.

50.  By reference to the specific context of a decision by an EGM chairman, Mr Mok refers to Byng v London Life Association Ltd [1990] Ch 170, at 189B-D.  There, it was held by the Vice-Chancellor that a chairman’s decision will not be declared invalid unless on the facts which he knew or ought to have known he failed to take into account all the relevant factors, took into account irrelevant factors or reached a conclusion which no reasonable chairman, properly directing himself as to his duties, could have reached.  Hence, the test is the same as that applicable on judicial review in accordance with the Wednesbury principles.  I would note, however, that the case concerned not the proper interpretation of one of the articles of the company, but the residual power under common law which provides the chairman of a general meeting the ability to adjourn that general meeting.  Nevertheless, I do not think the case is authority only as to how a chairman of a general meeting is to exercise a residual common law power; as the other authorities identify, in some cases there may be implied qualifications or restrictions even in the context of a contract, where that is necessary to meet the reasonable expectations of the parties to that contract.

51.  Mr Mok submits that the principles found in the ‘trilogy’ of cases apply with even more force in relation to a decision which interferes with and abrogates the property right of a registered shareholder, with serious consequences to the shareholder himself as well as the body of shareholders at large.

52.  So, Mr Mok submits, a decision by the Board Chairman to block Kwok’s votes from being counted in the EGM would infringe those principles and constitute an irrational, arbitrary and capricious decision.  This is, he says, because:

(1) all requirements of due process are absent, there being (a) no properly adduced evidence from an accuser and the affected shareholder, (b) no guiding legal principles to be observed, to be able to reach a rational decision, (c) no opportunity for legal representation on making submissions by Counsel, (d) a proper reason is given based on evidence, principles or submissions, and (e) the decision-maker is not legally qualified or competent to make the decision in question;

(2) the allegations against Kwok are based on exceedingly complicated and convoluted factual and legal arguments;

(3) the making of such a decision in the absence of due process is wholly inappropriate where any ‘objection’ concerns substantive allegations on the validity of shares which can be only adjudicated in litigation where due process of law is observed;

(4) Convoy could apply for an interim injunction, and if it declines to do so, it is not appropriate for a third party ‘objector’ to raise the matter, to permit Convoy to bypass the legal requirements which would have to be satisfied on an application for interim injunction;

(5) there is no cross undertaking as to damages;

(6) the Board Chairman is labouring under a conflict of interest, being essentially both the accuser and the decision-maker;

(7) any decision by the Board (of which the Board Chairman is a member) that Kwok is not a ‘duly registered’ member would render it impossible for the Board Chairman to deal with Kwok’s votes independently or impartially;

(8) so that a decision made in the circumstances would be wholly unfair to Kwok and one made in breach of the fundamental principles of natural justice.

53.  Mr Mok also seeks to draw an analogy between this case and those cases where the courts have insisted that a statutory power or discretion which is stated to be ‘final and conclusive’ must nevertheless be exercised in compliance with the principles of natural justice and fairness.  First, such clauses must be ‘narrowly interpreted’ so as to render them not contrary to natural justice; secondly, the courts can still scrutinise a decision reached in breach of certain fundamental requirements of the rule of law, including the principles of natural justice.  Mr Mok relies on the succinct statement by Bokhary PJ in Chau Cheuk Yiu v Poon Kit Sang (2012) 15 HKCFAR 460 at §29 that: “Finality is a good thing, but justice is better”.

54.  Reliance is also placed on cases relating to finality or ouster clauses, such as Koo Ming Kown v CIR [2018] HKCFI 2593 at §§74-75, where G Lam J held that such clauses must be “narrowly interpreted”, so that it will not be applied to a decision reached “contrary to natural justice”; and R (Privacy International) v Investigatory Power Tribunal [2020] AC 491 at §§122-123, where the majority of the UK Supreme Court held that an ouster clause “however clear and explicit” does not prevent the courts from scrutinising a decision reached in breach of “certain fundamental requirements of the rule of law”, including the principles of natural justice.

55.  On the evidence, including the evidence filed for Convoy, Mr Mok submits that it is clear that it can be inferred that Convoy, its Board and the Board Chairman intend to interfere with Kwok’s property rights in the Kwok Shares at the 2020 EGM.  Far from filing any contrary evidence, Mr Mok submits that Convoy’s evidence only reinforces the inference that interference will take place.

56.  Therefore, Mr Mok submits that Convoy has pre-determined the answer to any question which might be dealt with under Article 74 at the 2020 EGM.  Convoy will act as it wishes, but without seeking an injunction of the sort which, if granted, would necessarily give protection to Kwok by way of the cross-undertaking.

57.  As Mr Mok puts it, the decision-maker who determines whether Kwok can vote pending the resolution of the underlying dispute raised in the Main Action is not, or should not be, the Board Chairman, and that decision should not be taken by the procedure adopted on the last occasion.  That is because there was no rational basis, and no regard was had to fairness or the principles of natural justice, and there was a clear conflict of interest for the decision-maker.

58.  For his part, Mr Wong emphasises – by way of overview – that this is not a case of an innocent shareholder, concerned with the mismanagement, affairs and direction of Convoy, being unfairly deprived of his voting rights by Convoy’s board, as Kwok attempts falsely to portray.  Rather, this is a case where Kwok is a shareholder strongly implicated in fraud by unanswered evidence, now attempting to assert a final right at an interlocutory stage, over and above what is agreed under the statutory contact of Convoy’s Articles of Association.

59.  As to Harris J’s first decision, [2018] 6 HKC 394, that the Board Chairman’s decision made under Article 74 in a meeting cannot be challenged after the meeting, even if it is unreasonable in the Wednesbury sense, Mr Mok submits that the decision (even ignoring the pending appeal) should be confined to its facts.  Those facts are, Mr Mok says, the limited challenge to a decision already made by the chairman of an EGM, which are not facts of the present circumstances.

60.  That is because the Board Chairman has not yet made, but appears to be about to make, the relevant decision which is challenged as irrational, arbitrary or capricious and in breach of the principles of natural justice.

61.  So, Mr Mok submits, in a situation different from that facing Harris J, it is open to the Court now to grant an interim injunction on a quia timet basis to restrain Convoy from interfering with and abrogating Kwok’s property rights.  Mr Mok emphasises that Article 74 has two parts, and it is the second part, in the last sentence alone, which relates to the decision of the chairman being final and conclusive.  He says that is the part of Article 74 with which Harris J’s decisions were (and the appeal is) concerned.  But, Mr Mok submits, this application is more focused on the first part of Article 74 relating to what the decision is and how it might be made.

62.  As a fall-back, Mr Mok says that I should in any event at least identify my view as to what proper procedures should take place on any decision taken on Article 74 by the chairman at the 2020 EGM in relation to whether Kwok can vote his shares, or whether those votes should be counted.  Mr Mok submits that that is not asking the Court to give an advisory judgment, but rather to deal with the application which involves the exercise of discretion, and where the Court can set out the views which lead to the particular exercise of discretion adopted.  At the very least, says Mr Mok, the expression of my views would be of assistance and use at the 2020 EGM.

63.  Mr Wong submits that Harris J has already made binding findings of fact as to the effect and scope of Article 74 and the Cayman law.  Therefore, Kwok now mounts a collateral attack on those findings, at the same time as invoking the very same principles which he challenges in the appeal pending from Harris J’s decision, which will be heard on 17 November 2020.  As Mr Wong puts it, the application is a ‘try-on’, and a clear abuse of process.

64.  Both Mr Mok and Mr Wong spent some time in oral submissions taking me through the two decisions of Harris J, in order to identify what they say he did, and/or did not, decide.  It may be helpful, therefore, to look at these briefly at those decisions.

65.  Before doing so, I would set out the terms of Article 74, which provides:

If:

(a) any objection shall be raised to the qualification of any voter; or

(b) any votes have been counted which ought not to have been counted or which might have been rejected; or

(c) any votes are not counted which ought to have been counted;

the objection or error shall not vitiate the decision of the meeting or adjourned meeting on any resolution unless the same is raised or pointed out at the meeting or, as the case may be, the adjourned meeting at which the note objected to is given or tendered or at which the error occurs. Any objection or error shall be referred to the chairman of the meeting and shall only vitiate the decision of the meeting on any resolution if the chairman decides that the same may have affected the decision of the meeting. The decision of the chairman on such matters shall be final and conclusive.

66.  In the first decision (“Kwok 1”), and as material for present purposes, Harris J directed that he would deal with the issues in the following order:

(1) First:

(a) Did the Chairman (Johnny Chen) have the power under Article 74 to determine the objection to Kwok’s votes being counted?

(b) If so, was the determination final and conclusive?  This involves a consideration of different approaches to similar provisions in English and Australian authorities.  There are no Cayman cases on point.

(c) Alternatively, was the Chairman’s power derived from the common law and challengeable on the grounds either that the Chairman made (a) an error of law or (b) took into account irrelevant matters or failed to take into account relevant matters, or if the decision is one which no reasonable chairman, properly directing himself as to his duties could have reached?

(2) Second:

(a) If the latter, did the Chairman make errors, which justified setting aside his decision?

(b) If the former, had the decision been made in bad faith, which was understood to be common ground would, whatever the source of the authority to determine the injection, be a ground for setting aside the decision.

67.  It is on that basis that Mr Mok suggests that the Wednesbury-type points were taken – and limited – only to the question of the common law power, if applicable.  But, becuase Harris J held that the power existed under Article 74, the only question which arose and which was decided was one of any exception to finality and conclusiveness under that article.

68.  At §27 of Kwok 1, Harris J held that the construction of Article 74 advanced on behalf of Kwok would deprive the article of utility, and that it was difficult to see how it could sensibly be suggested that the hypothetical commercial person would think the construction advanced is a credible reading of the article.  Harris J held that the natural reading of Article 74 is that the chairman can decide both the substantive objection and its possible impact on the voting in respect of the resolution.  He thought that in practice, one would expect the chairman to consider whether the numbers involved are sufficient to make any difference to the result of a vote.  If not, he might decide not to spend time and invite controversy by deciding the substantive issue; but if it does make a difference, Article 74 empowers him to do so.

69.  Harris J went on to hold, at §43, that there is nothing inherently objectionable in a shareholder restricting the exercise of his rights arising from a shareholding, or in the members by the statutory contract represented by the articles of association agreeing to regulate the process by which the company in general meeting comes to pass resolutions. Whilst it is correct that shares are property rights including voting rights, that right is a right which may be restricted by agreed contractual terms.  As Harris J held, it is important to understand what Article 74 empowers the chairman to do.  The chairman decides whether a vote should or should not be counted for the purpose of determining whether a resolution has been passed.  The chairman does not determine any underlying dispute, which has given rise to an objection on which he is called to rule.

70.  At §§44-45, Harris J held that the chairman had not decided the substantive objection, but was deciding whether the votes attaching to the particular shares should be admitted for voting purposes at that particular general meeting.  Indeed, Harris J pointed out that the issue would need to be revisited at each meeting at which the same objection is raised and the chairman would have to determine it on the basis of the information before him at that time.  Therefore, there was nothing objectionable in members agreeing in the articles that in the event of a dispute about whether votes should be recognised the chairman should make a final and conclusive determination, subject to exceptional circumstances.

71.  At §50, Harris J noted the common ground that the chairman’s decision could be challenged on the grounds of bad faith.  He then invited, at the next hearing, submissions on whether the finality of the decision prevents a challenge on the grounds that it is unreasonable in the Wednesbury sense or something similar.

72.  It seems to me that, in Kwok 1, Harris J was concerned with the question whether the chairman had the power to make a final and conclusive decision as to the validity of the objection raised at the EGM by virtue of Article 74.  In approaching the answer, he looked at and placed some weight on the points of finality and party autonomy: see §51.

73.  In the second judgment of Harris J, [2020] 3 HKC 403 (“Kwok 2”), he returned to that question which he had left open in Kwok 1.  It was a decision given after trial.  He recorded, at §17, that Mr Mok’s opening submissions (Mr Mok having also appeared on behalf of Kwok at that trial) advanced an argument that in substance involved practically wholesale importing of administrative law concepts dealing with the review of administrative decisions into company law, arguing that that permitted the court to review the decision of the chairman of a general meeting.  Harris J pointed out that he had made clear at the outset of the second stage of the trial that he thought this approach misconceived, and that any suggested qualification to the finality of the chairman’s decision had to be founded on established contractual or company law principles.  He explained that what he had in mind in his previous comments was an argument founded on implication of terms.

74.  At §18, Harris J identified Mr Mok’s closing submissions advanced two grounds of argument for the court to find the decision could be challenged on grounds that it was manifestly wrong, or as Mr Mok preferred to formulate it, as Wednesbury unreasonable in the sense that the decision was one that no reasonable chairman could have reached if he properly directed himself as to his duties and have regard to all the facts he knew or should have known.  Harris J identified two components to the argument.  The first is that Article 74 gave the chairman a contractual discretion and that such a discretion must not only be exercised honestly and in good faith, but also it must not be exercised unreasonably, arbitrarily, capriciously or irrationally. The second is that Article 74 should be read as subject to an implied qualification that a decision is not final and binding if wrong in the way just described.

75.  In the end, Harris J rejected those arguments.  He also identified that Article 74 imposes a duty on the chairman to decide at the meeting whether votes should be allowed or disallowed, on the basis of the information he has at the time, and that the chairman’s decision may be challenged only if it is reached in bad faith; it cannot be impugned on the basis that it was irrational or Wednesbury unreasonable.  Harris J also considered that any practically wholesale importing of administrative law concepts dealing with the review of administrative decisions into company law is misconceived.

76.  But, importantly for present purposes, I accept that the arguments identified by Harris J in Kwok 2, at §§18 and 22, are (or are almost) precisely the same Wednesbury or Wednesbury-similar arguments as are now run again by Mr Mok before me.  I do not think it correct to seek to read down the Harris J’s decisions in the way Mr Mok suggests.

77.  Mr Wong submits that Harris J made findings of fact as to the meaning and effect of the Articles under Cayman law (questions of foreign law being questions of fact).  Harris J held that under Article 74, the chairman of any meeting of Convoy has a wide power to disallow the votes of the member for the purpose of determining whether a resolution is passed, and that the power is to be exercised on the basis of the information before him at the time.  Harris J specifically recognised that the issue would need to be revisited at each meeting at which the same objections raised, and the chairman would have to determinant on the basis of the information before him at that time.

78.  It is, therefore, on the basis of the two decisions that Mr Wong mounts his abuse of process argument.  This is perhaps the core point he puts forward.  He relies on the principles of res judicata or issue estoppel, as explained in China North Industries Investment Ltd v Chum [2010] 5 HKLRD 1 at §§46-48:

(1) Where a final decision has been pronounced on the merits by a Hong Kong Court or (with certain exceptions) a foreign judicial tribunal’s jurisdiction over the parties and subject matter any party to such litigation as against any other party … is estopped in any subsequent litigation from disputing such decision on the merits, whether it be used as the foundation of an action, or as a bar to any claim, indictment, affirmative defence or allegation provided the party entitled raises the point at the proper time.

(2) This doctrine, res judicata, is not a rule of evidence but one of substantive law, for which the underlying public policy is the interest of the community in the termination of disputes and the finality of judicial decisions and, further, the need for individuals to be protected from vexatious multiplicity of suits.  It arises where a claim has previously been finally determined between the parties, or their privies, by a court of competent jurisdiction and the same issue falls directly in question in subsequent proceedings (cause of action estoppel) or where the issue has been determined by such a court as a necessary step in reaching judgment in case between those parties or their privies (issue estoppel).

(3) The correctness of the final decision is not relevant.  It binds the parties until such time as it is set aside on appeal.  This rests on the fact that a competent tribunal has jurisdiction to decide wrongly, as well as correctly and if it makes a mistake its decision is binding unless corrected on appeal.

79.  Mr Wong submits that, unless overturned by the Court of Appeal, Harris J’s findings as to the effect of Article 74 are binding on Kwok.  Specifically, the decision that irrationality or Wednesbury unreasonableness is not the test for Article 74 is not open to challenge, except on appeal.  Indeed, Kwok is bringing that appeal.  But it is trite that the decision binds the parties unless and until it is set aside on appeal.

80.  Here, the parties have been content that the argument on this application has been fixed to be heard before the appeal.  Yet, Kwok’s current argument, which presupposes that the chairman at the 2020 EGM must be acting irrationally if he excludes Kwok’s votes in the absence of any injunction obtained by the Company, is precisely an attempt to invite this Court to overrule Harris J, when it is the subject of the coming appeal (and where, understandably, Kwok’s Counsel are relying on the same cases as have been cited to me).

81.  There is also force in Mr Wong’s point that on the one hand Kwok complains of a pre-determined view which will be taken by the chairman at the 2020 EGM, but on the other hand Kwok asks the Court to order the chairman to take a different (the opposite) pre-determined view.

82.  As regards, what view might be taken, Mr Wong repeats what he says is a fair and accurate characterisation of the key context in which to see this application.  He points to the allegations that Convoy was previously in the hands of Roy Cho, who exercised insidious and secret control by secret ownership, evading all regulatory and shareholder oversight, and deploying Convoy’s resources at his whim.  He points to the raid by the SFC, and the ‘magical’ (Mr Wong’s word) acquisition by Kwok within less than two months of the 29.91% shareholding through multiple open market trades without substantial fluctuation in share price, the purchase conveniently stopping short of the 30% threshold that would trigger a general offer.  Immediately thereafter, Chen Pei Xiong (“Chen”) acquired a 7.47% shareholding.  It is that combined roughly 37% shareholding to which I made reference in what I called the SFO Action (which I struck out).  A further 2.3% shareholding was purchased by Wang Peng Ying (“Wang”).  Chen and Wang are said to be acting in concert with Kwok, so that there was a breach of the obligation to make a general offer.

83.  Mr Wong submits that Kwok has completely failed to explain or even properly engage the allegations and evidence against him, whilst others involved (in particular Roy Cho) face criminal proceedings.  He says that the current Board of Directors of Convoy, consisting in large part of independent professionals, has made great efforts to stabilise, to recover and to grow Convoy’s business since December 2017.

84.  Mr Wong also submits that the evidence now available, and which might be deployed against Kwok as to the validity of his shares, is far more complete and comprehensive than it was at the time of the 2017 EGM.  It is, therefore, on the basis of that material, and anything else put before the chairman at the EGM, that the chairman will exercise the contractual right under Article 74.  Mr Wong accepts that it is open to Kwok to make submissions, and that the chairman will consider those submissions as well is the views of any other shareholders.

85.  So, says Mr Wong, there is no basis for the Court to be invited to bypass the contractually agreed due process by assuming (with finality) that any chairman of the EGM would inevitably exercise his or her powers in bad faith.  Rather, as when any decision is made, there is nothing to prevent Kwok from applying to Court for any interim or permanent relief as he sees fit, just as he did to Harris J.

86.  Mr Wong also says there is no proper distinction to be drawn between a scenario when the chairman at the EGM has exercised his power under Article 74 and a scenario when the chairman is yet to exercise that power.

87.  I agree.  The attempted distinction between a pre-emptive or quia timet application made in advance of an Article 74 decision and a challenge made after the event of such a decision is an illogical distinction.  If, as is currently binding on Kwok, the chairman’s decision cannot be faulted on the ground of Wednesbury unreasonableness or irrationality, the chairman’s exercise of power under Article 74 cannot be fettered or pre-emptively restrained.  This is so, not least because there is simply no possible evidence as to what will or will not transpire at the future meetings such as the 2020 EGM.  Even pointing to likelihoods is to draw inferences of likelihoods only on the information currently known, of course without the possibility of knowing what will or will not happen at the 2020 EGM.

88.  Further, the timing of the making of the application, whether before or after the event, cannot properly impact upon the scope of the substantive right.  Article 74 has a meaning and effect and is applicable in a particular way – for the moment, pending appeal, it being assumed to have the effect and the approach as held by Harris J – irrespective of when it is applied.  Looking at whether a decision is final and conclusive necessarily engages consideration of the process of making the decision.  Therefore, there is a clear link between what Mr Mok described as the first and second parts of Article 74, as he later accepted.

89.  As an aside, and by way of an additional point, Mr Wong suggests that I should follow the established practice that a judge of first instance will, as a matter of judicial comity, usually follow the decision of another judge at first instance unless he is convinced that the judgment was wrong.  However, with the appeal looming within the next week or so, I see no practical benefit in treading that ground.  In any event, Mr Mok has confirmed that Kwok does not seek to challenge Harris J’s findings in the context of the present application (at least, not face on).

90.  Mr Wong also submits that Kwok’s application is bad at law.  First, Kwok’s application is premised upon Convoy having no substantive basis to disregard Kwok’s voting rights, unless an injunction is obtained by Convoy.  Mr Wong submits that premise is clearly incorrect, when Convoy could rely on at least (1) a possible good faith decision made by the chairman of the 2020 EGM under Article 74, which would be binding on Kwok, (2) the decision of the Board under Article 73, and (3) under Cayman company law, non-recognition of Kwok’s shares by Convoy on the basis that they are void, or alternatively void following their decision.

91.  As to the first point, Mr Wong submits that the Cayman Court has confirmed the law of the Cayman Islands that Article 74 empowers the chairman of Convoy to finally and conclusively determine the validity of the vote at its meeting: see China Agrotech Holdings Ltd (in liquidation) (unreported, FSD 68/2019, 22 July 2019) at §§75-78.  In that decision, Segal J agreed with the approach taken by Harris J in Kwok 1, though I acknowledge that the agreement also pre-dated, so could not be thought to have confirmed what was said by Harris J in, Kwok 2.

92.  There is also Article 73, which it is common ground permits the Board legitimately to exercise its power to disallow Kwok from voting at any EGM of Convoy.  Further, as Harris J recorded, Kwok also accepts that under the common law, the chairman has the authority to determine the substantive issue of whether or not an objection justifies excluding a shareholder’s votes.

93.  On the appropriate threshold, Mr Wong submits that if Kwok were to apply for a direct injunction against Convoy to compel it to recognise Kwok’s voting rights for the 2020 EGM in advance, the ‘finality’ effect of such a direct injunction would mean that Kwok would have to establish that Convoy has no realistic prospect of successfully invoking any to refuse to recognise Kwok’s votes.  On the evidence before the court, Mr Wong submits that is an insurmountable threshold.

94.  Therefore, the Court should not allow Kwok to circumvent a threshold he could not meet by the ‘innovative’ way of conducting this application.  The Court should also not rewrite the contract between Convoy and Kwok found in the Articles.  I agree.

95.  For the purposes of this decision, I do not think it necessary to rehearse the evidence which is largely to be found in Yap’s 2^nd affirmation, alleging that Kwok is a fraudster and that the shares of Convoy in his hands are the fruits of a fraudulent scheme and therefore void.  I accept there is now, in the context of this application, some competing evidence, but I am obviously in no position to resolve any competition on the evidence.  As I have already indicated, I do not think the evidence of Mr Rigby and Mr Ip is particularly helpful in this application.  But overall, I accept that there is at least reasonably strong evidence in support of Convoy’s case, even if there is a contrary view that can properly be put forward.

96.  I also agree with Mr Wong that there is a ‘non sequitur’ (my words) in the often repeated submission for Kwok that no rational chairman in the exercise of his powers under Article 74 could reasonably disregard the votes of Kwok’s Shares in the circumstances of the case, in the absence of an interlocutory injunction.  Essentially the illogic is to be found in the assumption, in advance of knowing what will take place at the 2020 EGM, that whatever takes place at the 2020 EGM could not found a good faith decision to disregard the votes.

97.  If, after the event, Kwok has any grievance, he may seek such remedies as he says are appropriate.  Amongst the remedies might be his application for some form of injunctive relief.  But I do not think that the position somehow imposes a burden on Convoy first to apply for an injunction.  I accept Mr Wong’s submission that such an approach would fall foul of the fundamental principle that the plaintiff cannot be required to apply for an interlocutory injunction.

98.  There is also something in the criticism that any urgency in this application by Kwok is self-induced.  It was open to him to have taken out the application at any earlier time, or perhaps more sensibly to have awaited the outcome of his appeal challenging the findings and approach taken by Harris J.

G. The Duly Registered Member Point

99.  This is the point that, with the benefit of the opinion from Mr Tom Smith QC, Convoy asserts that the chairman of the EGM is entitled to form a view as to whether a member is ‘duly registered’ without the need for a court judgment or an injunction in the current circumstances where the Main Action has been commenced, and even in the absence of any court order or interim injunction or declaration against Kwok as to his standing as a member.

100.  There is some force in Mr Mok’s submission that this appears to be something of an afterthought.  The opinion affirmation is dated 2 November 2020, and was plainly obtained for the purposes of these proceedings.  Convoy could not have relied on it before that date, not least at the 2017 EGM.  It does look like it has been obtained perhaps to ‘pave the way’ (Mr Mok’s phrase) for the Board Chairman, when chairing the 2020 EGM, to block the counting of the Kwok Shares.

101.  Mr Mok first submits that the evidence is inadmissible as not constituting proper expert evidence on foreign law, because it is concerned with the interpretation of a contract governed by foreign law but based on ordinary legal principles and English common law.

102.  My own observation is that the question posed to Mr Tom Smith, and his offered opinion, seems to address at least a significant part of the ‘ultimate issue’ raised by the originating summons in this action.  This is in part because it focuses on the view that might be taken in light of the existence of the Main Action, but the absence of any court order or declaration made in that action (or any other action) dealing with the real underlying issue as to the validity of Kwok’s ownership and property rights in the Kwok Shares.

103.  Relying on the opinion of Mr Stephen Smith QC, Mr Mok submits that Mr Tom Smith’s views are in any event wrong.  He points to some of the reasoning in Mr Stephen Smith’s conclusion, including that:

“(d) the words ‘duly registered’ in the definition of ‘Member’ in Article 2(1) of the Articles simply means that the name of the Member has been recorded in the Register;

(e) the Company is not entitled to rectify the Register to remove a person’s name from the Register absent an order for rectification of the Register made pursuant to s.46 of the Companies Law;

(f) pending any order for rectification of the Register, a person whose name is on the Register remains a Member of the Company; …

(k) any decision of the Board as to whether a person is a Member of the Company or entitled to attend and vote at an EGM can be challenged in court”

104.  Further, Mr Mok submits that Mr Tom Smith’s views could not authorise a determination in a ‘closed door’ decision, by way of a procedure rendering the determination irrational, arbitrary or capricious or in breach of the principles of natural justice and fairness.  In any event, where a determination is made under Articles 58/73(1), which is not stated to be ‘final and conclusive’, it remains open to the Court to rule against Convoy on this matter.

105.  At the end of the day, however, I think it was common ground between Mr Mok and Mr Wong I do not need to resolve any conflicting opinion between Messrs Smith, or even to prefer one over the other.  It seems to me all I need do is recognise the existence of the conflict in opinion, which may or may not need to be considered and determined in another context.

106.  As a separate issue, the Duly Registered Shareholder point seems to me unhelpful and unnecessary to the present analysis.

H. Result

107.  I have said that I will decline any invitation in the circumstances to differ from the findings and approach adopted by Harris J, the subject-matter of the looming appeal.  I have, of course, already noted that Mr Mok disavows (at least, directly) challenging Harris J’s findings before me.

108.  But, in any event, even were I to take a different view from that taken by Harris J, I cannot see that it would properly advance Kwok’s position.  In effect, I would be doing no more than declaring in advance that the chairman at the 2020 EGM should make a decision which is a ‘proper’ decision.  That is no better, no more useful, than declaring in advance that the chairman should not make a decision in ‘bad faith’.

109.  It may not even be very controversial to say that, whatever decision the chairman of the 2020 EGM makes, that decision ought not to be capricious or arbitrary.  Even if I were to say that the chairman should not make a capricious or arbitrary decision, or one which offends ordinary principles of natural justice and fairness, it might be asked “so what?”.  There is no real utility in any such order.

110.  Even if I would put more flesh on the bones of such a statement, that is also unlikely to be of any particular assistance. Anything more than broad statements of principle may be seen as improperly seeking to fetter the exercise of discretion and consideration which the chairman of the 2020 EGM might have to make under Article 74.  But I would point out that fairness depends on context, and the need not to act capriciously or arbitrarily does not necessarily trigger the full panoply of procedural steps as might be applicable in a court of law.  The chairman of the 2020 EGM will not be acting as a judge or arbitrator or umpire, as might ordinarily trigger the ‘due process’ for which Mr Mok argues.  The chairman will instead be performing a role contractually identified in the Articles.

111.  Also, as I have already indicated, the relevant decision of the chairman at the 2020 EGM is a decision to be taken at the 2020 EGM.  It is decision to be taken by the chairman on the materials available to him at that meeting.  I do not think it correct to pre-suppose that the chairman will make a decision which is somehow bound to be amenable to challenge.  Perhaps that is simply another way of putting that, in the context of Kwok seeking what is in effect final relief, I do not conclude that on whatever future circumstances might arise the chairman is bound to make a decision which in some way is not ‘proper’.

112.  Indeed, it seems to me that the Court will be in the best position to consider whether any decision made under Article 74 should not be treated as final and conclusive only after the decision has been made.  At that point, the Court is able to see what actually happened, and whether there was any basis upon which to interfere (whatever the basis of interference might be).  Where interference in advance may in effect grant final relief, the case in which it would be appropriate to jump in rather than await actual events must be rare in the extreme.  This is not such a case.

113.  I dismiss the application.

114.  In the circumstances, no question of fortification of any cross-undertaking of damages arises.

I. Costs

115.  Once the parties have had the opportunity to consider this Decision, they can address the question of costs.  A number of the points raised in argument seemed to me more to relate to questions of costs than the actual determination of the application.  They can be raised now.

116.  Therefore, in the absence of agreement between the parties as to the appropriate costs order to make, I will deal with the question of costs by way of written submissions from the parties.  Both sides should file those submissions, limited to 5 pages, identifying the costs order they invite me to make and brief reasons as to why.  They should do so within 7 days. Within the following 7 days, each side may file reply submissions, also limited to 5 pages.  I will then deal with the question of costs on the papers.