RE RICHARD LESTER MILLETT QC

HCMP 1037/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1037 OF 2012

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REASONS FOR JUDGMENT

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1. On 12 July 2012, the court dismissed an application for the ad hoc admission of Mr Richard Millet QC as a barrister of this court to advise and to appear for Tele‑Art Inc (in liquidation) before the Court of Appeal in CACV 283/2011. These are my reasons.

Facts

2. Tele‑Art Inc was the registered owner of shares in Nam Tai Electronics Inc.  It charged the shares to the Bank of China (Hong Kong) Limited in support of a guarantee of the repayment of advances made by the bank to a subsidiary of Tele‑Art Inc.  Tele‑Art Inc defaulted in its repayment to the bank and the bank therefore sought enforcement of its security under the relevant share charge.  This led to various pieces of litigation between Tele‑Art Inc and the bank.  Eventually, in 2007, the bank sold sufficient Nam Tai shares to cover Tele‑Art Inc’s indebtedness and returned the remaining charged shares to Tele‑Art Inc’s liquidator.  The bank also gave an account of the net proceeds of sale, but claimed to be entitled to withhold therefrom, amongst other things, “provisions” for future and anticipated legal costs for the ongoing proceedings.

3. Disputing this, Tele‑Art Inc commenced an accounting action  against the bank (HCA 2443/2008).  After a trial of preliminary issues, Barma J held in his judgment dated 30 November 2011 that the bank was entitled to retain from the proceeds of sale a reasonable amount to cover its anticipated costs and expenses in the action.

4. Dissatisfied with the result, Tele‑Art Inc appealed from Barma J’s judgment (CACV 283/2011).  Tele‑Art Inc’s main contentions are that first, the bank, as constructive trustee of proceeds of sale of a mortgaged property, has no lien in general law over the funds in its hand for its future costs and expenses not as yet incurred, in the absence of contractual provisions providing for the same and in the absence of any court order for security for costs; secondly, there is no express or implied right in the share charge to that effect.  The hearing of the appeal has been fixed for 10 October 2012.  Tele‑Art Inc wished to retain the applicant, a leading expert on the law of guarantee with substantial experience in the area of banking and finance, to appear for it in the appeal.

Arguments

5. Ms Lisa Wong SC (Mr Jose‑Antonio Maurellet with her), submitted for the applicant that the appeal raises a point of law on which there is no direct, definitive or persuasive authority; it is an issue of unusual difficulty and complexity, requiring the expertise of experienced and specialist counsel.  She also contended that the determination of the issue will impact on the development of local (or indeed overseas) jurisprudence.  It is an issue eminently appropriate for the Court of Final Appeal.  She also reminded the court that the applicant is unquestionably of sufficiently high quality and standing to argue the issue and his admission would provide the opportunity for cross‑fertilisation between overseas counsel and local counsel (both senior and junior) in the relevant area of law.

6. Mr Stewart Wong SC (Ms Elizabeth Cheung with him) for the Hong Kong Bar Association contended otherwise.  He submitted that the issue involved is not one of unusual difficulty and complexity; nor is it one the determination of which would impact on the development of local jurisprudence.  He emphasized that the fact that there is no direct authority on point does not by itself turn the issue into an unusually difficult or complex one.  He also queried whether the issue based on general law would really arise at all in the appeal as Barma J seems to have determined the issue by reference to the wording of the relevant share charge, rather than to any general law as such.

7. The Secretary for Justice also had his doubts about the applicant’s application.

General principles

8. The principles governing the admission of overseas counsel are well established.  They have been referred to by this court recently in Re Pointer QC [2012] 2 HKC 241, para 8 :

“The general principles governing the admission of overseas counsel are well established: Re Flesch QC; Re McGregor QC. It is unnecessary to rehearse them here. The burden is on an applicant for admission to satisfy the court that it is in the public interest to grant the admission. In considering an application for admission, the court adopts a flexible and sensible approach, balancing different aspects of the public interest. Different facets of the public interest include: the need to have a strong and independent local Bar; the need of Hong Kong people to have adequate legal representation and the need for the local courts to develop our own jurisprudence which enjoys international recognition and reputation. Overseas counsel with sufficiently high quality and standing may be admitted to appear in our courts in cases involving the determination of legal principles which may have an impact on the development of our jurisprudence. Local counsel’s exposure to cross-fertilisation between lawyers of sufficiently high quality and standing from other common law jurisdictions is considered to be helpful and conducive to the maintenance of a strong and independent local Bar. Admission of overseas counsel is not limited to hearings before the Court of Final Appeal or even the Court of Appeal. The same basic approach applies to all hearings, irrespective whether the hearings are final or interlocutory: Re Mostyn QC [2003] HKCU 1063, HCMP 3552/2003, 17 September 2003 (Ma CJHC), para 10.”

My reasons

9. The appeal involves a single, discrete issue. I agree with Mr Wong that on the face of it, the issue was decided by Barma J more by reference to the wording of the share charge than to general law.  To this extent, therefore, the appeal will turn on the relevant wording in the share charge.  There is no suggestion that the particular clauses requiring interpretation are general or common in the trade.  In those circumstances, insofar as the issue turns on the wording of the share charge, whether the bank has the right to retain expenses and costs for future litigation is a matter of interpretation of contract using well established canons of construction.  This exercise cannot be said to be sufficiently difficult or complex so as to justify an overseas counsel.

10. Insofar as the determination of the issue will turn on general law, I accept that there is apparently no direct authority on this point, apart from one or two indirect United Kingdom authorities and several decisions in New South Wales Australia which have subjected this question to some analysis.

11. But this does not by itself turn the issue into an unusually difficult or complex one.  In the absence of direct authority, one would have to start from first principles and one would probably need to examine the law on mortgage, on trust and in particular constructive trust and on equitable lien for an answer on this novel point.  But the crucial question is whether it is an unusually difficult or complex issue, justifying the admission of overseas counsel on this basis.

12. In my judgment, it is not.  Despite her best attempts, senior counsel has not been able to explain to the court what precisely London counsel’s arguments are going to be, let alone to explain why those arguments are unusually difficult or complex.  All she suggested in argument was that whereas an express trustee as fiduciary may be entitled to a lien for future costs and expenses, the bank as constructive trustee of the net proceeds of sale is not a fiduciary and does not have a lien.

13. It is for an applicant to persuade the court that the issue involved is an unusually difficult or complex one, so that it is in the public interest to grant the admission.  I have not been so satisfied in the present application.

14. Nor have I been satisfied that the determination of the legal issue would impact substantially on the development of local law (Re McGregor QC [2003] 3 HKLRD 585, para 11(1)), even though its resolution would no doubt benefit not only the immediate parties to the litigation but also others who are or may in future be in a similar position – which is not the issue.  I accept that the point raised is an interesting point of law.  But I have not been persuaded that it is of such a quality that its determination would have a substantial impact on the development of local law.  Whether the parties would bring the point up to the Court of Final Appeal for final adjudication is beside the point (Re McGregor QC, para 11(1)).

15. Given the above conclusion of mine, all other considerations urged upon the court by counsel paled into insignificance.

16. For these reasons, the application for admission was dismissed.