CASEY MCDONALD AND ANOTHER v. GOLDEN DYNASTY ENTERPRISES LTD AND OTHERS

HCMP 2388/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 2388 OF 2007

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D E C I S I O N

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1.  I have before me a summons issued by S B Chow & Co. CPA & Inter-Con Secretarial Services Limited (“SBC”, “Inter-Con”, collectively “the applicants”).  The applicants seek an injunction against the plaintiffs and Mr Middleton (collectively “the receivers”), who were appointed interim receivers of eight companies incorporated in the British Virgin Islands, being the defendants herein, in an order I made on 27 November 2007 (“the Order”), be restrained from disclosing to Danone Asia Pte Limited (“Danone”), any companies associated or connected with Danone, any directors, officers, etc. of the said companies, all or any of the records, books, documents or information provided by the applicants to the receivers in compliance with the Order until further order, without the written consent of the applicants.

2.  It was recited in the Order that the purpose of appointing the receivers is to preserve and secure the assets of the defendants in conjunction with an order made by Madam Justice Charles of the High Court of the British Virgin Islands dated 9 November 2007 in the proceedings there (“the BVI Proceedings”).

3.  By the Order, the receivers are directed to identify and secure the defendants’ assets, and investigate the affairs of the defendants for the purposes of discharging their duties under the Order.  They are empowered under paragraph 4(e) to see, review, secure, take possession of and copy all books, records and documents of the defendants, or relating to its accounts and audit of such accounts, located at the offices of the defendants, its accountants, auditors and other advisors or agents or any other person whether in Hong Kong or overseas.  Under paragraph 4(j)(iii), the power to ascertain and conduct investigations is extended to a subsidiary of the defendants, likewise the power to obtain books and records.

4.  Armed with the Order, on 3 December 2007, the receivers were given access to the documents relating to the defendants by the applicants.  I understand that the applicants have been providing accounting and/or company secretarial services to the defendants.

5.  The receivers were allowed access to the documents on their undertaking that the documents or information obtained would not be disclosed to Danone pending the hearing of this summons today.

6.  The reason why the injunction is sought by the applicants is because it is contended by them that the receivers should not be allowed to disclose documents or information to Danone as there are pending proceedings between Danone and the applicants in HCMP No. 1307 of 2007 (“the Discovery Proceedings”), by which Danone sought discovery of documents against the applicants in support of the proceedings commenced by Danone and its parent company in the United States, on the basis that the applicants have become mixed up in tortious or wrongful acts of others to facilitate wrongdoing and are under a duty to assist Danone by giving full information and disclosure.  Danone is seeking a Norwich Pharmacal type of order in the Discovery Proceedings.  It seeks an order to require the applicants to disclose the identity of and documentation regarding any companies in respect of which they have provided professional services on behalf of, pursuant to the instructions of, or in connection with Miss Kelly Fuli Zong, Madam You Zhen Shi, Qinghou Zong, Ever Maple Trading Limited and Honour Bright Investment Limited from 1996 to present.

7.  I understand that the Discovery Proceedings have not been set down for hearing, as Inter-Con was recently joined as an additional defendant.  That application is opposed by both the applicants.

8.  It is contended by the applicants in support of the present application that to allow the receivers to disclose documents obtained from them to Danone pursuant to the Order would be to allow Danone to obtain the documents through the backdoor while the Discovery Proceedings are pending, as documents relating to the defendants provided by the applicants to the receivers are within the ambit of the documents sought in the Discovery Proceedings.  I do not think this is a material or relevant consideration.  Unlike the Discovery Proceedings, I am not concerned with Danone’s entitlement to the documents; the receivers appointed by the court order are entitled to have access to the documents in discharge of their duties.

9.  The fact that the documents provided by the applicants are also part of the documents sought in the Discovery Proceedings is neither here nor there.  Nor am I concerned with the situation involving a party on whom a list of documents is served in discovery in civil proceedings.  In any event, the receivers are not using the documents for any collateral or improper purpose.

10.  As receivers to the defendant companies, the receivers are empowered to have access to and custody of the documents of these companies, to enable them to carry out their duties of preserving the assets of the companies and furthering investigations into the affairs of the companies and their subsidiaries.  If in the course of carrying out these duties, the receivers should find it necessary to share information with Danone, this would be a legitimate use of the documents.  I do not think this is using the documents for a purpose other than those for which the power of compulsory discovery was conferred.  This is different from the basis on which Danone seeks a Norwich Pharmacal type of order in the Discovery Proceedings.  It is not made pursuant to any entitlement of Danone to the information or documents.

11.  I do not think it is appropriate to make the order sought by the applicants, which may hamper the receivers in the discharge of their duties.

12.  The receivers are officers of the court, not agents of the parties procuring their appointment.  They are subject to the supervision of this court and the court in the British Virgin Islands.  I note that on 29 November 2007, the court in the British Virgin Islands made an order to expressly authorise the receivers to disclose to any third party information obtained in the course of the receivership as the receivers think necessary for the purposes of the receivership.

13.  I will make a similar order.  For avoidance of doubt, I direct that in continuing the Order until the determination of the originating summons or further order, the receivers be authorised to the extent they consider it necessary for the purpose of the receivership to share any information obtained with any party and/or its advisers for the purpose of tracing and/or preserving the defendants’ assets.

14.  In the order made by the court in the British Virgin Islands on 29 November 2007, the injunction was continued subject to an undertaking of Danone not to use without permission of the court, documents or information obtained from the receivers for any purpose save in the BVI Proceedings to trace and preserve assets.  Danone is not before the court in these proceedings, so I cannot require it to give a similar undertaking.  What I can do is to direct the receivers, in the event they consider it necessary to share information with Danone, to require from Danone an undertaking similar to that given by it in the BVI Proceedings.  In the event of doubt, the receivers should seek directions from this court.

15.  I dismiss the applicants’ application.