FALCON PRIVATE BANK LTD v. BORRY BERNARD EDOUARD CHARLES LTD AND ANOTHER

HCA 1934/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO 1934 OF 2011

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REASONS FOR DECISION

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Background

1.  This is the Plaintiff’s application by summons dated 22 March 2013 seeking to have this action stayed until the final determination of the Defendants’ appeal in CACV 42 of 2013.  In CACV 42 of 2013, the Defendants were granted leave by the Court of Appeal to appeal against my decision in refusing to recuse myself (the “Recusal Summons” or “Recusal Decision” as appropriate) from hearing their summons applying to have the Mareva injunction order made against them by Deputy High Court Judge Au-Yeung, as she then was, discharged (the Discharge Summons”) and their summons applying to strike out the Plaintiff’s statement of claim (the “Strike Out Summons”).   Having refused to recuse myself, I proceeded to hear and then dismissed the Discharge Summons and the Strike Out Summons on 7 June 2012.  I also refused the Defendants leave to appeal my decision in dismissing those three summonses.  Then the Defendants applied to the Court of Appeal for leave to appeal.  The Court of Appeal granted leave to appeal my decision in dismissing the Recusal Summons and deferred considering their application for leave to appeal my decision in dismissing the Discharge Summons and the Strike Out Summons until after the final determination of the appeal against my decision in the Recusal Summons.

2.  In the meantime, the action progressed with discovery, filing of defence and exchange of list of documents.  The discovery revealed that the sum of US$10 million transferred to the 1^st Defendant’s bank account by mistake had been wholly dissipated by the 2^nd Defendant.  The 1^st Defendant which is a HK$10 company has no asset other than a sum of US$2,201.07 in its bank account.  The 2^nd Defendant said he had no asset and could not even pay the costs awarded under two costs orders in the total sum of about HK$3 million.  It would appear that this case has gone as far as it could and has served its purpose in ascertaining where most of the funds had gone.  The 2^nd Defendant is out of the jurisdiction and has no asset in Hong Kong.  Any judgment obtained against the Defendants is going to be empty.

Discussion

3.  The Defendants now pressed for discovery against the Plaintiffs.  The Plaintiff sought to have the action stayed until the final determination of the appeal against my Recusal Decision.  In view of the uncertainty of the outcome of the appeal, my immediate impression of the Plaintiff’s application for stay was that it was a sensible one to make.  From the factual circumstances known to this court, having had conduct of the proceedings for the past two years, it seemed that the application could be disposed of forthwith after hearing counsel’s submission.  However, the Defendants opposed the application and asked for an adjournment to enable them to file evidence and for argument. Mr Wright, counsel for the Defendants, argued that as the 2^nd Defendant was in New Zealand, his legal team had difficulties in taking instructions and filing an affidavit in time for this hearing.  I therefore granted the adjournment and gave directions for filing of affidavits as I remained open to persuasion until hearing arguments from both sides.

4.  Mr Wright objected to my hearing the summons at the adjourned hearing.  He argued that as leave to appeal my decision dismissing the Defendants’ Recusal Summons had been granted and the Court of Appeal had indicated there was good chance of success it would not be appropriate for me to continue dealing with this case.  I could see the force of that argument. However, consistent with my views formed in the hearing of the Recusal Summons, the request was just another attempt in forum shopping by the Defendants who wished to avoid adjudication by a judge who knew the case far too well. Furthermore, I had the conduct of these proceedings for the past two years and for the following reasons, I considered it expedient that I should continue dealing with, at least, this application.

5.  As indicated by the Court of Appeal, if my Recusal Decision appealed against is set aside, my decisions in respect of the Discharge Summons and the Strike Out Summons will fall away.  My decision in the present application will also fall away if unfavourable to the Defendants. It will only stand if it is to the Defendants’ liking.  On the other hand, if the Defendants’ appeal fails, then whatever decision I make in the present application will be unassailable on the grounds that the appeal was pending.  The Defendants’ grounds that I should not hear the application because of the pending appeal is just a red herring.  My decision either way will give rise to no injustice to the Defendants.

6.  Furthermore, the Defendants’ insistence to have the present application determined before the appeal was logistically illogical.  If the appeal is allowed, the Defendants’ Discharge Summons and Strike Out Summons will be restored and heard de novo by another judge. Then unless and until those summonses are re-determined and in favour of the Plaintiff and not appealed by the Defendants or their appeal is dismissed, there will be no question of further discovery as sought by the Defendants or stay of proceedings as sought by the Plaintiff.  The discovery will have to wait until the final re-determination of those two summonses.  If the re-determination results in the Plaintiff’s statement of claim being struck out and the action dismissed, any discovery sought by the Defendants will be a waste of time and costs for both parties.  Thus, there is no real or useful purpose to be served to have the Plaintiff’s application determined before the hearing of the appeal.  The course taken by the Defendants would only generate unnecessary costs.  Hitherto, they were unable to pay any costs awarded. 

7.  In view of the above, the rule of convenience must prevail.    Having handled the case almost since its commencement, it would be most expedient and in the best interest of justice that I should continue to deal with the application than to pass it on to a total stranger.  Accordingly, I gave the direction that the hearing be returned before me.