DAIMLER AG (FORMERLY KNOWN AS MERCEDES BENZ AG) v. HELGE HERBERT LEIDUCK, APPOINTED BY ORDER TO REPRESENT THE ESTATE OF HERBERT HEINZ HORST LEIDUCK, DECEASED AND ANOTHER

HCA 4089/1994

[2023] HKCFI 445

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 4089 of 1994

__________________

BETWEEN

__________________

__________________

DECISION

__________________

APPLICATIONS AND MATERIALS BEFORE THE COURT

1.  There are before the court 7 applications (“Applications” collectively) as follows:

(1) by the defendants by summons dated 25 January 2022 for leave to call 2 new witnesses and to rely on their evidence both in writing and in court:

(a) Maria-Alexandra (Marie-Alix) von Sachsen- Meiningen (“MASM”)[1] who has signed a witness statement and a supplemental witness statement respectively dated 29 December 2021 and 13 January 2022[2] and who will attend court for cross-examination; and

(b) Ofir Itskovitch (“OI”)[3] who has signed a witness statement dated 18 January 2022[4] and who will attend court to be cross-examined (“New Evidence Application”);

(2) by the defendants by summons dated 11 April 2022 for leave to rely on the affidavits dated 7 January 2008, 9 December 2008, 25 June 2009, 30 March 2010 and 6 April 2010 (“Pre-2011 Affidavits”) made by the late Mr Herbert Leiduck (“Mr Leiduck”) (who was, until his death on 23 March 2014, the 1^st defendant in this action and a witness for the defendants) in support of the defendants’ application by the Inquiry Summons (defined in [19] below) (“Hearsay Evidence Application”);

(3) by the plaintiff by summons dated 26 April 2022 for:

(a) the dismissal of the Inquiry Summons with costs to the plaintiff on an indemnity basis (“Dismissal Application”);

(b) alternatively,

(i) an order that the plaintiff’s costs of, incidental to or occasioned by Mr Leiduck’s inadmissible evidence and the Competency Issue (defined in [51] below) be paid by the defendants forthwith on an indemnity basis (“Costs Application”);

(ii) an order that the defendants give security for the plaintiff’s costs as a condition for the continuation of the application by the Inquiry Summons (“Security for Costs Application”);

(iii) an order that the Pre-2011 Affidavits be expunged pursuant to ss 47 and 49 of the Evidence Ordinance (Cap 8) (“Expungement Application”); and

(c) if both or either of the Dismissal Application and the Costs Application be allowed, an ancillary order under s 52A of the High Court Ordinance (Cap 4) and Order 62 rule 6A of the Rules of the High Court (Cap 4A) for disclosure of the identity and other details of the third party funding the defendants’ costs of the proceedings under the Inquiry Summons (“Disclosure Application”).

The Hearsay Evidence Application and the Expungement Application, being 2 sides of the same coin, can be counted as one single matter.

2.  In support of/in opposition to the Applications, the parties have lodged 14 hearing bundles[5], close to 300 pages of written submissions and 11 lever-arch files of authorities. Oral submissions then took 4 days from 7 to 10 June 2022.

3.  While I appreciate the parties’ zealous efforts to assist, for which I am grateful, the fair and proper disposal of the Applications (and the underlying proceedings) does not require the court to deal with, or even set out, each and every allegation or argument that has been raised by the parties. And I do not propose to do so. Nonetheless, the parties should be assured from the outset that I have, in the course of writing this decision, reminded myself of, and given due consideration to, all the materials that the parties have placed before me.

RELEVANT FACTUAL & PROCEDURAL BACKGROUND

4.  The Applications arose out of an unprecedented and tortuous factual and procedural background, which goes all the way back to the early 1990’s.

Proceedings prior to the Inquiry Summons

5.  On 30 April 1994, the plaintiff (then known as Mercedes Benz AG), a renowned luxury car manufacturer, commenced this action to recover the advance commission[6] (“IRSAM Advance”) that it had paid to one Intercontinental Resources Societé Anonym Monegasque (“IRSAM”) pursuant to the agreement contained in or evidenced by the plaintiff’s letter dated 8 July 1993 to IRSAM, under which IRSAM agreed to promote the sale of 10,000 Mercedes cars at the total price of US$870 million by 31 December 1993. In return, the plaintiff would pay IRSAM a commission equivalent to 25% of US$870 million, inclusive of the IRSAM Advance. IRSAM was a company incorporated in Monaco and of which Mr Leiduck was the sole owner and president.

6.  Prior to issuing the writ of summons herein, the plaintiff had, on 29 April 1994, obtained a Mareva injunction (“Injunction”) against both Mr Leiduck and one Intercontinental Resources Company Limited (“IRC”) upon the usual cross-undertaking as to damages (“Undertaking”).

7.  IRC was a Hong Kong company founded by Mr Leiduck and of which he was on the date of the Injunction the 99.998% shareholder and a director. The plaintiff sought to attach IRC with liability as a constructive trustee of the IRSAM Advance, and obtained the Injunction against IRC, on the sole premise that US$6 million of the IRSAM Advance had been misapplied in July 1993 towards the repayment of a loan of which IRC was a co-borrower (“IRC Loan”).

8.  The source given for this piece of information was one Jacques Lefort (“Lefort”), a magistrate in Monaco then entrusted with an investigation into various criminal complaints against Mr Leiduck (“Lefort Investigation”). Lefort allegedly met the plaintiff’s lawyer in Paris, one Maître Georges Fridmanis (“Fridmanis”), on 5 April 1994 and later allowed him access to his files (unspecified) on 22 and 26 April 1994.

9.  This information was in fact wrong. IRC had not used, or benefited at all from, the IRSAM Advance. The continuing existence and non-repayment of the IRC Loan had been confirmed by a letter dated 6 May 1994 by the lawyer acting for the lender of the IRC Loan. This letter was exhibited to the affidavit dated 9 May 1994 made by Yip Tai Yick Philip (“Yip”), another director and the then general manager of IRC[7], in support of the discharge of the Injunction against IRC.

10.  By 14 May 1994, the plaintiff accepted that the IRC Loan had not been repaid out of the IRSAM Advance. In this regard, Fridmanis had written to Baker & McKenzie (“B&M”), the plaintiff’s then solicitors, on 13 May 1994, to advise that the information said to have been provided by Lefort to the plaintiff regarding the dealings with the IRSAM Advance after its payment by the plaintiff was incorrect. In support, he attached copies of the cover page and pages 20 and 24 (which has become known herein as “Extract C”) of a report dated 11 March 1994 prepared by one Jean-Humbert Croci (“Croci Report”). Extract C showed the IRC Loan to be still outstanding.

11.  In the circumstances, the Injunction against IRC was soon discharged on 17 May 1994, which was just 17 days after it was granted. The discharge was by consent. More specifically, the plaintiff and IRC agreed that (1) the plaintiff would pay IRC’s costs and disbursements on an indemnity basis; and (2) IRC would make no claim for damages pursuant to the Undertaking (“IRC Settlement Agreement”). The plaintiff later discontinued the action against IRC on 22 August 1994.

12.  This may be the right juncture to digress a little on the Croci Report.

(1) This document was, on its face, submitted to Lefort on 11 March 1994 to provide expert opinion on various transactions through certain bank accounts of Mr Leiduck, his wife and the companies controlled by Mr Leiduck (including IRC).

(2) The plaintiff first disclosed the existence of the Croci Report herein in February 2010.

(3) The plaintiff later disclosed, through answering certain interrogatories administered by the defendants in August 2012, its receipt, possession and knowledge of various parts of the Croci Report on different dates as follows: (a) pages 47 to 53 (known herein as “Extract A”) on 27 April 1994 (i.e. before the plaintiff applied for the Injunction against IRC); (b) pages 31 to 53 after 27 April 1994; and lastly (3) Extract C between 11 and 13 May 1994.

(4) In support of IRC’s claim for setting aside the IRC Settlement Agreement, the defendants place very strong reliance on the plaintiff’s possession and knowledge of Extract A which, according to the defendants, showed that the IRC Loan was still outstanding as at September 1993 in contradiction of the plaintiff’s allegation that it had been wrongly repaid in July 1993 with part of the IRSAM Advance.

13.  Turning to Mr Leiduck, he was served with the writ of summons herein and the papers generated by the application for, and the grant of, the Injunction in Monaco where he had, since October 1993, been detained in prison. Such service was, after the plaintiff’s unsuccessful appeals to the Hong Kong Court of Appeal and the Privy Council, finally set aside, and the Injunction against Mr Leiduck discharged, on 26 July 1995 on the ground that Hong Kong courts had no jurisdiction over Mr Leiduck.

14.  While the plaintiff’s legal actions against Mr Leiduck in the Hong Kong courts had failed on jurisdictional grounds, it was successful in the complaints and legal proceedings that it had instigated against Mr Leiduck in Monaco, which led to (1) Mr Leiduck’s incarceration before trial in a Monegasque prison for 33 months from October 1993 to June 1996; and (2) the subsequent trial and conviction of Mr Leiduck[8] in his absence[9] in May 2000.

15.  Meanwhile, in 1998, Mr Leiduck had brought 2 lawsuits against the plaintiff in Germany. One such litigation was to claim compensation for all the losses incurred or to be incurred by Mr Leiduck as a result of the plaintiff’s proceedings against him in Hong Kong and before the Privy Council. I agree with counsel for the plaintiff, Mr Bernard Man SC (leading Mr Thomas Wong), that the compensation so claimed by Mr Leiduck in Germany should in principle be the same massive amounts of damages for the recovery of which the Inquiry Summons was issued. See [27] below.

16.  Yet, the statement of claim that Mr Leiduck lodged with the Regional Court of Stuttgart on 19 May 1998 made no mention of (1) Mr Leiduck or IRC’s loss of commissions relating to the Housing Project or (2) the 3 interested buyers of Mr Leiduck’s shares in IRC or the stages to which negotiations had progressed with any of them. Instead, Mr Leiduck simply stressed, repeatedly, that he was still unable to estimate his loss despite the fact that nearly 4 years had lapsed after the grant of the Injunction. Anyway, Mr Leiduck abandoned this lawsuit on 13 July 1999, which was 1 day before the hearing of the same.

17.  Before this, the District Court of Stuttgart had, on 15 January 1999, rejected Mr Leiduck’s application for legal aid on the ground that his claim did not have a reasonable chance of success. The Appeal Court of Stuttgart rejected Mr Leiduck’s appeal against the denial of legal aid on 31 March 1999.

Inquiry Summons

18.  Coming back to the proceedings in Hong Kong, one would have thought that this action had come to an end on 26 July 1995 upon the setting aside of service on Mr Leiduck on jurisdictional grounds.

19.  However, this was not going to be the case. After a lapse of just 3 days short of 12 years, by a summons issued on 23 July 2007 (“Inquiry Summons”), the defendants (both Mr Leiduck and IRC) applied, in enforcement of the Undertaking, for (1) an inquiry as to the losses they had suffered by reason of the Injunction and (2) an order for payment of the sum(s) found by the inquiry to be due from the plaintiff to them.

20.  The defendants’ case for the enforcement of the Undertaking can be summarised as follows.

21.  On liability, having agreed not to enforce the Undertaking, IRC will have to set aside the IRC Settlement Agreement first before it can claim damages against the plaintiff. To do so, the defendants initially alleged that the plaintiff had induced Yip to agree to forgo any claim that IRC might have against the plaintiff by virtue of the Undertaking by promises of future business with Yip himself (“Alleged Yip Fraud”). See the defendants’ points of claim re fraud filed on 11 April 2008 (“POC”).

22.  The trial of the Inquiry Summons (which is for determination of whether there should be an inquiry of damages, and not the inquiry itself) (“Inquiry Trial”) was originally fixed to commence on 13 April 2010.

23.  However, around a month before the Inquiry Trial, at a hearing before Master Lung on 11 March 2010, the defendants orally applied for leave to amend the POC to raise the allegation that the IRC Settlement Agreement was procured by the plaintiff’s fraudulent misrepresentation that it obtained the Injunction against IRC as a result of a bona fide mistake on its part. Master Lung dismissed the application. Deputy High Court Judge Louis Chan (as he then was) dismissed the defendants’ appeal. Then, on 12 April 2010, which was just 1 day before the scheduled commencement of the Inquiry Trial, the defendants applied for (1) leave to appeal against DHCJ Louis Chan’s decision and (2) an adjournment. The Inquiry Trial was thus adjourned to a date to be fixed.

24.  On 24 October 2010, the defendants filed and served an amended POC to add a plea of misrepresentation by the plaintiff in support of the setting aside of the IRC Settlement Agreement.

25.  Then, on 18 December 2012, the defendants filed a consolidated POC in which all references to the Alleged Yip Fraud were deleted, after raising and maintaining such defamatory accusation against Yip for about 4½ years.

26.  The final version of IRC’s case for setting aside the IRC Settlement Agreement (which did not or did not fully emerge until more than 5 years have passed after the issue of the Inquiry Summons) runs primarily as follows:

(1) First, the plaintiff had misrepresented to IRC that it had at the time of the application for the Injunction mistakenly, but genuinely, believed that US$6 million of the IRSAM Advance had been used to discharge the IRC Loan and that this mistake was not discovered by the plaintiff until 14 May 1994[10].

(2) Second, such misrepresentation is fraudulent in nature because:

(a) The plaintiff had in fact bribed Lefort for information that he had purportedly obtained from the Lefort Investigation (“Alleged Lefort Bribery”). More particularly:

(i) In about early 1994, Lefort indicated to Fink that he wanted to obtain a “classy” Mercedes car at “a cheap price”, which indication was meant, and understood, to be a request for a free gift of a luxury Mercedes Benz car in return for co-operating with the plaintiff.

(ii) Fink passed on such request to a director of the plaintiff in charge of sales surnamed Hubbert[11] (“Hubbert”).

(iii) In about February 1994, Lefort received money in cash from an employee of the plaintiff and purchased a Mercedes Benz E300[12]. In return, Lefort provided the plaintiff with information that he had purportedly obtained from the Lefort Investigation, including the (mis)information that US$6 million of the IRSAM Advance had been used to pay off the IRC Loan.

(b) Further, before it applied for the Injunction, the plaintiff had in any event received the Croci Report, or relevant parts thereof, which showed that the information regarding the application of the IRSAM Advance allegedly given by Lefort to the plaintiff was erroneous.

(3) Third, the defendants first discovered the Alleged Lefort Bribery on 16 March 2006 when Mr Leiduck had a telephone conversation with Fink who told him about Lefort’s said alleged request and his passing the same onto Hubbert[13]. On the same day, Mr Leiduck telephoned Schulz and obtained from him what Mr Leiduck considered to be confirmation of what Fink had told him.

27.  As for damages, the defendants claim under 2 heads:

(1) First, Mr Leiduck, or alternatively IRC, had allegedly suffered loss of the commissions of €90 million that he/it would otherwise have earned (minus expenses) under a housing development project, which involved the construction of 15,000 houses in the Leningrad and Tula regions of Russia for the Russian Armed Forces withdrawing from East Germany following the dissolution of the Warsaw Pact (“Housing Project”).

(2) Second, the Injunction against IRC, though short-lived, ruined IRC, which had allegedly lost the entire value of its business. Alternatively, Mr Leiduck, holding 99,998 of the 100,000 shares of and in IRC, had lost the opportunity to sell those shares. In this regard, as at the commencement of the adjourned Inquiry Trial in February 2013, the case maintained by Mr Leiduck was that he had started to explore the possibility of either selling 70% of his IRC shares to Yip or disposing of all his IRC shares to two Russian gentlemen surnamed Temerko and Mukhin. With Yip, he had only got to the stage of eliciting an expression of interest from Yip but they had not got to the stage of negotiating any details. With the two Russians, Mr Leiduck had indicated to them that he was looking for something in the region of US$30 million. Further, Mr Leiduck had also been told by his son, Mr Helge Leiduck (“Mr Leiduck Jr”), that Mr Leiduck Jr had been in negotiation with a Russian company called Stern-Stroy Limited (“Stern Stroy”) for a sale of 70% of Mr Leiduck’s IRC shares for US$20 million plus a promise of additional investment of up to US$40 million in IRC. Mr Leiduck asserted the belief that if it had not been for the Injunction, he would have sold his IRC shares (which were worth US$30-40 million), or a substantial portion thereof, to one of these 3 potential buyers.

The adjourned Inquiry Trial

28.  The Inquiry Trial eventually began on 4 February 2013 with 16 days (4-28 February 2013) reserved.

29.  Unfortunately, 16 days turned out to be a gross under-estimate. The 16 days originally allocated to the adjourned Inquiry Trial were exhausted by (1) a number of last-minute controversial and hotly contested applications by the defendants; (2) the parties’ oral opening submissions; and (3) the evidence of 5 witnesses for the defendants namely, Mr Karl Ulmer[14], Mr Stephen Cheung Siu Tai[15], Mr Leiduck Jr, Dr Olga Salman[16] (part-heard) and Ms Mitsie Johnson[17] (also part-heard). Ms Johnson and Dr Salman completed their oral evidence on Day 17 (1 March 2013) and Day 18 (5 March 2013) respectively.

30.  Mr Leiduck, who was then tendered by the defendants as their last witness as to fact, was sworn in on Day 13 (25 February 2013). He testified from a business centre in Essen, Germany via video-link with leave granted by the Court of Appeal on 24 January 2013[18]. Leaving aside the time difference between Hong Kong and Germany, with a view to accommodating Mr Leiduck’s special needs as a witness arising from his advanced age[19], physical disabilities[20] and ailments[21], on the days when Mr Leiduck gave evidence, the court had to sit in shortened sessions of 2 hours each[22] starting from 6 pm or 5 pm (Hong Kong time). As it turned out, the accommodation extended to Mr Leiduck (which did not appear to have been factored into the estimate of 16 days) contributed significantly to the serious overrunning of the Inquiry Trial.

31.  After swearing in on 25 February 2013, Mr Leiduck purportedly verified on oath, and adopted as his evidence in chief, the Pre-2011 Affidavits as well as his “Post-2010 Written Evidence”[23].

32.  His cross-examination by Mr John MY Yan SC (and, with him, Ms Sara Tong), former counsel for the plaintiff, started on 25 February 2013 (Day 13) and finished on 16 August 2013 (Day 30).

33.  Mr Horace Wong SC (and, with him, Mr Clark Wang) began to re-examine Mr Leiduck on 16 August 2013 and continued to do so on 19 and 21 August 2013 (Days 31 and 33).

34.  20 August 2013 (Day 32) was skipped because Mr Leiduck did not attend the business centre from which he was giving evidence. The explanation given by counsel for the defendants was that Mr Leiduck’s condition “was very bad” and that “he was not feeling well”. There was however no detail of the reason(s) preventing Mr Leiduck’s attendance. In particular, it was then not known for how long he would be unable to continue with his testimony.

35.  I was concerned (legitimately, I believe) that at least the factual evidence should be completed within the few remaining hearing dates that had then been reserved (which were all in August 2013). According to Mr Wong SC, Mr Leiduck’s evidence was “coming to an end” and their cross-examination of Mr Rene von Samson-Himmelstjerna (“RVS”), the only factual witness for the plaintiff, would take just one and a half day. Such estimate appeared at the time to be realistic. RVS is the plaintiff’s in-house senior legal counsel who has been handling this dispute for the plaintiff since 1999. In particular, he has been the only person from whom the plaintiff’s legal team obtains instructions and to whom they report. That being the case, it is unlikely that he would have much direct personal knowledge of the core factual disputes raised by the Inquiry Summons. Taking into account these circumstances and with a view to making the best possible use of the remaining reserved dates, on 20 August 2013, I directed that RVS should be interposed in the morning of 22 August 2013 (Day 34) and that Mr Leiduck’s evidence, if still unfinished, could continue in the afternoon.

36.  As directed, RVS took the stand in the morning on 22 August 2013. His oral evidence did not finish by the time we adjourned at 1:40 pm.

37.  Although Mr Leiduck did turn up in the afternoon on 22 August 2013, pending an investigation necessitated by the sudden development detailed in [42] to [46] below, it was agreed by all that it would be inappropriate for Mr Leiduck to continue to give evidence. He had by then been in the box for a total of 19 days[24].

First disclosure of Mr Leiduck’s cognitive difficulties and emergence of the “Competency Issue”

38.  To backtrack a little, the VCF Application was supported by Mr Leiduck’s 7^th affidavit as well as affidavits from 2 doctors who had been treating Mr Leiduck. These affidavits detailed Mr Leiduck’s acute cardiac problems that would render it life-threatening for him to travel from Germany to Hong Kong to testify (footnote [21] above).

39.  Regrettably, there was no mention of any mental illness notwithstanding that the defendants must by then know that Mr Leiduck had been diagnosed to be suffering also from dementia. I say so because:

(1) On as early as 7 July 2011[25], following a report by Mr Leiduck’s wife of incidents of visual hallucinations (some scenic) and disorientation affecting Mr Leiduck, a Dr A Gallard (“Dr Gallard”), a specialist in neurology, had diagnosed Mr Leiduck to be suffering from dementia with Lewy-bodies (“DLB”).

(2) On 3 January 2012[26], one Dr F Sondhauss (“Dr Sondhauss”), a consultant/specialist for psychiatry and psychotherapy, had (a) made psychological findings of, inter alia, erratic and long-winded thought processes, reduced attention and concentration, impaired long term memory, paranoid thoughts, misperceptions in the form of visual hallucinations and impaired relation to reality; and (b) diagnosed Mr Leiduck to be suffering from moderate dementia.

40.  As it happened, neither the court nor the plaintiff had been alerted to either of these diagnoses concerning Mr Leiduck’s mental health. The court received Mr Leiduck’s written evidence and heard his oral testimony without any inkling that he might not have been competent to be a witness in a court of law in Hong Kong until the 34^th day of the Inquiry Trial.

41.  The first time I detected anything untoward as to Mr Leiduck’s fitness as a witness was after he resumed his oral evidence on 16, 19 and 21 August 2013. By then, Mr Leiduck had plainly changed much for the worse, giving the impression that he did not really know what was happening or what was asked of him (even when he was questioned by his own leading counsel). My recent review of the transcripts for 16, 19 and 21 August 2013 had reinforced such impression.

42.  Picking up from where I have left in [37] above, at 5 pm on 22 August 2013, when Mr Leiduck was due to continue his evidence in re-examination, Mr Wong SC handed up the English translation of a medical report dated 12 June 2013 (“Stein Report”) by one Dr Albercht Stein (“Dr Stein”), which:

(1) was commissioned by the court in Augsburg, Bavaria, Germany as a result of Mr Leiduck’s unwillingness and inability to testify in certain criminal proceedings against a third party;

(2) addressed the question “whether Mr Leiduck is able to make a statement as a witness” in terms of his abilities to reasonably express his interests during the court room proceedings, to formulate his statement as a witness in a comprehensible manner, to answer specific questions of the parties in the case adequately and truly, to follow court proceedings adequately, to meet the obligation to tell the truth, to understand questions and statements of other parties in the proceedings and to adequately and actively assert his own legal interests;

(3) noted that Mr Leiduck was suffering from dementia and cerebral-organic psycho-syndrome and taking medication for dementia (exelon); and

(4) concluded that Mr Leiduck was then completely unable to participate as a witness in court proceedings, with no prospect of recovery. In particular, it was said, inter alia, that Mr Leiduck had considerable deficiencies in both long and short-term memory; that due to the considerable reduction in his memory function, particularly the long-term memory, he could not be questioned “responsibly” on things that happened many years ago; that many experiences were increasingly processed by Mr Leiduck in a delusional manner as a result of his advanced age and the illness pattern of dementia and the cerebral-organic psycho-syndrome which would only intensify; and that he could no longer answer sophisticated questions which went beyond his personal situation in a manner which was adequate and met his obligation to tell the truth.

43.  Upon Mr Wong SC’s indication that Mr Leiduck had also been examined by some other doctor, I adjourned the Inquiry Trial to 28 August 2013 for the defendants to make full and proper disclosure of all the information they had at hand regarding Mr Leiduck’s mental health and capacity and for both sides to consider the implications of such information on the status of the evidence already given by Mr Leiduck and prepare submissions on what the court can and should do in the circumstances.

44.  Meanwhile, by the 21^st affidavit dated 23 August 2013 of Mr Jeremy Levy (“Mr Levy”) of Robertsons, solicitors for the defendants, the defendants formally produced the Stein Report and its English translation, and explained that Mr Leiduck had been summonsed twice by the court in Augsburg, Bavaria, Germany for questioning as a witness in respect of certain criminal proceedings[27] in March 2013. However, Mr Leiduck was neither willing nor able to appear due to his illness. The Augsburg court commissioned Dr Stein to examine Mr Leiduck to see if he was fit to give evidence. After the Stein Report was submitted to the Augsburg court, Mr Leiduck Jr asked the lawyer who represented Mr Leiduck before the Augsburg court to obtain a copy of the report. Mr Leiduck Jr received a copy of the Stein Report (written in German) on 19 August 2013, which was soon forwarded to Mr Levy. Mr Levy obtained an English translation in the morning on 22 August 2013.

45.  In addition to the Stein Report, Mr Levy’s 21^st affidavit also exhibited, with English translations, 2 other medicial reports on Mr Leiduck dated 11 June and 13 August 2013 (wrongly dated 16 August 2013) (“1^st Pfeffer Report” and “2^nd Pfeffer Report” respectively and “Pfeffer Reports” collectively) by a Dr Klaus-Dieter Pfeffer (“Dr Pfeffer”), a specialist in psychiatry and psychotherapy, following examinations of Mr Leiduck on 7 June and 9 August 2013. The 1^st Pfeffer Report stated that the “patient is facing various legal proceedings, e.g. in Hong Kong or Augsburg. The issue is whether he is fit to be questioned. He has been called as a witness on several occasions, but could no longer remember things from the past correctly, became tired quickly and was not able to stand up to the stress.” Dr Pfeffer considered “[Mr Leiduck] to be legally incompetent, incapable of being questioned and unfit to face proceedings in view of his cognitive and emotional disturbances as well as his physical impairment”. Dr Pfeffer then added in the 2^nd Pfeffer Report that according to Mr Leiduck Jr, “his father is often unaware of reality, over-estimates himself, takes his delusions seriously”. The 2^nd Pfeffer Report concluded that Mr Leiduck “remained mentally incompetent, unfit to be questioned, legally incompetent and unable to defend his own interests”.

46.  By the resumed hearing on 28 August 2013 (Day 35), it was clear to all that the contents and conclusions of the Stein Report and the Pfeffer Reports had cast doubts on Mr Leiduck’s fitness both as a party and as a witness. At the invitation of counsel for the defendants, I stayed all further proceedings in this action pending an application to be made for the appointment of a next friend for Mr Leiduck.

Appointment of next friend for Mr Leiduck and representative for Mr Leiduck’s estate after his death

47.  On 5 November 2013 (Day 36), I appointed Mr Leiduck Jr to be next friend of Mr Leiduck.

48.  After Mr Leiduck’s death in March 2014, by an order dated 9 April 2014, Mr Leiduck Jr was appointed to represent Mr Leiduck’s estate in this action and to carry on this action on behalf of Mr Leiduck’s estate.

Trial and determination of the Competency Issue

49.  On 5 November 2013, I also (1) adjourned the Inquiry Trial to a date after the court’s determination of the Competency Issue and of the consequences of such determination; and (2) gave directions for the hearing and determination of the Competency Issue (“Competency Trial Directions”), which I subsequently revised on 8 November and 3 December 2013.

50.  One of the Competency Trial Directions was for the appointment of a single joint expert in psychiatry (“SJE”) for an expert opinion on the Competency Issue. Pursuant to such direction, and upon the plaintiff’s nomination, I appointed as SJE one Professor Dr med Hans Förstl (“Dr Förstl”), a neurologist, psychiatrist and psychotherapist as well as the geriatrics director of the Department of Psychiatry and Psychotherapy, Technicshe Universität München.

51.  It was common ground that the Competency Issue encompassed the following 4 sub-issues:

(1) whether Mr Leiduck was, at the times of his examinations by Dr Förstl on 30 January and 9 February 2014, incompetent to give evidence within the meaning of s 3(b) of the Evidence Ordinance (Cap 8), which renders persons of unsound mind who, at the time of their examination, appear incapable of receiving just impressions of the facts respecting which they are examined or of relating them truly incompetent to giving evidence (“s 3(b)”);

(2) if so, since which date had Mr Leiduck become so incompetent;

(3) in particular, whether Mr Leiduck was so incompetent on the dates when he swore/signed his affidavits, witness statements and/or answers to interrogatories and gave oral evidence; and

(4) whether and, if so, how likely Mr Leiduck might recover from his incompetence in the future.

52.  For the sake of clarity, it should be appreciated that a person is not incompetent as a witness merely by reasons of his having any particular mental illness or condition, unless he appears thereby incapable of receiving just impressions of the facts respecting which he is examined or of relating such facts truly.

53.  By his report dated 24 March 2014 and evidence in court on 14-16 April 2014 (Days 38-40), Dr Förstl expressed the following views:

(1) Mr Leiduck was incompetent on 30 January and 9 February 2014 when Dr Förstl examined him.

(2) Mr Leiduck would not recover from such state of incompetence.

(3) Mr Leiduck was incompetent within the meaning of s 3(b) on all the occasions on which he gave oral evidence, save for the 8 May 2013 (Day 23) session.

(4) There is no sufficient medical evidence reliably pointing to Mr Leiduck being of “unsound mind” before the diagnosis of DLB in July 2011.

(5) There is no sufficient evidence pointing to whether Mr Leiduck was competent or incompetent when he made the Post-2010 Written Evidence.

54.  At the conclusion of Dr Förstl’s evidence in court on 16 April 2014 (Day 40), Mr Yan SC applied for leave to adduce additional expert medical evidence from Professor Felice Lieh Mak (“Prof Lieh Mak”), former chair professor in Psychiatry of the University of Hong Kong (1984-2001) and a practising specialist in psychiatry (since 2009), on the Competency Issue, more particularly, Mr Leiduck’s competence or otherwise prior to February 2013. In this regard, Mr Yan SC had, on 14 April 2014 before the commencement of Dr Förstl’s oral evidence, handed up a report dated 14 April 2014 by Prof Lieh Mak which concluded that Mr Leiduck had become incompetent from as early as 2008 (before being diagnosed by Dr Gallard in July 2011) and remained so throughout the material times up to January 2013.

55.  I heard the plaintiff’s application on 17 April 2014 (Day 41). Applying the principles cited and discussed in the decision handed down herein on 22 April 2014, by an order dated 25 April 2014, I gave the plaintiff leave to adduce expert evidence from Professor Lieh Mak on whether Mr Leiduck was incompetent on the various material dates from January 2008 to January 2013.

56.  By an order dated 12 December 2014 made by consent, I gave the defendants reciprocal leave to adduce expert evidence from Professor Helen Chiu Fung Kum (“Prof Chiu”), Professor of Psychiatry at the Chinese University of Hong Kong and former Head of Department of Psychiatry at the Chinese University of Hong Kong (1996-2011), on the same issues in response to Prof Lieh Mak’s reports.

57.  The 3 expert witnesses were later examined in court for a total of 20 days spanning from 14 April 2014 to 24 February 2016[28]. The parties’ oral closing submissions, even though complimented by very lengthy and thorough written submissions (adding up to close to 500 pages, not counting appendices) took another 3 full hearing days on 23 and 24 May and 8 June 2016.

58.  On 2 December 2016, I handed down what has become known herein as the “Competency Judgment”, holding that:

(1) The common law principle in criminal cases that the burden is on the party calling the witness or seeking to have the witness sworn to satisfy the court that the witness is competent to give evidence in the proceedings, once questioned, applies equally in civil cases. In other words, the defendants had the burden of proving that Mr Leiduck was not at the material times incompetent by showing, on a balance of probabilities, that he was not of unsound mind or did not thereby appear incapable of receiving just impressions of the facts respecting which he was examined or of relating them truly. See the Competency Judgment at [78] to [80].

(2) All of Mr Leiduck’s evidence in court, except that given on 8 May 2013, was inadmissible on the ground of Mr Leiduck’s incompetence under s 3(b). See [94] to [96].

(3) The defendants had discharged the burden of proving that Mr Leiduck had not started to suffer from DLB (or vascular dementia), and was therefore not of unsound mind or incompetent due to unsound mind, before 2011. (The effect of such finding is that the Pre-2011 Affidavits are not inadmissible by reason of s 3(b).) See [206] and [223(1)] and [223(2)].

(4) On the evidence, the defendants had not discharged the burden of proving that Mr Leiduck was not incompetent on any of the dates of the Post-2010 Written Evidence, which evidence is therefore rendered inadmissible under s 3(b). See [219] and [223(3)].

With the exception of the incidence of the burden of proof (which is of course a question of law entirely for the court), in making these findings, I accepted the evidence of Dr Förstl and Prof Chiu and rejected that of Prof Lieh Mak.

59.  The defendants’ application for leave to appeal against my said 1^st and 4^th rulings was refused first by this court in July 2020 ([2020] 3 HKLRD 579) and then by the Court of Appeal (Kwan VP and Yuen JA) in March 2021 ([2021] HKCA 328).

Dates for resumption of the Inquiry Trial

60.  Without prejudice to the Applications, the Inquiry Trial is currently scheduled to resume before me next year with another 25 days reserved (i.e. 26-29 February, 1-22 March and 17-21 June 2024).

61.  The dates in February and March 2024 are intended for the completion of the evidence of RVS and the evidence of the experts on Russian company law and on the Russian company registration system in relation to the issue as at when Stern-Stroy was first established in Moscow, in particular, whether it was an existing company in Moscow as at 25 February 1994 and 1 July 1994. Oral closing submissions will then take place in June 2024.

62.  Against this background, I now turn to the Applications.

DISMISSAL APPLICATION

63.  Logically, the Dismissal Application should be decided first.

64.  In deciding whether to enforce an undertaking as to damages, the Court is exercising a discretion. It may refuse to enforce an undertaking if the defendant’s conduct in relation to the obtaining or continuing of the injunction or the enforcement of the undertaking makes it inequitable to do so: F Hoffmann-La Roche & Co AG v Secretary of State for Trade and Industry [1975] AC 295 at 361D-E (Lord Diplock).

65.  The source of the court’s discretion to refuse to order an inquiry is its inherent jurisdiction to release or vary an undertaking which has been given. It will not do so except in special circumstances; but the need to prevent an abuse of process of the court would certainly justify such a course: CT Bowring & Co (Insurance) Ltd v Corsi Partners Ltd [1994] 2 Lloyd’s Rep 567 at 581 (Millett LJ).

66.  A refusal to enforce an undertaking to pay damages on the ground of abuse of process would be even more compelling where the abuse has rendered a fair trial impossible. As Kwan JA (as the Vice-President then was) put it in Bruce James Stinson v Gu Ming Gao [2018] HKCA 10 at [64]:

“Where a litigant’s conduct puts the fairness of the trial in jeopardy, such that any judgment in favour of that litigant would have to be regarded as unsafe, or where it amounts to such an abuse of process as to render further proceedings unsatisfactory and to prevent the court from doing justice, the court is entitled to refuse to allow that litigant to take further part in the proceedings.”

67.  The plaintiff is not inviting the court to dismiss the Inquiry Summons on merits (though it has in the course of argument made a forceful collateral effort in dismantling the defendants’ substantive case).

68.  In seeking the dismissal of the Inquiry Summons for abuse of process, the conducts identified by the plaintiff as constituting abuse of the court’s process by the defendants are: (1) the unjustifiable and unjustified 13-year delay in taking out the Inquiry Summons and (2) the deliberate concealment of Mr Leiduck’s incompetency, both of which are said to have caused considerable prejudice to the plaintiff and rendered a fair trial impossible.

Delay before the Inquiry Summons

69.  Dealing first with the defendants’ delay in taking out the Inquiry Summons, an application to enforce an undertaking as to damages should be made promptly. See Gee, Commercial Injunctions (7^th edition), page 390, §11-043:

“Unnecessary delay in making an application to the court to enforce the undertaking can result in the court’s declining to enforce it. This is irrespective of prejudice being caused … The court will take into account all the circumstances of the case, including the duration of the delay, any explanation for it, whether it has caused prejudice to the other party, whether any prejudice can adequately be dealt with by an award of costs, and whether the claim for loss is substantial and reasonably arguable…If there is delay in prosecuting an inquiry, the court can decide to dismiss the inquiry. It is not necessary for there to be prejudice caused by the delay. It is for the court to decide in pursuance of its “broad equitable jurisdiction” whether to enforce the undertaking or to release it, and it can be released even after an inquiry has been ordered.”

70.  In Societe Generale v Goldas Kuyumculuk Sanayi Ithalat Ihracat AS [2019] 1 WLR 346, at [44], Longmore LJ (with whom Macur and Simon LJJ concurred) cited in agreement the following dicta of Millett LJ (as he then was) in Barratt Manchester Ltd v Bolton Metropolitan Borough Council [1998] 1 WLR 1003 at 1009F:

“… the cross-undertaking cannot be enforced without the leave of the court, which may be withheld if not applied for promptly… [his Lordship then cited a number of authorities]… As those cases show, the court does not inquire whether the other party has been prejudiced by the delay. The only question is whether the applicant has behaved with reasonable despatch.”

And in the context of the relevance of delay (and prejudice caused by such delay) in the prosecution of an inquiry:

“… the same principles ought to apply to the discharge of the cross-undertaking for failure to prosecute the inquiry as apply to the grant or refusal of the inquiry in the first place. The enforcement of the cross-undertaking should be regarded as being conditional on the inquiry being applied for promptly and prosecuted with reasonable diligence. This would allow for a desirable degree of flexibility. Just as the court may decline to enforce the cross-undertaking if the plaintiff does not apply to enforce it with reasonable promptitude, so it ought to be willing to discharge it where the plaintiff does not conduct the enforcement proceedings with reasonable diligence.

This is not to say that the presence or absence of prejudice to the defendant is irrelevant. Its presence will always be highly material. Where the delay has occasioned significant prejudice, it will almost always be right to dismiss the inquiry and discharge the cross-undertaking. But the greater the delay, the less the need to establish prejudice, and the court should not hesitate to discharge the cross-undertaking and dismiss the inquiry where there has been excessive and prolonged delay even though it cannot be shown to have occasioned any prejudice to the other party.”

71.  Longmore LJ then held at [45] that the judge erred in principle in allowing an inquiry after a delay of 8 years, and said, “delay in asking for an inquiry is a hugely important consideration to which the judge has attributed inadequate weight despite his acknowledgement of its existence.”

72.  Regarding prejudice, Longmore LJ referred, at [47], to the “inevitable difficulty in investigating facts which occurred now more than ten years ago (no doubt a difficulty for both parties and the court)…”.

73.  Mr Leiduck himself could, and should, have taken steps to enforce the Undertaking once the Privy Council had set aside the Injunction against him in July 1995.

74.  He had not provided any plausible explanation for not taking out the Inquiry Summons until July 2007.

75.  In particular, Mr Leiduck was not a party to, and was therefore not bound by, the IRC Settlement Agreement. The various matters that have been raised by the defendants in favour of setting aside the IRC Settlement Agreement or, more precisely, when these matters allegedly came to Mr Leiduck’s attention cannot be used to excuse Mr Leiduck’s own inaction between July 1995 and July 2007.

76.  Indeed, as noted by the plaintiff, the fact that Mr Leiduck sued the plaintiff in Germany in 1998 for compensation for the losses that the Injunction had allegedly caused him shows that Mr Leiduck did not regard himself to be bound by the IRC Settlement Agreement.

77.  As for IRC, the late discovery of (1) the Alleged Yip Fraud, (2) the Alleged Lefort Bribery, and/or (3) the plaintiff’s knowledge and possession of pertinent extracts of the Croci Report prior to the application for the Injunction do not, whether individually or cumulatively justify IRC’s delay.

78.  First of all, IRC has ceased to maintain the Alleged Yip Fraud since 18 December 2012 when it filed and served the consolidated POC.

79.  As for the late discovery of the Alleged Lefort Bribery through the telephone conversation between Mr Leiduck and Fink on 16 March 2006, IRC has not explained its continuing inaction for more than another year between March 2006 and July 2007. It is also noteworthy that the Alleged Lefort Bribery did not assume any significance until 18 December 2012 when the defendants filed the consolidated POC, raising for the first time the Alleged Lefort Bribery as a basis for setting aside the IRC Settlement Agreement.

80.  Lastly, the late issuance of the Inquiry Summons back in July 2007 cannot logically be justified by the knowledge that the defendants subsequently acquired in August 2012 of the plaintiff’s notice and possession of the Croci Report in as early as April 1994 before the application for the Injunction.

81.  According to the plaintiff, the lateness of the Inquiry Summons has caused it substantial prejudice in that all persons having personal knowledge of the events alleged by the defendants (namely, Fink[29], Hubbert[30], Schulz[31], Fridmanis[32] and one Paul John Carolan[33]) have retained no recollection of such events or even passed away. The plaintiff has thus been deprived of the opportunity to adduce useful evidence from these witnesses.

Deliberate concealment of Mr Leiduck’s incompetency by the defendants

82.  As I have observed at [19]-[22] of the decision dated 17 June 2016 on the plaintiff’s summons dated 2 December 2013 for leave to serve upon the defendants interrogatories concerning various matters contained in Mr Levy’s 21^st Affidavit and Mr Leiduck Jr’s 4^th affidavit dated 23 September 2013 (also on Mr Leiduck’s mental health) and the exhibits thereto, when deciding whether to refuse to order an inquiry by reason of the defendants’ conduct, the relevant question is when the defendants themselves became aware that Mr Leiduck might be incompetent, not when Mr Leiduck Jr or the defendants’ legal team acquired such knowledge. The defendants miss the point in suggesting that those around Mr Leiduck had no reason to doubt his competency until June 2013.

83.  As further observed at [30] to [32] of the decision handed down herein on 29 August 2016, all the medical reports on Mr Leiduck can be taken as being in Mr Leiduck’s hands once they were compiled. Further, given his position as a director of IRC at all material times, Mr Leiduck’s knowledge of his own mental condition can be imputed to IRC.

84.  On these premises, the defendants were aware of Mr Leiduck’s dementia well before 22 August 2013 when the defendants disclosed the Stein Report:

(1) on 7 July 2011 when Dr Gallard diagnosed Mr Leiduck to be suffering from DLB; and

(2) on 3 January 2012 again when Dr Sondhauss found erratic and long-winded thought processes, reduced attention and concentration, impaired long-term memory, paranoid thoughts, misperceptions in the form of visual hallucinations and impaired relation to reality, and diagnosed Mr Leiduck to be suffering from moderate dementia.

85.  If the defendants had disclosed to the court and the plaintiff Mr Leiduck’s dementia in July 2011 or within a reasonable time thereafter, the controversial and protracted retrospective assessment of Mr Leiduck’s competency in 2014-2016 might have been greatly reduced in scope or even avoided altogether. This is so because precaution could then have been taken for (1) a contemporaneous assessment of Mr Leiduck’s competency on every occasion when he signed the Post-2011 Written Evidence and gave oral evidence; and (2) the advanced deposition of Mr Leiduck before his mental condition further deteriorated to a level caught by s 3(b).

86.  As it was, the defendants’ failure to make timely disclosure of Mr Leiduck’s diagnosed mental illness has caused both the court and the parties to expend considerable time and costs in taking or dealing with Mr Leiduck’s inadmissible evidence (both written and oral) and in hearing and determining the Competency Issue.

87.  The defendants’ initial delay in taking out the Inquiry Summons and the further delay and wasted costs caused by the defendants’ concealment of Mr Leiduck’s dementia have rendered a fair disposal of the Inquiry Summons much more unlikely.

88.  As said earlier, if the Inquiry Trial is allowed to continue, it is currently scheduled to complete in June 2024, which means that this court will have to assess the credibility of witnesses based on testimonies heard, and demeanour observed, over 10 years ago and to find facts relating to events that took place almost 30 years ago. Speaking for myself, I am not confident that such extraordinary time lapses would have no impact on my adjudication of the case. The court should not be put in such an invidious position.

89.  I am unsympathetic towards the defendants’ suggestion that the Dismissal Application is “inordinately late”. As said earlier, a person is not incompetent as a witness merely by reasons of his having any particular mental illness or condition, unless he appears thereby incapable of receiving just impressions of the facts respecting which he is examined or of relating such facts truly. And the precise nature and pathway of Mr Leiduck’s dementia was not fully uncovered until the defendants were compelled to make full disclosure of Mr Leiduck’s medical records including, in particular, the various nursing records which charted the changes in Mr Leiduck’s day-to-day (or even hour-to-hour) condition.

90.  Had the plaintiff made the Dismissal Application on the ground of concealment of Mr Leiduck’s dementia right after the disclosure of the Stein Report and/or the Pfeffer Reports, it would most probably have been met by the defendants with the answer that it was premature without first investigating how the dementia had affected Mr Leiduck’s capacity as a witness on the material dates within the meaning of s 3(b). Again, a person is not incompetent as a witness merely by reasons of his having any particular mental illness or condition, unless he appears thereby incapable of receiving just impressions of the facts respecting which he is examined or of relating such facts truly. Although the Stein Report and the Pfeffer Reports specifically addressed Mr Leiduck’s then ability to give evidence in a court of law, the legal test of incompetence applied was not precisely that under s 3(b). In any event, they did not purport to deal with Mr Leiduck’s mental state on the dates with which we were concerned.

Conclusion

91.  For these reasons, the proceedings under the Inquiry Summons should not be allowed to proceed any further. This is not a conclusion that any court would come to lightly, especially after a part-heard trial of over 60 days. However, such outcome appears to me to be the only just one on the very peculiar facts and circumstances of this case.

COSTS

92.  Costs should generally follow the event unless there is some justification for depriving a successful party of his costs: Yoe Han Yauw v Yoe Han Hian [2022] HKCA 498 at [20] (Au JA). The successful party may be deprived of whole or part of its costs if it has acted unreasonably or improperly in raising an issue, or where its failed allegation has caused a significant increase in the length or costs of the proceedings. It is most unusual and rare for a successful party to be ordered to bear the costs of the unsuccessful party: Yoe Han Yauw at [21] (Au JA).

93.  Order 62 rule 5(1)(e) requires the Court, in exercising its discretion as to costs, to take into account the conduct of all the parties, which includes whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue and the manner in which a party has pursued a particular allegation or issue.

94.  Applying these principles, the defendants should pay the plaintiff all the costs of and occasioned by the Inquiry Summons, save for the period after 16 April 2014 and before 23 February 2016.

95.  The exclusion of this period of time is intended to deprive the plaintiff of the costs attributable to the issue raised by the plaintiff with the purported support of Prof Lieh Mak, which was that Mr Leiduck was incompetent from January 2008 to January 2013. I have already set out my views on Prof Lieh Mak’s evidence in great detail in the Competency Judgment. The plaintiff was certainly unsuccessful in persuading the court that Mr Leiduck was of unsound mind before July 2011. As for the period thereafter, although the plaintiff managed to exclude the Post-2011 Written Evidence on the ground of Mr Leiduck’s incompetence, it was not the result of the court’s acceptance of Prof Lieh Mak’s evidence at all. Rather, it was a conclusion reached by the application of principles relating to the burden of proof under s 3(b).

96.  The plaintiff’s costs of the Inquiry Summons shall include the costs of the VCF Application both before the Court of First Instance and the Court of Appeal and the costs of the Dismissal Application.

97.  The costs awarded as aforesaid to the plaintiff should be taxed, if not agreed, on an indemnity basis with certificate for 2 counsel. The more generous basis for taxation in favour of the plaintiff is justified to reflect the court’s disapproval of the defendants’ abuse of process leading to the dismissal of the Inquiry Summons.

DISCLOSURE APPLICATION

98.  In Waddington Ltd v Chan Chun Hoo Thomas (No 3) [2017] 4 HKC 496, Chow J (as he then was) held at [18]-[19] and [30].

(1) The court has jurisdiction to make a non-party costs order against the funder of a party in an action under s 52A(2) of the High Court Ordinance.

(2) The court has an ancillary jurisdiction to order the party being funded and/or the solicitors acting for that party to disclose the identity of the funder as well as information and documents relating to the funding arrangement.

(3) The factors relevant to the court’s exercise of its discretion whether to order such disclosure are:

(a) the strength of the application as it now appears unassisted by disclosure;

(b) the potential value to the fair determination of the application of the documents of which the claimant seeks disclosure and whether they are likely to elucidate considerations highly probative of the exercise of the court’s discretion, or threaten to drag the application into a side alley of satellite litigation with diminishing returns for the overall issue;

(c) whether on a summary assessment it is obvious that the documents for which disclosure is sought will be the subject of proper legal professional privilege; and

(d) whether the likely effect of any order the court might be minded to make will be proportionate and just in all the circumstances.

(4) The information to be disclosed, or documents to be discovered, ought to be no more than what is reasonably necessary to enable the plaintiff to pursue the intended application for a non-party costs order against the funder.

99.  Generally, non-party cost orders will not be made against “pure funders”. To determine whether a person is a pure funder, Bokhary PJ stated in Re The Liberty Container (2007) 10 HKCFAR 256 at [30]-[31]:

“30 . …[The] balance which has emerged from cases like Knight, Hamilton and Dymocks provides, in our view, a good general guide when deciding whether or not to order costs against a funder who comes within the scope of s.52A.

31. This balance involves drawing a distinction between, on the one hand, a pure funder who funds litigation to facilitate access to justice by the funded litigant and, on the other hand, a self-interested funder who funds litigation not so much to do that as to gain access to justice for his own purposes. We hesitate to adopt or devise anything as a hard and fast test for deciding who is or is not a pure funder. But we think that the courts can usefully guide themselves by normally treating as pure funders those and only those who have no personal interest in the litigation, do not seek to benefit from it, are not funding as a matter of business and do not seek in any way to control its course. On this basis, a creditor who funded litigation for the benefit of the general body of creditors including himself is not a pure funder.” (emphasis added)

100.  In this case, both Mr Leiduck[34] and IRC[35] are plainly impecunious. It is inconceivable that either or both of them would have been able to sustain the prosecution of the Inquiry Summons without financial support from a funder or funders.

101.  Indeed, in August 2019, the plaintiff was in receipt of a letter from the German tax authority, the content of which suggests that the defendants are being backed by an individual named “Detlef Artur Hühne”.

102.  It is unclear at this stage whether this individual is a pure funder or not. There is no indication, for example, that this person is a moneylender or a friend or relative of Mr Leiduck. On the contrary, according to the German tax authority’s letter, this person is a lawyer, which tends to suggest that it would be likely that he or she would have some interest or control over this litigation.

103.  Hence, on the materials presently available, the plaintiff’s intended application for a non-party cost order has at least a reasonable prospect of success.

104.  The information now sought by the plaintiff, by way of answers to the few questions it has raised, would establish just the identity and address of the funder and whether he is a pure funder or not and would not normally be protected by any legal professional privilege. Without such information, the plaintiff cannot even begin to put up an application for any non-party cost order: Reeves v Sprecher & [2009] 1 Costs LR 1 at [23] (Sir Donald Rattee); Waddington at [31].

105.  For these reasons, I allow the Disclosure Application with costs to the plaintiff to be taxed on a party and party basis, if not agreed.

106.  With the dismissal of the Inquiry Summons, the remaining applications have become academic. I propose on a nisi basis not to make any order on them.

107.  Lastly, I thank counsel on both sides for their comprehensive assistance.