Re Robin Potts QC

HCMP5047/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 5047 of 2001

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J U D G M E N T

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1. This is an application by Mr Robin Potts QC for admission as a barrister in the High Court for the purpose stated in the Notice of Motion i.e. "advising and appearing for the plaintiff in HCA No. 8033/1998 in its appeal against two orders of Deputy Judge Woolley on 12 April 2001 and any further appeals arising thereto and in any other appeals arising from or relating to the action, interlocutory or otherwise."

2. The Bar Association opposes the application. The Secretary for Justice takes a neutral stance.

3. The orders being appealed against arose out of two subpoenas issued by the plaintiff in the course of the proceedings in HCA 8033/1998. The action is for the return by the defendant of a sum of money or its traceable products which the plaintiff claims is held by the defendant for the benefit of the plaintiff under a constructive trust which arose because the conscience of the directors of the defendant was impinged. The plaintiff claims that the financial position of the Peregrine Group on which the defendant's ability to perform its financial obligations under the swap agreement depends and the knowledge of the directors at the relevant time is crucial to its case. The plaintiff's efforts in discovery of documents from the defendant regarding the financial position of the Peregrine Group produced no fruitful results. As a result, the plaintiff issued two subpoenas to Mr Hague, one of the joint and several liquidators of Peregrine Investments Holding Ltd (PIHL), the holding company of the Peregrine Group. The subpoenas required Mr Hague to produce information and documents pertaining to the relevant financial position of the Peregrine Group. A consent order was made in respect of the first subpoena. The plaintiff subsequently applied to the court to enforce compliance of the first subpoena by Mr Hague. Mr Hague in return applied to the court to have the second subpoena set aside. On 12 April 2001, Deputy Judge Woolley by order, dismissed the application to enforce compliance and granted an order setting aside the second subpoena. The plaintiff has now appealed against these two orders. The appeal is therefore on a procedural matter at the interlocutory stage of the proceedings.

4. These appeals of the plaintiff will be heard on 29 and 30 November 2001. In his application, Mr Potts QC seeks admission in order to appear for the plaintiff in these appeals.

5. That Mr Potts QC is a leading counsel of high quality and standing in the area of constructive trust and company law is not disputed. Mr Potts QC has in fact been already admitted on 23 September 1999 to conduct the proceedings of the action. In his judgment granting the application for admission, Chief Judge Patrick Chan recognised the case involved particularly difficult questions of law in the area of constructive trust and complicated factual issues and in addition, transactions with international elements. Because there were such difficulties and complexities, the Chief Judge considered that contribution by overseas experts in this area of law would benefit local jurisprudence in Hong Kong. For that reason, he granted the application to admit Mr Potts QC.

6. The order of the Chief Judge is that Mr Potts QC be admitted "for the purpose of the conducting civil proceedings referred to in the supporting affidavit filed herein, namely HCA No. 8033/1998." The order though worded in general terms, is for the purpose of conducting the civil proceedings in the action in question only. Appeals therefrom have not been expressly included.

7. The present application is made on the grounds that (a) the order by the Chief Judge is a blanket order in wide terms which include conducting interlocutory proceedings and appeals from proceedings in the action and (b) the issues involved in the appeals are unusually complex in law and facts.

8. The Bar Association's grounds of objection are that the appeals are purely on procedural matters and it is not necessary to instruct London leading counsel for any kind of interlocutory application in the action whether of complexity or not or only involving matters of procedure. There is no unusual difficulty or complexity in the appeal. The objection is also that the appeals do not involve legal principles which have any substantial or profound impact on Hong Kong law.

9. Mr Sarony QC for the applicant submits that it has been the practice of the Hong Kong High Court to admit overseas counsel who have been admitted to conduct litigation at first instance to continue to do so on appeal from first instance decisions and since interlocutory matters are an intrinsic part of the proceedings at first instance, it is logical that overseas counsel so admitted be permitted to conduct appeals from interlocutory decisions.

10. On the question of complexity, the supporting affidavit of Camille Jojo referred to the following extracts from junior counsel's further certificate:

" ...the crucial issue as to whether or not a constructive trust arose therefore depends on the Defendant's ability to have performed its obligations under the swap transaction, which in turn depends upon the financial position of the Peregrine Group as a whole at that time and various defaults which occurred under various financial instruments. These included but were not limited to, Commercial Paper Programmes, Floating Rate Note Programmes, currency swaps the subject of the International Swap Derivatives Association Master Agreements (ISDA) (which in turn contained complex provisions for close out and netting off of extant transactions under an Event of Default) and other fixed income products. The complex matrix of facts in terms of establishing the relevance of the documentation sought under the two Writs of Subpoena ... require a detailed understanding and expertise in respect of these complex financial instruments and the ramifications to the financial position of the Peregrine Group as a whole as a result of the various defaults, which occurred on and prior to 9th January 1998."

11. Mr Sarony QC submits that extensive discovery is necessary for the determination of the question of whether the directors' conscience had been so impinged as to give rise to a constructive trust. The complexity and the nature of the interconnecting financial transactions in which the Peregrine Group was involved and the operations of the ISDA and International Foreign Exchange Master Agreements, have to be both understood and the correlative need appreciated by the court so that it can follow the requirements of discovery in specific data. These require to be explained by highly qualified and experienced leading counsel in this specialty and this is where the particular expertise of the applicant who has already been admitted to conduct this litigation will be of enormous assistance to the Court as well as to the plaintiff in the appeals in question.

12. Mr Chua for the Bar Council submits that the appeal do not raise any issue as to the legal principles applied by the Deputy Judge in dealing with the two applications on 12 April 2001. The grounds of appeal only raised issues of relevance of the documents, whether it would be oppressive to require compliance with the subpoenas by the liquidator and the question of possession of the documents sought. These relate to the application of legal principles which are well established. There is no suggestion that these might involve a determination by the Court of Appeal or the Court of Final Appeal of legal principles which might impact upon the development of local jurisprudence. The appeals are on the discretion of the Deputy Judge and junior counsel are quite able to deal with the issues involved in the appeals. Mr Chua submits that the applicant has failed to satisfy a basic requirement of the guidelines for admission in Re Flesch [1999] 1 HKLRD 506.

13. It is also submitted that the order of the Chief Judge did not expressly or implied state that Mr Potts QC was to be admitted for all or specified interlocutory applications and appeals therefrom. It cannot be said that the order covers appearances in the appeals in question. Further, it is submitted that in a number of other interlocutory applications in the course of the proceedings in this action, for example, the discovery application before Sears J and further and better particular applications, where the same issues of relevance and necessity were involved, no London leading counsel was instructed.

14. The leading case on admission of overseas counsel Re Flesch held that the paramount consideration is public interest and it is for the applicant to show "that the case in which he is briefed to appear is a suitable case which involves the determination of legal principles which may have an impact on the development of local jurisprudence and that he is of a sufficiently high quality and standing to be in a position to make a useful contribution". But it also held that "the court should adopt a flexible and sensible approach in dealing with such applications, balancing different aspect of the public interest".

14. In Re Hogate QC [2001] 2 HKLRD 425, Burrell J held that not all interlocutory matters would merit the admission of the Queen's Counsel conducting the trial, but where the outcome of the interlocutory matter could dispose of the whole action and the appeal process is very likely to be engaged whatever the outcome of the interlocutory hearing, then if no objection is taken to the admission for trial the application for admission for the interlocutory hearing is considerably strengthened.

15. As has been recognised by Chief Judge Chan and I agree, the plaintiff's action is no doubt one involving complex factual issues and difficult questions of law in the area of constructive trust. The applicant Mr Potts QC is undoubtedly a highly qualified and well experienced leading counsel in this area of law. The court had accepted that Mr Potts QC could make useful contributions to the development of local jurisprudence in the area of constructive trust and swap agreements and on that basis, it would be in the public interest to admit him to conduct the proceedings at first instance. The question is, having regard to this background whether it is also in the public interest to admit him to conduct the appeals the outcome of which, the plaintiff claims, would be crucial to its case. I should also mention at this stage that the present application is not an initial application to appear in an interlocutory appeal which requires quite different consideration.

16. The plaintiff's case of constructive trust depends much on establishing that the defendant's directors' conscience has been impinged. For this purpose, the plaintiff claims that the information and documents sought by subpoenas would assist the plaintiff to ascertain the financial position of Peregrine and the knowledge of the defendant's directors at the relevant time. In my opinion, the applicant with his expertise and experience in this area would be best qualified to assist the court in understanding the nature and importance of the documents sought and their relevance to the appeals on whether the subpoenas were properly issued and should be enforced. The importance of the subpoenas is so linked to the importance of the trial that the outcome of the appeals may so weaken the plaintiff's case as to disable it from further proceeding, in which case it may be necessary to invoke further appeal process. In these circumstances, it would be against public interest not to allow counsel admitted to conduct the proceedings at first instance to be admitted also to conduct appeals from the interlocutory applications arising therefrom on matters such as issue and compliance with subpoenas.

17. It may be that generally, appeals involving interlocutory matters may be competently handled by junior counsel but that does not follow that that is so in all cases. Every case must be considered according to its particular circumstances and the court must adopt a flexible and sensible approach. Having regard to what have been said earlier, in my opinion, this is an appropriate case that in the public interest, this court should exercise its discretion to allow Mr Potts QC to be admitted for the purpose of conducting the appeals in question. For the avoidance of doubt, I make the order that Mr Potts's application be granted and he is admitted as a barrister in the High Court of Hong Kong for the purpose of conducting the proceedings relating to the appeals to be heard on 29 and 30 November 2001 and not otherwise.