XCHRX TERREMARK INTERNATIONAL (ASIA) LTD. v. KATHLEEN JANE BUTLER

1997, No.A5601

IN THE HIGH COURT OF HONG KONG

COURT OF FIRST INSTANCE

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J U D G M E N T

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1. This is an application for an "unless order". On 27^th June 1997 I ordered the defendant to pay the sum of $659,578 into court. She has not done so, she has only paid $369,634 into court. The plaintiff now asks me to make an order that unless the defendant pays the balance into court within a specified time, the plaintiff shall have judgment in this case.

2. The history needs to be stated very shortly.

3. A Statement of Claim was filed in May. There has been no Defence filed. Not only that, there is no affidavit from the defendant saying what her defence will be. She left Hong Kong and went to Australia having removed funds from the plaintiff's bank account. That is not in dispute. There is apparently in the background some argument or issue over the circumstances of the termination of her services as a director of the plaintiff company. When the plaintiff's solicitors asked for the money back, her solicitors offered to have the money paid into court or that the money would be held by a stakeholder. When the plaintiff's solicitors wanted to take them up on that offer, they pulled away from it. They said she was holding a lien over the money. Then they were asked where the money was and for an undertaking that the money had not been dissipated. There was no reply to the letter which asked that question.

4. When the matter came before me on 27^th June 1997, there was no suggestion that the money or part of it had been spent. When I asked why the defendant did not wish to pay the money into court since all that she said was that she was exercising a lien over the money, her solicitor told me that since she had a lien, she had no right to pay the money into court; a rather odd proposition. I asked where the funds were and was told that they should be in her possession.

5. Only part of the sum was then paid into court, accompanied by a letter by the defendant's solicitors stating that as a bald fact, with no explanation whatsoever that the rest had been dissipated. So the plaintiff's solicitors asked by letter dated 4^th July for particulars of the disbursement. The answer the same day was that the defendant had disbursed the funds and would contact the plaintiff direct about that (presumably I suppose with some explanation).

6. There has been no such contact and there has been no such explanation. The papers in this application were served on 21^st July. On 26^th July, i.e. on Saturday last, the defendant's solicitors notified the plaintiff's solicitors that the defendant had applied for legal aid and asked for all proceedings to be stayed. Legal aid has not yet been granted.

7. There is no affidavit yet as to where the funds have gone; there is no Defence filed; there is no evidence as to the Defence itself; there is no explanation by the defendant as to why she has behaved as she has.

8. I asked the defendant's solicitors today where the money is and he tells me that he does not know. For the defendant to come before this court against the background of this history, having instructed a solicitor and she has not told what she has done with the money, can only be described as extraordinary.

9. I said at the first hearing that her conduct gives prima facie cause for considerable concern and a degree of suspicion as to the bona fides of her case. Everything that has happened since that hearing confirms that suspicion. I have no doubt whatsoever but that she is playing for time and that this application for legal aid is yet another step in that campaign. This court cannot and will not allow itself to be treated with such disdain.

10. I am told that there is a statutory provision which in the absence of a court order to the contrary requires once the application for legal aid has been filed, that proceedings be stayed. That provision is section 15 of the Legal Aid Ordinance. Subsection (4) of s.15, however, reads as follows :

"(4) Where any memorandum is so filed, then, unless otherwise ordered by the court in which the memorandum is filed, all proceedings in the action or in the appeal or in both the action and the appeal shall, ... be stayed ..."

And it then goes on to specify the period of such stay. In other words, there is a proviso to the subsection that entitles a court to stipulate that the statutory stay shall not operate. I shall so stipulate.

11. I direct that the proceedings shall, despite the application for legal aid, not be stayed. That is because there has been no satisfactory explanation whatever about the conduct of this defendant and about her reason for failing to obey the court order and because, in the circumstances, I am satisfied that the application for legal aid is made as yet another delaying tactic. I shall make an unless order, and I shall now turn to the terms of it.