VELATEL GLOBAL COMMUNICATIONS INC AND ANOTHER v. CHINACOMM LTD AND OTHERS

HCA 1978/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1978 OF 2011

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REASONS FOR DECISION

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1.  By his summons dated 18 February 2016, D6 (Qiu Ping) applied for an order vacating the trial dates of 10-13 May 2016. It was heard at the PTR on 26 February but was adjourned to enable D6 to file proper evidence to enable the court to come to a decision. At this 2^nd PTR, I dismissed the summons with costs to the plaintiffs. Here are my reasons.

The legal principles

2.  The factors to consider in such an application have been set out in Arko Ship Leasing Ltd v Winsmart International Shipping Ltd [2013] 2 HKLRD 121, G Lam J, §14:

(1) What is the nature of the proceedings? What is at stake to the parties, in particular to the plaintiffs who seek the adjournment?

(2) Would the relevant witnesses definitely not be available to give evidence in any manner — for example, if a witness is unable to come to Hong Kong, is it possible nevertheless to receive his evidence via videolink?

(3) What is the nature of the difficulty preventing the witnesses from attending, and is the applicant responsible for creating that difficulty and if so to what extent?

(4) What is the nature of the evidence each relevant witness is intended to be called to give? Is he the only possible source of such evidence?

(5) Has the party seeking the adjournment made efforts to locate other persons who may be able to stand in to give similar evidence?

(6) Will the adjournment be likely to address the problem faced by the applicant?

(7) What is the risk of prejudice or other disadvantage to other parties if the adjournment is granted?

(8) The application must also be viewed in terms of the wider implications on the administration of justice. In particular, I have in mind the public interest in the efficient despatch of the court’s business, and the effect on the interests of future litigants of vacating a hearing close to the date and possibly leaving the court empty. In this context, I should take into account the timing of the application for adjournment.

Application of the legal principles

3.  The claim involved a dispute between foreign investors (the plaintiffs) and Mainland domestic entities (the defendants) over a joint venture in the telecommunication business.  D6 was the central figure in the defendants’ camp.  The plaintiffs claimed for breach of contract.  It was also the plaintiffs’ case that the defendants’ camp had removed designated funds for the joint venture without their approval.

4.  The summons was supported by 2 affirmations of Ms Lam of Lam & Co, solicitors for D6.  In essence, D6 was charged with fraud and was detained.  He might not be able to attend the trial in Hong Kong. 

5.  The plaintiffs’ solicitors have very properly raised a number of questions by letter, including the circumstances of D6’s arrest, his place of detention, the charge, the date of bail application, dates for trial and the maximum penalty upon conviction. 

6.  At the last PTR, I have directed D6 or a solicitor of Hong Kong who had visited him face to face to file an affirmation to answer the plaintiffs’ queries.

7.  Without disrespect, the 2^nd affirmation of Ms Lam filed as a result was not helpful.  Neither she nor the only 2 persons in the Mainland allegedly allowed to see D6 had seen him during the adjournment. There was no first hand evidence or documentary evidence from the relevant Mainland authority about D6’s arrest, detention or charge.

8.  Further, it transpired that D6 had been detained since 26 October 2015. He was charged at Wuhan Intermediate People’s Court on 14 January 2016.  He only informed Lam & Co a month later.  There was no explanation for this delay.

9.  Ms Lam was allegedly told by the Mainland lawyer that it was estimated that trial would start in the latter half of April 2016.  The basis of that estimation was not stated.  How long that trial would last was also unclear. Ms Lam has been told that the sentence upon conviction of the charge would be 10 years or more. 

10.  I should not speculate on the outcome of the trial in the Mainland.  If D6 were convicted, he might not be able to attend the trial in Hong Kong for some time and it would be unfair to ask the plaintiffs to wait.  On the other hand, if D6 were acquitted or the trial finished in good time, there was no reason why he could not attend the trial in Hong Kong in May.

11.  The evidence before the court as to why the trial dates should be vacated was overall flimsy and not credible. 

12.  Applying Arko Ship, with regard to factor (1),the plaintiffs’ claim was substantial, for restitution of the sum of US$9.75 million and loss of profits.  The defendants’ counterclaim for US$186.25 million had been dropped.  Only an amount of US$213,000 had been frozen by the Mareva injunction.  There was little incentive for D6 to litigate.

13.  With regard to factors (2)-(5), accepting that D6 was a crucial witness, D6 has failed to provide credible proof of his unavailability for trial in Hong Kong.  He has not even attempted to apply for giving evidence by video link or letter of request.  It was not open to him to ask for vacating of trial dates now and then explore the possibility of a video link later.

14.  With regard to factor (6), there was no credible evidence that the adjournment would address the problem faced by him in view of paragraph 10 above.

15.  With regard to factor (7), the prejudice to the plaintiffs was substantial.  Mr Chan, counsel for the plaintiffs has reminded me of my views of D6 when the plaintiffs applied for Mareva injunction.  In my Decision dated 26 October 2012, it was stated that D6’s explanation as to why funds were withdrawn were incredible (§50).  The surety agreements put forth by the defendants’ camp were very suspicious (§§111 & 112).  I took the view that there had been shameless efforts by D6’s camp to remove US$4.7 million out of reach of the plaintiffs and to conceal the true picture.  Dissipation was not only a risk but a fact (§120).  D6 had not made full and frank disclosure (§124).  Mr Chan informs me that this was still the position today. D6 had sought leave to appeal against the Decision but abandoned the appeal. 

16.  The risk of prejudice to the plaintiffs would be their having to wait for another period of time before getting a judgment against a defendant who appeared to be evading it, with the minimum security.  See factor (1).

17.  With regard to factor (8), the vacating of trial dates may waste the court’s time but this is not the most important consideration in the circumstances of the present case. 

18.  Considering all the circumstances, I am not satisfied that the trial dates should be vacated.

19.  The summons also asked for leave to adduce a new witness statement of Li Hong Ji.  There was no draft attached to the summons despite the plaintiffs pointing this out to D6 at the last PTR.  There was simply nothing on which the court could exercise its discretion.

20.  For the above reasons, I have dismissed the application.

21.  Costs should follow the event and be to the plaintiffs.  It was not opposed.  I therefore summarily assessed costs at $35,000 in favour of the plaintiffs.