CHOW STEEL INDUSTRIES PUBLIC CO LTD AND OTHERS v. KO SUNG AND OTHERS

HCMP 2711/2017

[2018] HKCFI 1622

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 2711 OF 2017

________________

________________

________________

____________________

D E C I S I O N

____________________

1.  On 15 December 2017, an application was made by the plaintiffs to obtain a Mareva injunction before Louis Chan J in aid of foreign proceedings in the current proceedings in the Kingdom of Thailand. The idea is that that is a judgment which would ultimately be enforceable (if the plaintiff succeeds) at common law.

2.  The plaintiffs then took out an inter partes summons to continue the said injunction before the summons judge.  On 22 December 2017, the injunction was continued by Louis Chan J, who then adjourned it to 19 January 2018.

3.  Two days before that hearing, on 17 January 2018, the defendants applied by their summons to discharge that injunction.  I note that in that summons the defendants had sought in paragraphs 4 and 5 for fortification of the plaintiffs’ undertaking as to damages.  And in the event that the plaintiffs fail to give a security of fortification in the manner as ordered by the Court, the injunction should be discharged.

4.  There was also a request for security for the defendants’ costs in such sum as may be ordered by the Court.

5.  The matter then came before Madam Justice Lisa Wong on 19 January 2018, whereby Her Ladyship gave directions for the filing of evidence.  At that stage of course the defendants had yet to file substantive evidence in opposition to the injunction and in support of the discharge of the said injunction.  Her Ladyship specifically queried whether in fact one day for argument would be sufficient.  This was acknowledged to be “tight” by the defendants, but understandably the defendants were keen to get a date as soon as possible.

6.  I note Her Ladyship then made the following apt observation.  She said:

“Well, it would take longer to get the two-day hearing. Now, well, the parties should keep the time estimate under review. At the moment, we only have the plaintiffs’ evidence, we haven’t seen the defendants’ evidence. But if after the exchange of evidence is completed the parties apprehend the risk that the hearing may go over one day it is to their advantage to immediately inform the court so that alternative arrangements can be made because it always takes longer for hearing to complete if the matter has to go part-heard after day one. So keep the time estimate under review.”

7.  At the same hearing Her Ladyship dealt with the other applications by the defendants.  I note that in terms of fortification the position simply was that the summons would be adjourned and it was noted by the defendants at the said hearing that an application for variation could be made before the Court.  If not, it would be dealt with at the substantive hearing.

8.  It seems to me that the question of fortification and security for costs are matters which are to be looked at flexibly because inevitably in injunction proceedings there are matters which may from time to time arise which will have an impact on either the amount which is appropriate for the security for costs or for the question of fortification and the said quantum.

9.  HK$1 million was ordered for security for costs.  On 26 January 2018, the plaintiffs paid the amount into Court.

10.  On 23 March 2018, the 1^st defendant filed his fourth affirmation in support of his own application and against the plaintiffs’ application for the continuation of the injunction.  That affirmation contains 204 paragraphs spread over 50 pages, excluding two schedules.

11.  As a result of a number of time extensions, on 10 May 2018, the plaintiffs then filed their affirmation in reply.  That contains 152 paragraphs spread over 65 pages.

12.  In addition, the parties have filed evidence on issues pertaining to Thai law and in total these exceed 70-odd pages.

13.  On 16 May 2018, the defendants sought leave to adduce further evidence, ie the fourth affirmation of the 2^nd defendant, which is quite short, and the fifth affirmation of the 1^st defendant, which contained 16 pages.  They also seek to adduce a copy of a letter from Thai lawyers, ES Counsel.  It was explained that the need for filing this evidence was as a result of “new points”, which had been made in the affirmation in reply by the plaintiffs, and therefore that the defendants did not want it to be said that the plaintiffs’ evidence was somehow uncontradicted or not otherwise disputed.

14.  Shortly prior to the hearing, after I had considered the parties’ helpful and comprehensive skeleton submissions, the Court wrote to the parties seeking what they regarded to be a proper time estimate for the hearing of the various summonses as I considered that it was very likely that it would go beyond one day.

15.  At the hearing itself I raised a further matter.  I noted that neither parties had adduced the evidence on Thai law by way of affidavit evidence, but that the plaintiffs had done so in the form of a report, whereas the defendants had relied on what was in effect advice or opinion contained in the form of letters and that no leave had been sought by either parties to adduce expert evidence.

16.  I further drew attention to the judgment dated 24 February 2016 by Harris J in Re China Medical Technology Inc [1] and in particular paragraphs 49 to 53.  This dealt with not only the question of the form in which expert opinion was to be contained in, but also the requirement that it complied with Order 38, rule 37C(1), which deals with the declaration by the expert that he understands the duties owed to the Court.

17.  Whilst that had been complied with by the plaintiffs’ expert, this was not contained in the defendants’ letters.  This is not meant to be just a technical or formal requirement.  In any event, it was not the only reason why I had some doubt about the form and contents of the report of the Thai lawyers which the defendants seek to rely upon.

18.  I noted that at paragraph 2 of the first opinion or letter, it was stated by those preparing it that—

“In this regard, we have provided our opinion on a no liability basis in deciding what we believe is likely to be materially relevant to be considered by the court.”

19.  In the second letter by ES Counsel, a whole section was dedicated to what was entitled a disclaimer.  It stated as follows:

“26. Our legal opinion is made solely from the Thai law perspective and based on the limited information provided to us. As a result, it could be subject to further change should there be any additional information available to us.

27. It is also important to note that part of our analysis is based on the interpretation of the Supreme Court’s judgments which are not the law and subject to change.

28. This legal opinion is addressed to Mr Sung Ko [1^st defendant] as per the request of Ms Rattanaporn Choklap and not to be transmitted to anyone else nor is it to be relied upon by anyone else or quoted or referred to in any public document or filed with anyone without our prior written consent.”

20.  In those circumstances, I was concerned whether the Court could properly take into account either one or both parties’ expert opinions on the question of Thai law which looms large because this is an application which is based on an eventual Thai judgment if the plaintiffs succeeded. 

21.  As a result of these concerns, I raised with the parties a number of possible options as to how best to proceed bearing in mind that this is an application to discharge Mareva injunction and the obvious prejudice caused by such an application to defendants who are subject to it.

22.  Having consider the various options, it seemed to me that the only viable option was to adjourn the application for a two-day hearing so that all the factual evidence would be admitted and that all the Thai expert law reports will be properly put and properly admissible before the Court.

23.  Having gone through the affirmations and the helpful skeletons prepared by the parties it seemed to me that two days is in fact already a tight and conservative estimate.  But bearing in mind that the matter has to be properly determined as soon as possible, I agreed with the two-day estimate.

24.  The only other issue which arose as a result of this adjournment is whether the current position in terms of security for costs and fortification is appropriate.  I note what was stated at the hearing before Madam Justice Lisa Wong where this was first considered.  It seems to me that this is a matter which the Court can always revisit.  I do not consider that the only reason why fortification should now be considered is because of a delay as a result of filing of late evidence.  At the end of the day even if the Court had proceeded to hear the argument, unless judgment was to be delivered immediately there would be a time gap between the hearing and delivery of the judgment.  And during that period a loss could conceivably arise by reason of the defendants having suffered by reason of the injunction, which later transpired should not have been granted.

25.  I have regard to the financial statements which were in the evidence produced by the 1^st plaintiff and some of the criticisms which were made by the defendants as regards the financial situation of the plaintiffs and their debt position.  I do not intend to conduct a scientific exercise.  Suffice to say that the 1^st plaintiff is out of the jurisdiction and there is no suggestion that it has assets, whether of a fixed or liquid nature, within the jurisdiction.

26.  Having considered that there might be an adjournment of a matter of weeks or perhaps a couple of months, it seems to me that having regard to the amounts which have been disclosed by the defendants currently subject to a Mareva injunction, that the amount of HK$1 million being interim fortification would be appropriate.

(Submissions regarding filing of evidence and costs)