ACROPOLIS LTD v. THE HONGKONG & SHANGHAI BANKING CORPORATION LTD

HCMP 1031/2018

[2018] HKCFI 1670

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1031 OF 2018

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REASONS  FOR  DECISION

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1.  On 13 July 2018, the plaintiff’s applications by originating summons (“OS”) and interlocutory summons (“Summons”) both issued on 6 July 2018 came before me as reserve summons judge. Notwithstanding the defendant banks’ indication of neutrality/no opposition, I refused to hear the applications and adjourned them to a date to be fixed with no order as to costs in respect of the hearing before me. I now give reasons.

2.  I can be brief about the circumstances leading to the plaintiff’s applications.

(1)  The plaintiff is the single largest registered shareholder of Aeso Holdings Limited (“Aeso”), a company listed on the Growth Enterprise Market of the Stock Exchange of Hong Kong Limited.

(2)  It is the petitioner in HCCW 218/2017, by which it seeks to set aside the subscriptions of, inter alia, 50,000,000 (25%) shares in Aeso by various placees (including the 5^th - 9^th, 13^th, 15^th and 16^th respondents therein) (“Placees”) on the ground that they are not independent of Aeso’s second largest registered shareholder, W&Q Investment Limited (“W&Q”), but are acting in concert, in collusion with and/or in association with W&Q and those behind or associated with it.

(3)  99% (49,500,000) of the Placees’ shares were placed through Cinda International Securities Limited (“Cinda”).

(4)  Pursuant to an order made by Mr Justice Harris in HCCW 218/2017 on 9 January 2018 (“Cinda Disclosure Order”), Cinda has disclosed to the plaintiff statements (“Statements”) of its 2 bank accounts with The Hongkong and Shanghai Banking Corporation Limited and Bank of China (Hong Kong) Limited (“Banks” collectively) on which Cinda has identified the deposits credited to the accounts of the Placees who obtained their shares in Aeso through Cinda (“Deposits”).

3.  The Statements however do not show the actual source(s) of the Deposits which, the plaintiff says, would reveal the precise connections between the Placees and W&Q.

4.  By the OS, the plaintiff seeks orders against the Banks for the disclosure, on affidavit, of information/documents regarding the identity of the payor(s) of the Deposits and for leave to disclose such information/documents to the relevant regulatory and law enforcement bodies including but not limited to the Securities and Futures Commission and the Hong Kong Stock Exchange.[1] The plaintiff so applies under s 21 of the Evidence Ordinance (Cap 8).

5.  Then, by the Summons, the plaintiff applies for orders that are in the same terms as those prayed for in the OS.  The margin of the Summons is indorsed with, inter alia, a reference to Order 29, rule 1 of the Rules of the High Court (Cap 4A).

6.  At the hearing, I asked Mr Clifford Smith SC (leading Mr Kerby Lau), counsel for the plaintiff, the following questions to which I did not get any satisfactory answers:

(1)  Why did the plaintiff issue fresh proceedings, instead of applying by summons under HCCW 218/2017?

(2)  Why did the plaintiff commence the new proceedings by an originating summons in Form 10 (i.e. the expedited form), and not the usual Form 8?

(3)  Why did the plaintiff issue an interlocutory summons, citing Order 29 rule 1, for the same orders as sought under the OS?

7.  The ascertainment of the source of the funding used by the Placees to obtain the Aeso shares they acquired through Cinda is said to be one of the objectives of the Cinda Disclosure Order: see paragraph 6 of the skeleton submissions of the plaintiff dated 10 July 2018. The present application is a further step in the train of inquiry started by the Cinda Disclosure Order.  It would have been logical for it to be made in the proceedings under which the Cinda Disclosure Order was made.

8.  An originating summons in Form 10, which gives a fixed return date, can be used only if it is prescribed / authorised / required under a written law: see Order 7, rule 2(1) and (1B).  I am not aware of any such written law in respect of an application under s 21 of the Evidence Ordinance.  Hence, even if proper reasons had existed for the commencement of fresh proceedings by originating summons, the plaintiff should have used Form 8 (which gives no fixed return date) and in due course issued a separate notice of appointment to obtain a hearing date (see Order 12 rule 3(1)).  Paragraph 1 of Practice Direction 5.8 (Originating summonses set down for hearing by judges) cautions practitioners to comply with Order 7 rule 2 which specifies the form of originating summons to be used.  Non-compliance may delay the proceedings or result in the summons being dismissed.  It may also have costs consequences.

9.  What I find most objectionable is that not only has the plaintiff improperly obtained a fixed return date by the unauthorised use of a Form 10 originating summons, it further secured a hearing before the summons judge on the next available summons day.  The Friday summons day is reserved for the hearing of summonses for interlocutory injunctions, including those where injunctions have been granted ex parte.  See paragraph 1.1 of Practice Direction 5.3 (Listing and hearing of summonses for interlocutory orders and injunctions).  An originating summons (even one in Form 10) for orders of the type sought by the plaintiff would never have been listed before the summons judge.  The OS was so listed only because the plaintiff saw fit to issue the Summons purportedly under Order 29 rule 1 at the same time.

10.  As far as I can see, the Summons serves no substantive purpose.  The orders applied for thereunder overlap completely with the orders sought under the OS.  The inference that I draw is that the plaintiff took out the Summons solely to squeeze its application onto the list of the summons judge on the next available summons day so as to get a quick disposal.  It did so by indorsing the margin of the Summons with a reference to Order 29 rule 1 when none of the orders applied for is within the scope of Order 29.  The citation of Order 29 rule 1 is misleading, and I say, deliberately so.

11.  Such procedural manoeuvre is inexcusable.  There is no urgency in the application.  The availability of the information / documents sought by the plaintiff is not going to be prejudiced by the normal waiting time for a hearing.  The petition in HCCW 218/2017 has not yet been set down for trial.

12.  No doubt the plaintiff has anticipated the Banks to adopt a neutral stance and hoped that the court would somehow overlook the procedural irregularities.  This kind of mentality should be discouraged. That the plaintiff may eventually obtain the information / documents it desires is neither here nor there.  It is wrong as a matter of principle to allow a party to retain, or benefit from, an advantage that it has obtained solely through abusing the process of the court, especially where the abuse appears to be intentional.