DYMOCKS FRANCHISE SYSTEMS (NSW) PTY LTD v. DYMOCKS FRANCHISE SYSTEMS (CHINA) LTD

HCMP 2143/2018

[2019] HKCFI 500

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 2143 OF 2018

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DECISION

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1.  The is, or was at least meant to be, the substantive hearing of the various matters first came before me on 22 January 2019. As will be explained later, the main issue is whether Norton Rose Fulbright (“NRF”) should be granted leave to intervene in the present proceedings, or otherwisepermitted to “search for, inspect and obtain a copy of all the documents filed in the present proceedings”.

The hearing on 22 January 2019

2.  When the parties first came before me on 22 January 2019, there were three matters before the Court, namely:

   (a)   the Originating Summons (“Originating Summons”) taken out by the plaintiff (“Dymocks NSW”) on 5 December 2018 returnable on 22 January 2019 for leave pursuant to section 733(1) of the Companies Ordinance to intervene in HCA 613/2015 (“HCA 613”) for the purpose of continuing and/or defending HCA 613 for and on behalf of Dymocks Franchise Systems (China) Limited (“Dymocks HK”), Dymocks HK being the plaintiff in HCA 613;

   (b)   Summons (“Interim Summons”) taken out by Dymocks NSW on the same day for certain interim relief, namely that it be permitted to operate certain bank accounts of Dymocks HK for the purpose of settling the legal fees of Dymocks HK incurred or to be incurred for HCA 613; and

   (c)   Summons taken out on 17 January 2019 by NRF (the “NRF Summons”), the defendant in HCA 613, to intervene in these proceedings and to search for, inspect and obtain a copy of all the documents filed in the present proceedings. 

3.  The NRF Summons was supported by the affidavit dated 17 January 2019 of Wong Yiu Pong, a solicitor with Dentons Hong Kong LLP, solicitors for NRF.  Parties had also filed substantial submissions in support or opposition of the matters.  Only 30 minutes had however been scheduled for all those matters. Further, the NRF Summons was only taken out shortly before the hearing. Dymocks NSW had not had the opportunity to file any evidence in response.  In the circumstances, and having heard parties, I decided to adjourn all the matters for substantive hearing. However, I noted that the trial of HCA 613 was due to commence on 18 February 2019.  In the hope that all the matters before me could be dealt with before the commencement of HCA 613, I imposed a tight timetable for parties to file evidence.  I further directed parties to come back before me in the afternoon of 12 February 2019 with two hour reserved.  I also urged parties, should the special counsel procedure be adopted for the purpose of the inspection sought, to agree upon the identity of the special counsel.

Between 22 January and 12 February 2019

4.  On 29 January 2019, Dymocks Holdings Pty Ltd (“Dymocks Holdings”) took out a Summons (“Amendment Summons”) to amend the name of the plaintiff herein from that of Dymocks NSW to that of Dymocks Holdings, or otherwise to have it substituted as the plaintiff.  I will come back to this Summons.

5.  Also on 29 January 2019, Mr Choi Ching Lam, a trainee solicitor for Dymocks NSW, filed an affirmation.  He exhibits therein an unaffirmed affirmation of Mr Andrew Dymock Forsyth (“Forsyth 2^nd”, since affirmed and filed).  That draft affirmation is relied upon by Dymocks NSW and Dymocks Holdings in support of the Amendment Summons and in opposition of the NRF Summons.

6.  No further evidence has been filed on behalf of NRF.

7.  Further written submissions have been filed by Mr John Hui and Mr Kevin Lau, counsel for Dymocks Holdings and Dymocks NSW.

8.  No further submissions have been filed on behalf of counsel forNRF.  I have further been informed that NRF had, despite request, declined to agree on directions for any special counsel arrangement.

HCA 613

9.  In respect of HCA 613, I need to say no more than this to set the background.  As mentioned above, Dymocks HK is the plaintiff.  NRF is the defendant.  The claim is for professional negligence.  NRF also has a counterclaim for unpaid legal fees.  The trial is due to commence on 18 February 2019.

The present proceedings

10.  The background leading to the commencement of the present proceedings has been explained in Forsyth 2^nd. In gist, there had been (I say “had been” deliberately, as will be clear later) some disputes between the indirect shareholders of Dymocks HK.  Funding for the continuous prosecution of HCA 613 could no longer be accessed.  According to Forsyth 2^nd (at paragraph 23):

“ Left with no choice, the proceedings herein were commenced on 5 December 2018 for leave for [Dymocks NSW] (which should in fact have been Dymocks Holdings) to intervene into [HCA 613]. At the same time, urgent interim relief was sought that, pending determination of the Originating Summons, [Dymocks NSW] (which again should have been Dymocks Holdings) be authorised to give instructions to DLA Piper on behalf of Dymocks HK and to operation all bank accounts of Dymocks HK for the payment of legal fees.”

11.  Since commencement of the present action, Dymocks NSW (and Dymocks Holdings) have reached agreement and settlement with the other indirect shareholders.  Dymocks Holdings no longer seeks to pursue the present proceedings (or the Interim Summons).  The only pending issue is costs.  Indeed, the Court was informed of this on 21 December 2018, well before the return day of the Originating Summons.   That position was confirmed during the hearing on 22 January 2019, and has remained the same as of today.

The NRF Summons

12.  Parties now come back before me.  I expect the matters to be proceeded with.  But whilst on his feet, Mr Wong, solicitors appearing for NRF, informs me for the first time that NRF do not intend to proceed with the NRF Summons today.  He seeks an order that it be adjourned sine die, with costs against Dymocks NSW.  Mr Wong submits that his clients want to take a pragmatic approach to the matter and to save costs.  He submits that NRF has substantially got what his clients have set out to obtain.  He further submits that despite the imminent commencement of HCA 613, Dymocks NSW may still do something to harm his clients, though he has failed to point to any evidence in support of this grave submission. 

13.  I repeat the history set out above.  I agree with Mr Hui’s submissions that once HCA 613 has commenced and been completed, and bearing in mind the nature of the order which NRF are seeking via the NRF Summons, there is simply no point and utility in having the NRF Summons adjourned and hanging in suspense.  Compared with dealing with the matter today, adjourning the NRF Summons would in fact increase the costs rather than saving any.

14.  In the circumstances, I refuse the application to adjourn.

15.  I will hear parties on the further conduct of the matter.

16.  Having heard my reasons for refusing his application to adjournthe NRF Summons, Mr Wong applies to have the NRF Summons discontinued.  Mr Hui does not object.  I grant leave to discontinue save the issue on costs, which I will proceed to hear submissions.

The Amendment Summons

17.  As has been explained in Forsyth 2^nd, the Amendment Summons is necessary because of an “unfortunate mistake” by his team in identifying the name of the appropriate indirect shareholder of Dymocks HK to pursue the Originating Summons.  The mistake is indeed an unfortunate one.  However, having considered the nature of the mistake, the absence of any prejudice, and the fact that a settlement has in effect been reached, I allow the application, and order the name of the plaintiff be amended to that of Dymocks Holdings.

The Originating Summons and the Interim Summons

18.  In the light of the settlement, I accede to Mr Hui’s requests and make the following Orders:

   (a)   in respect of the Interim Summons:

 (i)   I make no order as to paragraph 1;

 (ii)   I order that costs be in the cause of the Originating Summons; and

   (b)   in respect of the Originating Summons, and so that the issue of costs can be revisited upon the conclusion of HCA 613:

 (i)   I order that the same be adjourned sine die with liberty to restore;

 (ii)   costs of the Originating Summons be reserved; and

 (iii)   given the fact that there are certain materials now in the court file which are clearly protected by legal professional privilege, I am in principle prepared to order that certain documents currently in the court file be placed in a sealedenvelope which should not be opened, released, inspected and/or copied without specific leave of this court.  I however require from Mr Hui precise identification of those documents, which he will do in the form of a draft order to be submitted.