GLOBAL BRIDGE ASSETS LTD AND ANOTHER v. SUN HUNG KAI FINANCIAL LTD

HCA 1701/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO 1701 OF 2014

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REASONS FOR JUDGMENT

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Introduction

1. At the end of the hearing on 12 May 2016 (and in the plaintiffs’ absence), I granted an order in terms of the defendant’s summons; that is:

(a)   a peremptory order that, unless by 4 pm on 26 May 2016, the plaintiffs pay to the defendant the costs in accordance with the consent orders dated 29 October 2013 (in HCA 317/2008, HCMP 2275/2011, CACV 242/2011, CACV 243/2011 and CACV 275/2011), the statement of claim be stuck out and this action be dismissed;

(b)  Mr Chin Kam Chiu (also known as Chun Kam Chiu) (“Chin”) be joined as a party to these proceedings for the purpose of costs only.

The questions or issues of fact annexed to the order dated 29 September 2015 (made in the course of the above summons) were answered in the negative; that is:

(1)  there was no assignment to the 2^nd plaintiff of a debt of RMB16.3 million allegedly owed by the defendant to the Joint Venture Company referred to in the statement of claim herein, and as alleged by Mr Fu Chiu Wa (“Fu”) in para 12 of his affirmation;

(2)  notice of such assignment was not given to the defendant (as alleged by Fu in para 13 of his affirmation).

The reasons for the above orders appear below.

Background

2. The background leading to the above has been set out in:

(1)  the decision dated 29 September 2015 (para 3 to 18 thereof);

(2)  the court of appeal’s judgment dated 1 April 2016 (HCMP 172/2016) (para 2 thereof).

3. In summary, the defendant sought to dismiss this action on the ground that the plaintiffs had failed to pay the costs of an earlier action (HCA 317/2008) (and its subsequent appeals).  The total amount of costs was agreed at about $5.3 million.

4. To resist the application to dismiss this action, the plaintiffs (through Fu’s affirmation) put forth an allegation that they were the assignees of a debt of RMB16.3 million, which the defendant allegedly owed to the assignor.

5. The defendant successfully argued earlier that the alleged debt assignment should be tried as a preliminary issue (para 19 to 22, 29 September 2015 decision). Further, it contended that Chin was the “mastermind” behind the above litigation (having funded and controlled, and likely to benefit from, it).  Accordingly, it is only just and reasonable he should be made liable for the defendant’s costs so incurred.

Trial of preliminary issue

6. In an order dated 25 January 2016, it was directed in effect that the affirmation or witness statement would not be admitted as evidence unless the deponent or the statement maker attended court to be cross-examined.

7. The defendant’s witness attended the trial and testified.  In brief, he denied the alleged assignment or the alleged notice of assignment.  Because of para 8 below, this evidence was not contraverted.

8. On the other hand, neither the plaintiffs nor their witness(es) attended the hearing.  Consequently, there was no evidence in support of the plaintiffs’ case of an assignment (or of notice of assignment).

Striking out

9. Reference has been made by the defendant to the following:

(1)  para 26 (to 31), 29 September 2015 decision;

(2)  Morton v Palmer (1882) 9 QBD 89, 92;

(3)  Re Payne (1883) 23 Ch D 288, 289-90;

(4)  Martin v Earl Beauchamp (1883) 25 Ch D 12, 15;

(5)  M’Cabe v Bank of Ireland (1889) 14 App Cas 413, 415;

(6)  Sinclair v British Telecommunications plc [2001] 1 WLR 38, 45, 46;

(7)  Investment Invoice Financing Ltd v Limehouse Board Mills Ltd [2006] 1 WLR 985, para 34;

(8)  Wahab v Khan [2011] EWHC 908 (Ch), para 19;

(9)  Taktouk v Semaan [2015] EWHC 652 (Ch), para 81-2.

They have been taken into consideration here.

10. I agree with the defendant that, in the peculiar manner in which this action was commenced, to allow it to continue without requiring the plaintiffs to pay the costs of the earlier action would amount to an abuse of process, and result in injustice to the defendant.

11. In exercising the discretion to dismiss this action (instead of staying it), the plaintiffs’ absence, and their resultant failure to prove its case of a debt assignment, has been taken into account. These show the plaintiffs’ allegations were nothing much more than an attempt to delay the matter.

Joinder of Chin

12. Here I agree with the defendant:

(a)   the joinder order is only a first stage; Chin would still have an opportunity to be heard as regards the costs for which the defendant seeks to make him liable (Sun Focus Investment Ltd v Tang Shing Bor [2012] 5 HKLRD 853, para 19);

(b)  Chin appears to be intimately connected with the plaintiffs;

(c)   Chin apparently held a senior position in the plaintiffs;

(d)  Chin’s letter dated 22 April 2016 seems to imply that he was the one funding this action, and that he was involved in its preparation.

13. Chin must have had notice of this joinder application, as evidenced by his said letter of 22 April 2016.

Costs order

14. There is no apparent reason to depart from the usual rule that costs should follow the event.  There will accordingly be a costs order that the costs of the defendant’s summons and the trial of preliminary issue are to be paid by the plaintiffs to the defendant to be taxed if not agreed.

15. The costs of the defendant’s summons as between the defendant and Chin are reserved.