WILLIAM A BRANDT, JR, THE CHAPTER 11 OF CFG PERU INVESTMENTS PTE LTD (SINGAPORE) v. THE HONG KONG AND SHANGHAI BANKING CORPORATION LTD

HCMP 134/2018

[2020] HKCFI 333

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 134 OF 2018

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D E C I S I O N

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1.  On 11 September 2018 I heard an application by William Brandt the Chapter 11 trustee of CFG Peru Investments Pte Limited for leave to use a decision of DHCJ Kwok made on 5 January 2016 in HCCW 367 and 368 of 2015 (“the 2016 Decision”). I rejected the application and my reasons were delivered on 14 January 2019. It is not necessary for me to repeat the circumstances in which the application was made. In this decision I shall use the definitions used in my earlier decision.

2.  The Respondent to the 2018 application was HSBC.  On 16 July 2019 HSBC issued an application for orders:

(1)  The Trustee may not disclose or use the 2016 Decision; and

(2)  three paragraphs from the complaint and opposition in the Complaint and Opposition filed in the Chapter 11 proceedings brought by the Trustee against HSBC be removed.  Those paragraphs read as follows:

“3. The Statements in question are (Schedule to Summons):-

3.1 part of Amended Complaint §91:-

‘… the Hong Kong Court found that the Hong Kong JPLs never should have been appointed over CFGL and CFIL to begin with and that HSBC failed to present credible evidence justifying the appointment of the JPLs in the first place’

3.2 part of Opposition §6:-

‘... the Trustee has been able to glean the substance of the proceedings and the ruling from independent sources which suggest that the Hong Kong Court admonished HSBC, believing it was misled when appointing the JPLs by selective record HSBC had presented.’

3.3 part of Opposition §32:-

   ‘On January 5, 2016, the Hong Kong Court found that the Hong Kong JPLs never should have been appointed in the first place and dismissed them.’”

3.  In summary, HSBC says that it was made clear by my decision that the restriction appearing on the 2016 Decision, namely, “No search, inspection or publication without leave of the court” prohibited the Trustee from using the 2016 Decision in the Chapter 11 proceedings.  Although, the Trustee has not exhibited or referred to parts of the 2016 Decision in the documents filed in the Chapter 11 proceedings he has, so HSBC contends, attempted to circumvent the prohibition by using references to the 2016 Decision in evidence filed in the Chapter 11 proceedings prior to the Trustee’s appointment.  The earlier evidence does not itself quote or exhibit the 2016 Decision, but summarises the deponent’s, Ng Puay Yee, reading of the Decision. Ms Ng’s evidence has been read and is referred to in earlier decisions of the Judge dealing with the Chapter 11 proceedings in the Southern District of New York, Garrity J, who is seized of the case.

4.  HSBC argues that the references to the 2016 Decision in the Complaint and Opposition are:

(1)  In breach of Practice Direction 25.2 and the 2016 Decision;

(2)  an interim order made by this court on 6 June 2018; and

(3)  the September order.

5.  The Trustee sought an order in his summons dated 7 June 2018 that he be permitted to use the 2016 Decision in connection with the discharge of his mandate as trustee of CFG Peru Investments Pte Ltd (Singapore).  On 17 September 2018 I dismissed the application.

6.  Practice Direction 25.2 provides:

“REPORTS ON HEARINGS HELD IN CHAMBERS NOT OPEN TO THE PUBLIC

1.  Proceedings held in chambers not open to the public are those where the press and the public are excluded from attending. Practitioners are reminded of the provisions of Practice Direction 25.1 dated 2 July 2015 governing chambers hearings in civil proceedings in the High Court, the District Court and the Lands Tribunal and the provisions of Practice Direction 15.15 dated 2 July 2015 governing matrimonial and family proceedings.

2.  No report should be made of any proceedings (including the judgment) held in chambers not open to the public without the authority of the master or the judge before whom the proceedings were conducted.  If the master or the judge considers that proceedings should be open for reporting or the judgment should be released for publication he should afford the parties an opportunity to make representations upon the matter before so declaring.”

7.  It seems to me clear from the language of the Practice Direction that its purpose is to regulate the reporting, in the sense of publication, of proceedings by the press and other people, who may wish to publish what has transpired rather than use of a decision in the way in which the Trustee sought to use the 2016 Decision in proceedings in the United States by his original application.  As far as I recall it was not argued on behalf of HSBC at the hearing in September 2018 that Practice Direction 25.2 prohibited use of the 2016 Decision.  HSBC argued that the restriction arose from the prohibition on the 2016 Decision itself.  Be that as it may, the present objection is that the statements that I have quoted above from the Amended Complaint and Opposition constitute reporting of proceedings in contravention of Practice Direction 25.2. I disagree.  It is the Trustee’s evidence, which HSBC has not contested, that the statements are summarising the descriptions of the 2016 Decision in the affirmations filed by Ms Ng in the Chapter 11 proceedings that led to his appointment.

8.  In my view, assuming in HSBC’s favour, that the references to the 2016 Decision by Ms Ng contravened Practice Direction 25.2, the Trustee stating in his subsequent evidence what from reading Ms Ng’s affirmation he understands has transpired, is not a contravention.  The Trustee is not in any relevant sense reporting the proceedings.  He is explaining what he has gleaned from reading evidence filed in the Chapter 11 proceedings, which has already been read by Garrity J.

9.  In my view the passages in the Amended Complaint and Opposition to which HSBC objects do not contravene Practice Direction 25.2.

10.  Mr Manzoni also argued that the inclusion of the objectionable passages infringed my decision.  I also disagree with this submission.  I decided not to grant leave for the Trustee to publish or use the 2016 Decision.  I did not find that the Trustee was prohibited from referring to or using evidence filed in the Chapter 11 proceedings, which referred to the 2016 Decision.  I doubt, if it has been argued that I should, that I would have so ordered.  The Trustee has been appointed by Garrity J to conduct the Chapter 11 proceedings in respect of GFG and CFI.  Although, I have taken the view that the Trustee should not be permitted to use the 2016 Decision in carrying out his function it does not seem to me that it would be appropriate to purport to restrict his ability to use in the Chapter 11 proceedings material that he had obtained, presumably in New York, for the purposes of carrying out his office.  I recognise that it might be thought that this produces the unsatisfactory result that the 2016 Decision can be referred to, and it may be in the view of one or other party that the reference is misleading, but that is simply the consequence of the Chapter 11 proceedings having been successfully commenced and the Trustee appointed.  Although this court may be unwilling, for reasons explained in my earlier decision, to assist the Trustee it does not follow that the court will take steps to interfere in his ability to carry out his office in New York.

6 June 2018 Order

11.  On 15 May 2018 HSBC issued an interlocutory summons seeking an order, which prohibited, amongst other things, the Trustee from using the contents of the 2016 Decision.  On 6 June 2018 I made the following order by consent:

“1. The Applicant in HCMP 134/2018, whether himself or through his agents or employees, must not without order of the Honourable Mr Justice Harris or such other judge as he directs, disclose or provide copies thereof to any person any of the documents or copies thereof (including their contents) referred to in the Summons dated 24 August 2016 and filed on 30 August 2016 as amended in HCCW 367 & 368 of 2015 on 5 January 2017 and filed on 5 January 2017, save where the documents have otherwise been lawfully obtained, or will be lawfully obtained by the Applicant.”

12.  Although the order is not expressed to last up to the hearing of the Trustee’s summons (it having been issued in these proceedings) it was clearly intended to provide a restriction on the Trustee using the 2016 Decision and other documents referred to in the order pending the determination of the Trustee’s application.  This was a restriction the Trustee was willing to agree to subject to the inclusion of the final sentence of paragraph 1, which contains a proviso that the restriction does not cover documents lawfully obtained by the Trustee, as he took the view that he had obtained a certain amount of information about      the 2016 Decision from documents generated subsequent to the 2016 Decision and which he had received following his appointment by Garrity J.  It was not suggested by Mr Eugene Fung SC for HSBC at the hearing on 11 September 2018 that in the event that I dismissed the Trustee’s application the order would remain necessary.

13.  It seems to me that the order does not help HSBC.  It is the Trustee’s case that the references in the objectionable passages are based on what he has read in the evidence of Ms Ng.  Such evidence falls within the proviso.  During the hearing before me I asked Mr Manzoni whether HSBC disputed that the objectionable passages could be based on Ms Ng’s evidence.  Having taken instructions I was told that HSBC did not wish to dispute this.  It seems to me that even if the order is still extant the proviso applies.  Further, for the reasons given in [10] even if it did not I would amend the order to allow the Trustee to refer to the contents of evidence filed in the Chapter 11 proceedings as I do not accept Mr Manzoni’s argument that such evidence itself was in breach of Practice Direction 25.2, or the restrictions stated in the 2016 Decision, and for the Trustee to use it would be an impermissible derivative use.

14.  I accept that Ms Ng’s references to the 2016 Decision was in breach of the restriction stated in the 2016 Decision, although not, for the reasons given in [7], Practice Direction 25.2.  However, it does not seem to me that this is a reason for prohibiting the Trustee from using the information he has received in the Chapter 11 proceedings.  First, HSBC has already agreed to the proviso in the order of 6 June 2018.  It did not object to the Trustee using what he had obtained from other sources he had lawfully obtained in the course of his appointment either on 6 June 2018 or 11 September 2018.

15.  Secondly, as I have already explained, although I have decided that the Trustee should not be permitted to use the 2016 Decision for the reasons given in my January 2019 decision, it does not seem to me that this court should make an order that purports to prevent the Trustee using what can be gleaned from the evidence filed in the Chapter 11 proceedings and already read by Garrity J who is seized of the Chapter 11 proceedings.

16.  For these reasons I will dismiss HSBC’s application dated 16 July 2019 and make a costs order nisi that HSBC pays the Trustee’s costs with a certificate for two counsel.  I would add that even if I had been persuaded to make an order in the terms of paragraph 1 of the summons, I would not have made an order in the terms of paragraph 2, which is effectively asking me to find that the Trustee is in contempt of court.  If this is what HSBC wished to do it should have commenced contempt proceedings; although in the light of my decision this issue falls away.