TRADEPOWER (HONG KONG) LTD v. GIRVAN LTD

HCMP 232/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 232 OF 2010

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REASONS FOR DECISION

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1.  The plaintiff (“Tradepower”) sought leave to discontinue this action but asked the costs of the action to be paid by the defendant (“Girvan”), and for Girvan to serve the writ of summons in an action commenced by Girvan in March 2010 (HCA 453/2010 (“A453”)) not later than 6 July 2010. On the other hand, Girvan sought those costs to be awarded in its favour. Girvan also denies it is liable to serve the said writ before the said deadline.

2.  At the end of the hearing, the following order was made:-

(a) unless Girvan (the plaintiff in A453) serves the writ of summons in A453 by 4:00pm on 12 July 2010, the said writ be:-

(1) struck out;

(2) vacated from the Land Registry as a lis pendens;

(b) the costs of para. 1, prayer for relief of the originating summons herein be paid by Girvan to Tradepower;

(c) subject to sub-para. (c) below, the costs of the remainder of the prayer for relief of the originating summons herein to follow the event of A453 (or any further order which may be made herein or in A453);

(d) in the event Girvan should fail to comply with para. (a) above, the costs referred to in sub-para. (c) above be paid by Girvan to Tradepower, to be taxed if not agreed;

(e) the costs of this application be paid by Girvan to Tradepower.

3.  In order to understand Tradepower’s application and the above order, the background needs to be set out briefly.

4.  The suit properties are several units and carparking spaces in an office building at Sung on Street, Hung Hom.

5.  Tradepower’s case is as follows.  It and Girvan were related companies in that both used to be controlled by the same individuals.  The suit properties were purchased by Tradepower in 1994 for about $23 million financed by a mortgage loan.  The individuals standing behind Tradepower and Girvan (and other related companies) implemented a scheme whereby the suit properties were in effect removed from Tradepower.

6.  In November 2008, Girvan commenced an action against Tradepower (HCA 2288/2008 (“A2288”)).  Among other things, the general indorsement alleges that Girvan has paid for the suit properties’ price, and Tradepower holds them on trust for Girvan.  Further, Girvan caused the said writ to be registered against the suit properties as a lis pendens.

7.  But the said writ was still not served more than 12 months after it was issued.  Tradepower commenced this action by way of originating summons in February 2010.  Para. 1, prayer for relief thereof seeks the registration of the said writ to be vacated.  Other relief sought includes a declaration that Girvan is not an equitable/beneficial owner of the suit properties.

8.  The propriety of the said scheme was an issue in earlier legal proceedings involving (among others) Tradepower and Girvan (HCA 1796/2005, CACV 101/2008 and FACV 5/2009).  In this action, Tradepower relies (apart from other matters) on the findings of the court of appeal and the Court of Final Appeal to the effect Girvan was indebted to Tradepower to a considerable extent, and there was no good reason for the said scheme.

9.  In March 2010, the parties agreed to, and obtained, a consent order in terms of para. 1, prayer for relief.  Further, they agreed to, and obtained, directions from the court regarding the further conduct of this action, including directions concerning affidavits in opposition and in reply and the like.

10.  Despite the above history, Girvan commenced A453 some 10 days after the consent orders.  The contents of the general indorsement thereof are exactly the same as that of A2288.  Similarly to what happened in A2288, the writ in A453 was still not served up to the time of the hearing (about 3 months since its issuance).

11.  The commencement of A453 in such circumstances borders on being an abuse of the court’s process (if not actually an abuse).  However, this application indicates Tradepower’s willingness to engage Girvan’s claim through the proceedings in A453.

12.  Despite Tradepower’s stance, since the coming into effect of the civil justice reform, the objectives of civil litigation include:-

(1) increasing the cost-effectiveness of any practice and procedure to be followed in relation to proceedings before the Court; and

(2) ensuring that a case is dealt with as expeditiously as is reasonably practicable

(RHC Ord. 1A r. 1). In fact, it is the legal duty of litigants and their legal representatives to assist the court to further those objectives (Ord. 1A r. 2).

13.  Girvan relies on Ord. 6 r. 8 and contends that the writ of A453 has a validity of 12 months and it does not need to serve the writ before the expiry of that period.  Technically it may be so, but as a matter of reality, I do not think Girvan’s two actions should be looked at separately: the contents of the two writs are the same.

14.  For that reason, Girvan should not be allowed to be dilatory in the service of the writ (the same can be said with regard to the general progress of A453).  That accounts for the order set out in para. 2(a) above.

15.  The costs orders (apart from that set out in para. 2(e) above) are consequential to the order set out in para. 2(a) above.

16.  Dismissal of A453 has not been ordered.  But such order may well be justified if it is established that Girvan continues to conduct A453 (or similar proceedings) in an abusive manner.

17.  Tradepower is substantially the successful party in this application, having succeeded in obtaining leave to withdraw, as well as in obtaining relief similar to (though not the same as) the other relief sought in this application (see, para. 2(a) above (in place of para. 1(2) of this application) and 2(c) and (d) above (in place of para. 1(1) of this application)).