ANTHONY ERIC RYAN HOTUNG v. HO YUEN KI

CACV 178/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 178 OF 2006

(ON APPEAL FROM HCMP 2701 OF 2005)

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BETWEEN

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J U D G M E N T

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Hon. Yuen JA:

1.  This is the Plaintiff’s application primarily for leave to issue committal proceedings against the Defendant for failure to comply with the order of this court (Cheung and Yuen JJA and Yam J) given on 10 July 2007 on appeal from an order made by Deputy Judge Gill on 25 April 2006 (“the Gill Order”). Although normally applications for leave to issue committal proceedings are made ex parte and the Plaintiff followed this course when he made an ex parte application on 29 May 2009, Cheung JA had on 5 June 2009 given directions for the application to be made at an inter partes hearing before two judges.

2.  The Plaintiff has in the same application also sought orders regarding service. This part of the Plaintiff’s skeleton (paras. 35-39) has not been answered by the Trustee whether in her counsel’s skeleton or in oral submissions, nor indeed can I see anything that can be said against it. The arguments focused on the application for leave to issue committal proceedings.

Background

3.  The Plaintiff is a beneficiary of two trusts of which the Defendant (“the Trustee”) is trustee. The settlor was the Plaintiff’s father Eric Edward Hotung (“EEH”) from whom he is now estranged.

4.  For many years now the Plaintiff has been seeking to inspect documents of two private companies Hotung Enterprises Ltd (“HEL”) and Hotung Investment (China) Ltd (“HICL”) in which the Trustee holds shares on trust and of which she was previously a director.

The Gill Order

5.  In HCMP2701/2005 in a chambers hearing on 26 April 2006, the Plaintiff obtained from Deputy Judge Gill an order that:

“the Defendant do furnish to the Plaintiff within 14 days from the date hereof, the following documents and information which are available to the Defendant as trustee of the Plaintiff under two Declarations of Trust dated the 29^th day of November 1979 and 1980 (“the Trusts”) respectively or alternatively to the extent [that] such documents and information are available to the Defendant by way of diligent demand for the same” the documents listed in 10 categories.

6.  There was no stay of the Gill Order. However the Trustee launched an appeal from it (CACV178/2006).

The Court of Appeal Order

7.  On 10 July 2009 this court handed down judgment in the appeal from the Gill Order. The Trustee’s appeal was allowed in that the scope of documents referred to in the Gill Order was reduced, but our order also expressly referred to the expenses of any applications that the Trustee might have to make under s.152FA of the Companies Ordinance (added in 2004), which provides that shareholders may apply to the court to inspect company records (“the Court of Appeal Order”).

8.  The Trustee did not appeal from the Court of Appeal Order and there was no stay.

Plaintiff’s allegations

9.  The Plaintiff has alleged that the Trustee has failed to comply with the Court of Appeal Order made more than 2 years ago and that her failure was in contempt of court.

10.  The Plaintiff has filed a statement in support of the application for leave to issue committal proceedings which is supported by his affirmation made on 27 May 2009.

11.  Amongst the Plaintiff’s allegations, the following are notable:

(1)  shortly after the Gill Order, the Trustee through her solicitors alerted EEH’s personal solicitors to the Order; EEH, the companies’ then managing director, thereafter removed the relevant company documents from Hong Kong to the United States; a United States court has ordered that the documents be returned to Hong Kong, but the Plaintiff has no knowledge of what has become of them;

(2)  the Trustee deliberately evaded personal service on her of the Court of Appeal Order (with endorsed penal notice);

(3)  although the Trustee purportedly made a request for documents to HICL in August 2007, this was sent to an address which was not the company’s registered office;

(4)  in any event, although the August 2007 letter gave HICL and HEL a period of 10 days to provide the documents, the Trustee took no steps thereafter in pursuance of that request;

(5)  although the Trustee has claimed that she did not take any further steps because she became aware in November 2007 of the presentation of a bankruptcy petition against the Plaintiff, that petition was dismissed two months later (January 2008) and yet the Trustee did not take any further steps until a year later in February 2009, when draft s.152FA applications were sent to the Plaintiff accompanying the Trustee’s demand for payment of costs on account as a condition of their issuance.

There were further allegations regarding recent proceedings issued by the Trustee.  As judgment has been reserved, I do not think it is appropriate for us to comment on them.

Trustee’s arguments

12.  On behalf of the Trustee, it has been argued that:

(1)  the application for leave to issue committal proceedings should have been brought in the Court of First Instance instead of the Court of Appeal;

(2)  the Gill Order did not require the Trustee to commence proceedings under s.152FA;

(3)  even if the trustee were required to commence proceedings under s.152FA, there was no time limit of 14 days  for her to do so;

(4)  in any event, committal proceedings were “plainly and obviously inappropriate” as the Trustee has in February 2009 offered to bring proceedings under s.152FA and has in April 2009 issued HCMP641/2009 for an order, amongst others, for the administration of the trusts by the court (these proceedings which are opposed by the Plaintiff are those referred to in para.11 above).

Principles to be applied on application for leave

13.  It is not disputed that the procedure requiring leave of the court to be obtained before committal proceedings can be issued is intended to filter out applications which are “obviously unfounded or oppressive” or which have “some suspicion of oppression about them” (Fabrique Ebel SA v MBO Far East [1985] 1 HKC 166).

Discussion

14.  Applying that principle to the present application, I take the view that leave should be granted to issue proceedings.

15.  As to the points made by counsel for the Trustee, I think first that it is at least arguable that at least those parts of the Gill Order which were varied by this court were orders of this court. Secondly, the order of this court referred expressly to s.152FA proceedings if the companies failed to provide the documents requested by the Trustee. Thirdly, counsel for the Trustee accepted that she was obliged by order of the court to make a diligent demand for those documents which were not available to her. Given the trustee’s actions and omissions set out in para. 10 above, I do not think it can be said that the application is “obviously unfounded or oppressive” or which have “some suspicion of oppression about them”. Whether committal proceedings are “appropriate” or not is a matter to be dealt with on the substantive application.

16.  In the circumstances, I would give leave to commence proceedings for committal. It is not appropriate for the court to examine the parties’ more finely-tuned arguments at this stage.

Order

17.  I would make an order in terms of the Plaintiff’s summons filed on 29 May 2009 save for para. 6 for which I would substitute the following: “Costs of this application be in the cause of the committal proceedings”.

Hon. Barma J:

18.  I agree.