MIMI KAR KEE WONG HUNT v. SEVERN VILLA LTD AND ANOTHER

HCMP 243/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 243 OF 2011

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R U L I N G

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1.  These proceedings are a direct result of the wife’s, as I shall refer to her, removal from the board of ADHL the family-controlled public company. By virtue of her removal she no longer retains the right to reside at Severn Road. She has reacted to that situation by issuing the originating summons in HCMP 243/2011 to seek declarations that she is the beneficial owner of that property as opposed to the 1st Defendant, a subsidiary of the 2nd Defendant, which holds the legal title to the property. In turn these two Defendants, as 1st and 2nd Plaintiffs, have taken out a summons against the wife as Defendant to remove her from these premises. They seek a possession order against her in HCMP 552/2011.

2.  These two summonses were to be heard over two days on 8 and 9 June.  At the end of the argument on 2 June I vacated these dates for reasons which I propose to give in course of this Ruling.

3.  I have a number of summonses upon which I need to rule.  The lead summonses, if I can so describe them, are those taken out in HCMP 243 and HCMP 552 by the companies.  Both are dated 27 May2011.  The wife also has two summonses, both in HCMP 243.  The first, dated 20 May 2011, is for an order that the deponents of affirmations in this originating summons should attend the trial (at that stage still listed for just two days on 8 and 9 June) for cross-examination.  The reasons for this are obvious when one examines the highly controversial contents of the affirmations.  Everything of importance between the parties is contested.  Everybody agrees that such an order should be made and so an order will go as appears in paras. 1 and 2 of this summons. Para. 3 asks for further directions which I will give presently.  There is also a summons dated 27 May by the wife for discovery as appears in paras. 1 and 2 of the summons.  The companies agree to provide such discovery.  By adopting this stance, they are taken to agree that what is asked for is relevant to the issues that call for resolution by the court.  The summons asks for discovery within two days so that everything should be before the court by 8 June.

4.  Given the escalation of the factual dispute, and this is no criticism of either of them, as a result of the wife’s third affidavit and of Mr Glynn’s, the senior partner of the firm of solicitors who represent her, affidavit, both of 11 May, cross-examination of the witnesses has become imperative.  It also calls for the further discovery which the companies are willing to provide subject to being given more time to comply with such an order.  On this basis two days has become a hopelessly inadequate estimate of the time required.  As I judge it, at a minimum these two summonses will take five days to hear out.  At the start of this hearing, Mr Barlow has insisted that these two days be retained and that if the case was to go part heard then so be it.  All other things being equal, which they rarely are in such situations given the very crowded state of the lists, such a course might well be acceptable.  On this occasion it will not.  Two days would dispose of Mr Barlow’s opening and perhaps the start of the wife’s cross-examination.  Thereafter the next realistic part heard date before me would be the 6 October which is the first of the dates reserved for the ancillary relief application.  In any event, there is the question of discovery and despite Mr Barlow’s submissions to the contrary the companies will need time to complete the discovery asked for.  When the case was fixed for two days, it was done on the basis that, on classic originating summons procedure, the evidence was not going to be seriously contested, if at all.  The court could complete its task within that period or at worst two more days might subsequently have to be provided.  Things have moved on.  The facts are seriously contested and cross-examination will be required and more documents are going to be disclosed.  On this basis, as a matter of case management, I have decided to vacate the hearings on 8 and 9 June.  But there may be even more substantial reasons why these dates would need to be vacated and these are the subject matter of the companies’ summonses dated 27 May which I now turn to.

5.  The orders asked for are identical in each summons and it is convenient to set these out here:

(1)  The proceedings in HCMP 243/2011 and HCMP 522/2011 be consolidated.

(2)  Wong Kar Gee Mimi be the Plaintiff and Severn Villa Limited and Applied Development Holdings Limited be the 1st and 2nd Defendants in the consolidated proceedings respectively;

(3)  The Plaintiff do file a Statement of Claim within 21 days;

(4)  The Defendant do file a Defence and Counterclaim within 21 days thereafter;

(5)  The Plaintiff file a Reply and Defence to Counterclaim within 14 days thereafter;

(6)  The parties do exchange Lists of Documents within 14 days thereafter with inspection of documents to take place within 7 days thereafter;

(7)  Supplemental affirmation (if any) be filed 14 days thereafter;

(8)  Unless the trial judge otherwise orders, affirmations filed herein shall stand as evidence in chief;

(9)  A Case Management Conference be fixed (with 3 hours reserved) as soon as possible after 56 days from this order;

(10)  The consolidated proceedings be adjourned to 6 October 2011, to be heard together with the ancillary relief proceedings in HCMC 9/2010;

(11)  Costs be reserved.

6.  Mr Bleach SC has appeared for the companies to argue for these orders.  In doing so he stresses that he is here to represent the two companies and not the husband who, of course, is not a party to these originating summonses although he is to be called as a witness on their behalf.  Mr Bleach has made this application on the companies’ behalf because of the way that the evidence has developed.  He submits that the shape and intensity of the evidential contest is such that the procedure contemplated in an originating summons is now inappropriate for the resolution of the evidence and the issues before the court.  On instructions he has supported the wife’s summons for cross-examination and accepts on his client’s part that they must try to obtain the further disclosure that has been asked for by the wife.

7.  It should be observed that in para.10 of the directions that have been asked for he is applying to have these two originating summonses heard together with the application for ancillary relief in the divorce in which his clients, of course, are not parties.  In representing the companies perhaps he has less say on this.  His principal concern is to have the present originating summons proceedings re-caste with the filing of pleadings and so forth to identify the issues more clearly than they are at present set out in the affidavits and to have the two days this month vacated and have these matters tried with proper time provided and proper time allowed to comply with the directions that are asked for.

8.  On the husband’s behalf, Mr Yu SC, although he has no direct voice in these two proceedings, his client is only a witness in them, strongly supports Mr Bleach’s approach.  Given his client’s obvious overall interest and locus stemming, as it does, from the ancillary relief application which reflects the breakdown of, not only the matrimonial relationship between husband and wife, but also of their corporate relationship, as it had been given their extremely close involvement in the operation of ADHL.  Mr Yu wishes me to adopt the full extent of the approach usually expected of divorcing parties where third party interests are affected by their ancillary relief application which was set out by Deputy Judge Mostyn QC in TL v ML [2006] 1 FLR 1263.

9.  Mr Barlow has characterised this as the companies attempt (orchestrated by the husband who controls them) to hijack his client’s originating summons proceedings which she had taken out very much at the husband’s and the companies’ suggestion as a way of resolving this, as one can fairly describe it, satellite litigation to the parties divorce. Mr Barlow wants the proceedings heard as soon as possible and separately.  The wife wishes to know where she stands at the earliest available opportunity.

10.  Although this is a perfectly understandable stance to adopt, from the court’s point of view, where it needs to address all of the parties’ interests and the fair and efficient administration of justice, the court must be alert to how a case or, in this instance, three related cases have developed.  So far as the ancillary relief application is concerned, it now has dates in October and I will give further directions to ready it for hearing.  Relatively speaking, that application is set fair save for this highly relevant and vitally important feature concerning the beneficial ownership of the Severn Road property.  I am told it has been valued at about $200 million.  Who is the beneficial owner must, without question, have a very substantial impact on the outcome of the ancillary relief application. Clearly, if the wife is held to own in $200 million property this will diminish her stake in the remainder of the assets that fall to be distributed between the parties by the court.

11.  Given the impact therefore of the outcome of the issue between the companies and the wife as to the beneficial ownership of Severn Road, the court’s task must be to manage this litigation and the ancillary relief application in a way that reflects the best interests of all of these four parties and address, as I said, the overall interests of justice which must also include the efficient running of the court’s lists.  It is not only these parties’ interests that must be addressed, although their’s assume the greater degree of importance on this occasion, but also of all the other litigants waiting in the wings to have their cases heard.

12.  In terms of prejudice, I do not consider that delay to October is going to affect the wife very much beyond the worry of having to wait for her case to be heard.  In any event, she will need to wait until October for her ancillary relief application to be heard and decided.  In the meantime nobody is going to do anything to remove her from her present home.

13.  The law is that if I were to consolidate the originating summonses with the ancillary relief application, the originating summonses will become subsumed into the matrimonial proceedings.  See Goldstone v Goldstone [2011] EWCA Civ. 39 (unreported), a decision of the English Court of Appeal which I gratefully adopt as correctly reflecting the position in Hong Kong as to the relationship between the RHC and the MCR’s.  This would mean that prima facie the trial of the originating summonses as a preliminary issue in the ancillary relief application would be heard in private which I think would be undesirable given that this issue affects the ownership of an important asset of a publicly listed company.  This being said, I believe that I am able to direct a public hearing of this marked in Chambers (open to the public).

14.  Another important feature to be addressed is that, if the originating summonses were heard separately the court’s findings would not bind the husband in the ancillary relief application because he is not a party, although that may in fact be arguable.  In any event, it could be overcome by the husband being joined in the originating summonses, which Mr Yu tells me he would be willing to do, as Defendant, certainly in HCMP 243 — there would be no need to make him a party in the possession summons, HCMP 552.

15.  Ultimately, everything sensible, from a case management point of view calls for a consolidation of the two originating summonses and in turn their consolidation with the ancillary relief application.  Whilst this represents a change in the companies’ position, I regard it as perfectly justified given the fact that the nature of the dispute, now strongly contested on the evidence, has changed so substantially requiring different directions to ensure that it is tried in a manner appropriate to its changed circumstances.  There is jurisdiction for that course in the RHC. Although there may be no specific provision for this in the MCR’s, those rules make it clear that in such circumstances, the court is able to look to the RHC to supply what is lacking in the MCR’s.  This really is a classic TL v ML supra situation and so I propose to adopt that procedure.  These cases will therefore be consolidated.  The subject matter of the originating summonses will be heard first as a preliminary issue starting on 6 October after which judgment will be given in respect of that.  If there are appeals to be prosecuted from that judgment then such matters will have to be attended to at the time.  I also appreciate that this may put in doubt whether the ancillary relief application could proceed straight afterwards but this may also accommodate an opportunity for an FDR hearing because the parties will then know where the beneficial interest on this substantial asset lies and discovery will have been completed and all valuations that are needed will also have been obtained.  Therefore, all the pre-requisites for an informed settlement by the parties will be there for them .

16.  Looking at the summonses, there will be orders in terms of paras.1 to 8 inclusive, as to 9 the directions hearing will be the same as in HCMC 9, which is going to be on 19 September 2011 at 9:30 a.m.  As to para. 10, I will hear the parties as to costs in due course in writing if they prefer.  There will also be liberty to apply as to the terms and implementation of these orders.