QUESTNET LTD v. KURT GEORG ROCCO RINCK AND ANOTHER

CACV 103/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 103 OF 2009

(ON APPEAL FROM HCA NO. 1475 OF 2006)

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BETWEEN

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REASONS FOR JUDGMENT

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Hon Le Pichon JA:

1.  This was an appeal by the second defendant (who appeared in person) from an order of Deputy High Court Judge Anderson Chow SC made on 17 March 2009 dismissing the second defendant’s application to set aside the decision of Master Roy Yu of 16 April 2008. Master Yu had dismissed the second defendant’s application to set aside the default judgment entered against him by Master de Souza on 4 September 2007 in the sum of US$737,600.31 together with interest and costs.

2.  At the outset of the hearing, the second defendant applied for an adjournment or, alternatively, that leave be granted for the withdrawal of the appeal. After hearing from both parties, the application for an adjournment/withdrawal was refused and as the second defendant stated that he was in no position to proceed with the appeal, the court had no option but to dismiss the appeal with costs, to be taxed if not agreed. The reasons for the refusal of the application for the adjournment/withdrawal appear below.

3.  The background facts are set out in detail in §§ 2-29 judgment of Chu J given in the action on 23 June 2008 in relation to the plaintiff’s motion for contempt against the second defendant.

4.  In outline, the facts are these.  The underlying action concerns the misappropriation of corporate funds held on express trusts by the first defendant, a former director and employee of the plaintiff, and the knowing receipt and dishonest onward remittance of about Euro 582,806.44 by the second defendant who was the plaintiff’s former Chief Legal Officer.

5.  The plaintiff obtained a Mareva injunction and a disclosure order against the first defendant on 21 July 2006. When the first defendant disclosed by his fourth affirmation filed on 17 August 2006 that the sum of Euro 582,806.44 had been placed on trust with the second defendant, and that the second defendant had, on his instructions, paid debts owed to his creditors, a Mareva injunction was obtained against the second defendant the same day.

6.  Chu J found the second defendant guilty of contempt of the injunction in remitting that sum of Euro 582,806.44 to the first defendant and his wife at the first defendant’s direction when he knew that the injunction prevented him from doing so. The facts that gave rise to the finding of contempt also found the second defendant’s liability in knowing receipt/dishonest assistance.

7.  As earlier noted, a default judgment was obtained against the second defendant for the sum of US$737,600.31 with interest. Various attempts to set that aside in proceedings below proved unsuccessful.

8.  This appeal was set down on 27 April 2009. On 14 September 2009, the hearing date was fixed with the agreement of the parties. In the court file, there is a note of the Deputy Clerk of Court (Appeals) stating that:

“Subject to the agreement of parties, CACV 206/08 will be listed to be heard together on the same date (see letter from D2 dated 11.9.2009).”

9.  The letter from the second defendant made reference to CACV 206 and,after describing its nature, stated that

“We are minded of later taking out summons to consolidate both matters for the benefit of all concerned and intend to instruct Counsel in these matters.  Therefore, the estimated time for the hearing of both matters (assuming consolidation is granted), is to be about 4 hours.”

10.  No summons for consolidation ever was taken out and there has been no further reference to CACV 206.

11.  By letter of 7 March 2010 to the plaintiff’s solicitors and copied to the court, the second defendant, while acknowledging that he and the first defendant had been held jointly liable to the plaintiff in respect of a debt of about US$700,000, indicated that the debt had since been (or was in the process of being) settled by the first defendant following enforcement proceedings over the first defendant’s Swiss bank account. The second defendant indicated his wish to “withdraw” his appeal in those circumstances. This was later followed by a written request that the hearing of the appeal be vacated and that the parties be directed to attend within 14 days to refix a hearing date. Further correspondence between the parties ensued.

12.  On 11 March 2010, the court directed that the appeal proceed as scheduled in the absence of any consent summons for the dismissal of the appeal.

13.  On 15 March 2010, the court further directed that any application to withdraw the appeal be made at the hearing of the appeal.

14.  As earlier mentioned, at the outset of the hearing, the second defendant applied for an adjournment or, alternatively, that leave be granted for the withdrawal of his appeal. The application was made on the basis that it would be known within a period of approximately 7 weeks whether or not the first defendant’s debt would be fully satisfied and, in that eventuality, the appeal would be rendered unnecessary.

15.  Quite apart from the fact that the parties were unable to agree on the exact amount still outstanding, the plaintiff’s position was that even in the best-case scenario, the proceeds from the Swiss bank account would not be sufficient to clear both capital and interest owed by the first defendant, and thus nothing would be served by an adjournment.

16.  The second defendant then was asked to outline the basis of his appeal so that the court could form a view as to whether the appeal had any substance as no written submissions had been filed by him. It transpired that the present appeal stands or falls with his appeal in CACV 206. The second defendant’s case is that the judge should not have relied on the judgment of Chu J in the contempt proceedings in refusing to set aside the default judgment and the findings therein made because, it was said, substantial grounds exist for appealing that judgment.

17.  When asked about the status of that appeal and why the two appeals had not been listed to be heard together, having regard to his letter to the court of 11 September 2009 (referred to in § 9above), the second defendant informed court that his former solicitors had indicated that if put in funds for the appeal by 18 February 2010, they would take out a summons for consolidation of the appeals. The second defendant was unable to provide funds, and continues to act in person as he has done since September 2008.

18.  So far as CACV 206 is concerned, apart from the Notice of Appeal filed on 21 July 2008 and the Notice of Setting Down the appeal of 4 August 2008, no further steps have been taken by the second defendant. That appeal (the success of which is critical to the present appeal) has lain fallow for over 19 months.

19.  Accordingly, it is plain that for over 1½ years, the second defendant has made no effort whatever to progress CACV 206 upon which the present appeal depends. In my view, against the backdrop of this chronology, the administration of justice would not be furthered by granting any further indulgence to this litigant.

Hon Stone J:

20.  I agree with the judgment of Le Pichon JA.

Hon Bharwaney J:

21.  I agree.