CHU SHU HO DAVID AND ANOTHER v. LAM HON LIT HARRY

HCA3525/2002 and
HCA3618/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NOS.3525 AND 3618 OF 2002

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(Consolidated pursuant to the Order of
The Honourable Madam Justice Chu dated 27 September 2002)

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REASONS FOR DECISION

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1. These two actions came before me on Summons Day. The parties in the two actions are identical. There were three applications by summonses issued by the plaintiffs. In HCA3618/2002 ("HCA 3618"), the plaintiff had issued an inter partes summons for the continuation of the ex parte injunction granted on 20 September 2002 and a second summons for consolidation the action with HCA3535/2002 ("HCA 3525"). In HCA 3525, the plaintiff had also issued a summons for consolidation of the action with HCA 3618. Additionally, the defendant in HCA 3525 made an oral application for setting aside or discharging the Order of Burrell J made on 20 September 2002.

2. At the hearing, I granted the plaintiffs' three applications by summonses but refused the defendant's application for discharge, and had given oral reasons for so doing. I now reduce the reasons into writing.

Background

3. Briefly stated, the background leading to the applications is as follows.

4. On 13 September 2002, the plaintiffs applied and obtained in HCA 3525 an ex parte order ("the 1st ex parte Order") restraining the defendant from presenting or otherwise from prosecuting or perusing any petition or originating process in Hong Kong for the winding-up of the 2nd plaintiff in terms of or similar to the allegations contained in a draft petition exhibited to the defendant's affirmation dated 18 September 2002. The application, though made ex parte, was on notice to the defendant. At the hearing before Deputy Judge Fung who granted the order, the defendant was represented by leading counsel, and submissions were advanced on his behalf. The 1st ex parte Order was to remain in force until 20 September 2002, which is the first available Summons Day. In the meantime, the plaintiffs had issued an inter partes summons returnable on 20 September 2002 for the continuation of the 1st ex parte Order.

5. The inter partes summons went before Burrell J, who after hearing counsel for the parties, adjourned the summons to 17 December 2002 with 18 and 19 December 2002 also reserved for arguments before the companies judge. Burrell J also ordered that the 1st ex parte Order be continued pending the determination of the inter partes summons ("Burrell J's Order").

6. In the afternoon of 20 September 2002, the plaintiffs applied ex parte in HCA 3618 for an order restraining the defendant from presenting a petition for the winding-up of the 2nd plaintiff in the BVI, where the 2nd plaintiff was incorporated. The application was initially intended to be made to Burrell J, but because of his Lordship's unavailability, it was made to me, sitting as the Duty Judge. After receiving submissions from the plaintiff's leading counsel, I granted the application ("the 2nd ex parte Order"). The 2nd ex parte Order was to continue in force until 27 September 2002, which is the return date of the plaintiffs' summons that seeks its continuation pending the determination of the inter partes summons in HCA 3525.

7. In the meantime, the plaintiffs also issued summonses in both actions seeking to consolidate them, and the summonses were also returnable on 27 September 2002.

8. Then on 26 September 2002, the defendant indicated by correspondence that he would move to set aside Burrell J's Order at the hearing on 27 September 2002.

Application to set aside or discharge Burrell J's Order

9. Two days before the hearing before Burrell J, the defendant filed an affirmation exhibiting, among other things, an accountant's report. As a result of this, the plaintiff applied before Burrell J for an adjournment of the inter partes summons for the continuation of the 1st ex parte Order in order that evidence in reply can be filed. In applying for the adjournment, the plaintiffs also applied for the continuation of the 1st ex parte Order until the determination of the inter partes summons. The plaintiffs' application was opposed and after two hours' hearing, Burrell J granted it.

10. The defendant's application to set aside or discharge Burrell J's Order was made on the basis that the restraint against the presentation of winding-up petition was as a matter of law, wrong in principle. The plaintiffs opposed on the basis that I have no jurisdiction to set aside or discharge Burrell J's Order and that the matter ought to be made the subject matter of an appeal to the Court of Appeal.

11. In meeting the plaintiffs' objection, Mr Yu SC for the defendant argued that Burrell J's Order is effectively a continuation of the 1st ex parte Order, that the merits have, in fact, not been considered and that it was granted largely as a matter of exigency. He therefore contended that Burrell J's Order is an ex parte order and can be reviewed at any time. Reference was made to a passage in the explanatory note to Order 32, rule 6, which provides that an ex parte order can be reviewed at any time : Hong Kong Civil Procedure 2002, vol.1 para.32/6/16.

12. Additionally, Mr Yu SC also argued that the 1st ex parte Order is plainly wrong in law and is therefore a denial of justice if the court was simply to shut out the defendant's application on a procedural point.

13. Mr Tang SC for the plaintiffs, on the other hand, argued that the hearing before Burrell J was an inter partes one in that the defendant had been given due notice of the hearing and of the applications to be made at it. Burrell J's Order is therefore an inter partes order.

14. In my view, the starting point is to appreciate the nature of the orders that have so far been made in HCA 3525. The 1st ex parte Order is, in essence, an interim injunction order pending a hearing on whether an interlocutory injunction ought to be granted. That hearing is the subject matter of the inter partes summons that came before Burrell J. On 20 September 2002, on the plaintiffs' application and after hearing arguments, Burrell J, despite opposition, adjourned the application for interlocutory injunction to 17 December 2002. His Lordship also granted an injunction to last until the application is determined. Thus analyzed, Burrell J's Order is also an interim injunction, and not an interlocutory injunction.

15. The question that arises is whether Burrell J's Order is an ex parte or inter partes order. I consider that this question is not to be decided by seeing whether arguments had been advanced by both parties, but by seeing whether the opposing party had been afforded a reasonable opportunity to argue against it if it so wished. Hence, as submitted by Mr Tang SC, a hearing is an inter partes hearing if due notice of it had been given to the responding party. Similarly, an order is to be regarded as an inter partes order if it was made after due notice of the application had been given to the opposing party. Accordingly, Burrell J's Order is an inter partes order. It was made at a hearing attended by both parties when both written and oral submissions were presented to the court on the two issues that the court was called upon to resolve, namely, whether the summons should be adjourned and whether an injunction should be in place pending the determination of the summons.

16. It is also to be noted that in the defendant counsel's skeleton submissions placed before Burrell J, arguments had been advanced on the merits of the plaintiffs' application for an order restraining the presentation of winding-up petition. Further, some of the cases that Mr Yu SC relied upon in support of the setting aside or discharge application were also referred to in that skeleton submission. These matters had therefore been drawn to Burrell J's attention. In the end, Burrell J decided to adjourn the application for interlocutory injunction and to grant an injunction, which, on my analysis, is interim in nature. Burrell J's Order has to be an inter partes order.

17. That being the case, the passage under para.32/6/16 in Hong Kong Civil Procedure 2002 has no application. Similarly, the observation of Rogers J (as he then was) in Seapower Resources International Limited & Ors v. Lau Pak Shing & Ors, HCA10715/1993, is also not relevant.

In this context, it is pertinent to recall the observation of Buckley LJ in Chanel v. Woolworths [1981] 1 WLR 485 at 492H, that :

"[e]ven in interlocutory matters, one cannot fight over again a battle which has already been fought unless there has been some significant change of circumstances or the party has become aware of facts which he could not reasonably have known or found out in time for the first encounter."

18. The battle that had been fought in this case is whether there should be an interim injunction pending the determination of the inter partes summons. It was, in fact, open to the defendant at the hearing before Burrell J to argue that even on the plaintiffs' evidence at the hearing before Deputy Judge Fung, the injunction should not have been made, and that therefore the 1st ex parte Order should, on that occasion, be discharged or that there should be no further injunction pending the determination of the inter partes summons. Now that the opportunity had passed, if the defendant is dissatisfied with Burrell J's Order, the remedy lies in an appeal.

19. This also leads me to Mr Yu SC's argument that justice demands that a court should review the order restraining the presentation of a winding-up petition because it is plainly wrong in law. I can see the force of the submission but, in my view, the court in the administration of justice must always act within the proper limits of its jurisdiction and should be slow to be over-zealous as to step over its jurisdictional limits.

This is not a case where the defendant never had an opportunity to put forward his case or the legal submissions regarding the merits of the injunction that had been granted. Quite the contrary, the application to Deputy Judge Fung was made on notice. There were also before Burrell J arguments on the point now sought to be relied upon for the purpose of this setting aside or discharge application.

20. For the reasons indicated above, I accept that I have no jurisdiction to review the injunction order made by Burrell J and to entertain the defendant's application to set aside or discharge or set aside Burrell J's Order. The application is therefore refused.

Continuation of the 2nd ex parte Order

21. The continuation of the 2nd ex parte Order is opposed on the ground that it is wrong as a matter of law to restrain the defendant from presenting petition to wind up the 2nd plaintiff, be it in Hong Kong or the BVI. For this purpose, Mr Yu SC had made submissions on the legal principles governing such application and on the merits of the plaintiffs' application.

22. I prefer to adopt a more simplistic approach to this matter. Although there is before the court an inter partes summonses issued after an ex parte injunction was granted, any injunction to be granted, whether one calls it a continuation of the ex parte order or a fresh injunction, is not really an interlocutory injunction, but an interim injunction. This is because the injunction, as prayed for in the summons, is to last until the hearing of the application of the interlocutory injunction in HCA 3525, scheduled to be heard in December.

23. The 2nd ex parte Order is primarily to ensure that the interim injunction obtained in HCA 3525 (i.e. Burrell J's Order) will not be circumvented by activities undertaken outside Hong Kong. This is a basic point that needs to be borne in mind when assessing the merits of the ex parte application as well as the application to continue the 2nd ex parte Order.

24. In a situation like the present, there are two pertinent considerations. Firstly, Burrell J's Order is not to be defeated in the period leading up to the hearing of the application for interlocutory injunction in HCA 3525. Although Mr Yu SC said that the defendant had not thought of presenting a petition in the BVI, it is not quite the same as saying that no such risk exists. In my view, the risk of a petition being presented in the BVI is a real one. Secondly, I should not be involved in a review of the discretion that Burrell J had exercised when he granted the injunction. To accede to the request of the defendant to refuse the continuation of the 2nd ex parte Order is effectively revisiting the decision of Burrell J. It will also have the effect of foreshadowing the application to be heard in December.

25. In the same vein, if I were to accede to the argument that even on the evidence filed for the 1st ex parte Order, and without looking at the defendant's evidence, the plaintiffs have failed to make out a case that entitles them to an order restraining the defendant to present petition, I would also be effectively revisiting the decision of Burrell J. That I consider to be wrong. A judge should not review the decision of another judge made after an inter partes hearing. I therefore consider that I ought not go into the merits of the arguments and on whether the defendant should be restrained from presenting a winding-up petition as a matter of law. The plaintiffs' summons for the continuation of the 2nd ex parte Order pending the determination of the application for interlocutory injunction in HCA 3525 is allowed.

Application for the consolidation of the two actions

26. It follows that I should also granted the applications for consolidation of HCA 3525 and HCA 3618 since the two actions concern the same parties and same dispute. The commencement of HCA 3618 was largely to cater for the urgency of the situation as it stood on 20 September 2002. I would further order that HCA 3525 is to stand as the leading action.