China Metal Recycling (Holdings) Ltd and Others v. Chun Chi Wai and Others

HCA 1412/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO 1412 OF 2013

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D E C I S I O N

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APPLICATIONS

1.I have before me two applications:-

(1)  the first is an application (“the Re-Opening Application”) made by the 1^st and 13^th defendants by letter dated 19 October 2015 seeking to re-open the decision of Deputy High Court Judge Anita Yip SC (“the Judge”) on 12 October 2015; and

(2)  the second is an application (“the Relief Application”) made by the 1^st and 13^th defendants by summons dated 5 November 2015 seeking relief from the sanction imposed by an unless order made by this court on 17 November 2014 (“the Unless Order”).

BACKGROUND FACTS

2.The background facts giving rise to the Unless Order have been set out in a decision handed down by this court on 17 November 2014 (“the Unless Order Decision”) and will not be repeated here.

3.At paragraph 49 of the Unless Order Decision, I reached the conclusion that the 1^st and 13^th defendant had failed to fully and properly comply with an order made by L Chan J on 9 April 2014 (“the Chan Order”).  At paragraph 56 of the Unless Order Decision, I conclude that it was just, appropriate, and proportional to make an unless order to give the 1^st and 13^th defendants one last opportunity to comply with the Chan Order.

4.Paragraph 1 of the Unless Order states as follows:-

“The 1^st and 13^th defendants shall, by 4 p.m., on the 14^th day following the date of this order, each serve an affidavit or affirmation on the Plaintiffs’ solicitors:

(a) providing full and proper disclosure of all their respective assets of an individual value of HK$50,000 or more, whether in or outside Hong Kong, whether in their own name or not, and whether solely or jointly owned, giving the value, location and details of all such assets;

(b) in the event that any assets of an individual value of HK$50,000 or more have been disposed of, encumbered or otherwise dealt with between 30 July 2013 and the date on which the said affidavit or affirmation is sworn, providing a full explanation as to what has become of the proceeds and the value thereof;

(c) providing a full explanation as to what has become of the monies received by the 13^th defendant amounting to approximately HK$636,000,000 received by the 13^th defendant in respect of its disposal of 60,000,000 shares in China Metal on 27 April 2011 and approximately HK$170,461,770.68 received by the 13^th defendant in respect of various cash dividends declared and paid by the 1^st Plaintiff (as described at paragraph 58 of the Third Affidavit of Cosimo Borrelli dated 26 October 2013 and the exhibit referred to therein) and, in the event that any part of those monies have been used, spent or disposed of, providing full particulars of the circumstances (including a full explanation as to what has become of the monies and their current whereabouts and value);

(d) exhibiting all documents which evidence the matters set out in paragraphs 1(a) to (c) above.”

5.Paragraph 2 of the Unless Order further states as follows:-

“Unless the 1^st and 13^th defendants do fully and properly comply with paragraph 1 above within the time specified, the Defence of the 1^st and 13^th defendants be struck out and the Plaintiffs shall be at liberty to enter judgment against the 1^st and 13^th defendants with costs.”

6.In compliance, or purported compliance, with the Unless Order, the 1^st defendant filed his 17^th affirmation on 1 December 2014 exhibiting thereto a report prepared by a forensic accountant, Mr Frank Yuen of KLC Kennic Lui & Co dated 1 December 2014 (“Mr Yuen’s 1^st Report”).  The 1^st defendant’s 17^th affirmation was also filed on behalf of the 13^th defendant.

7.The plaintiffs considered that the 1^st and 13^th defendants had failed to fully comply with the terms of the Unless Order and took out a summons on 21 April 2015 (“the Striking Out Summons”) seeking to (i) strike out the defence of the 1^st and 13^th defendants, and (ii) enter judgment against them in this action.

8.In opposition to the Striking Out Summons, the 1^st defendant filed his 18^th affirmation on 24 June 2015 exhibiting thereto a supplemental report prepared by Mr Yuen dated 24 June 2015 (“Mr Yuen’s 2^nd Report”), and his 19^th affirmation on 4 August 2015 exhibiting thereto a second supplemental report prepared by Mr Yuen dated 29 July 2015 (“Mr Yuen’s 3^rd Report”).

9.The Striking Out Summons eventually came before the Judge on 24 and 25 September 2015.  She gave a written decision on 12 October 2015 (“the Striking Out Decision”).

10.As can be seen from the Striking Out Decision:-

(1)  The plaintiffs relied on six grounds of complaint in support of the Striking Out Summons (paragraph 17).

(2)  The Judge found that the first, fourth, fifth and sixth grounds were either not made out or of no substance (paragraphs 28, 118, 126 and 130).

(3)  The second ground related to five items totalling about HK$384 million.  Four of them were either not pursued by the plaintiffs or rejected by the Judge (paragraphs 93, 94, 96 and 99).

(4)  The remaining item under the second ground related to a sum of about US$11 million.  I shall come back to this item later in this decision.

(5)  The third ground related to the 1^st and 13^th defendants’ failure to provide all documents as required by paragraph 1(d) of the Unless Order.  The Judge found the plaintiffs’ complaint to be justified in respect of the general ledgers of the 13^th defendant and those of Asia Huan Bao, being items 19 and 20 referred to in Appendix 1 to Mr Yuen’s 1^st Report (paragraph 106).  Nevertheless, the Judge would have been disposed to grant an extension of time to the 1^st and 13^th defendants to provide the outstanding documents if the failure to provide the ledgers had been the only breach of the Unless Order (paragraph 139).

11.The Judge considered, however, that the 1^st and 13^th defendants’ failure to provide the ledgers was not the only breach of the Unless Order, because she found that they had also failed to give a full explanation of the US$11 million mentioned above.  The Judge considered this latter failure to be “obvious, serious and significant” (paragraph 139 of the Striking Out Decision).

12.The US$11 million was part of the monies referred to in paragraph 1(c) of the Unless Order which, according to Mr Yuen’s 1^st Report, was paid into the 13^th defendant’s USD current account numbered 8.00188.8.4000 with Bank Sarasin & Cie AG, Hong Kong Branch (“the Wellrun Sarasin USD Current Account”) on 18 May 2012. The 1^st and 13^th defendants’ case is that this US$11 million was used to partly repay a “Money Market Loan” (numbered 113400) of US$15 million which the 13^th defendant obtained from Sarasin on 21 February 2012.

13.Mr Yuen’s analysis, adopted by the 1^st and 13^th defendants, of the fund flow in respect of the US$11 million is very complicated.  Putting the matter as simply as I can, I understand Mr Yuen’s analysis to be as follows:-

(1)  On 30 June 2011, the 13^th defendant received US$38,709,674 (Item (a)[1]) which represented part of the sale proceeds of the 60 million shares in the 1^st plaintiff referred to paragraph 1(c) of the Unless Order.

(2)  Out of those sale proceeds, the 13^th defendant transferred US$15 million (Item j) to Huan Bao Steel Ltd on 3 January 2012.

(3)  Item (j) was the source of funds for the following three transfers made by Huan Bao Steel Ltd to the 13^th defendant -

(a)  Item (q) – US$4 million on 29 March 2012

(b)  Item (s) – US$8.7 million on 17 May 2012

(c)  Item (t) – US$2,299,997 on 17 May 2012.

(4)  Items (s) and (t) together were the source of funds for the transfer of US$11,000,019 (Item (u)) to the Wellrun Sarasin USD Current Account on 18 May 2012.

(5)  This transfer of the US$11,000,019 to the Wellrun Sarasin USD Current Account effected a partial repayment of the Money Market Loan which the 13^th defendant had earlier obtained from Sarasin on 21 February 2012 (Item (m)).

14.The Judge’s reasons for coming to the conclusion that the 1^st and 13^th defendants had failed to give a full explanation of the US$11 million appear in the following passages of the Striking Out Decision:-

“59. But I think, by extension, Ms Chan’s complaint is equally applicable to some of the sums listed in table 7… Likewise, how can one be sure that the US$15 million at Item (j) was the source for items (q), (s) and (t)? After all, even though the amounts were similar, the proceeds did stay in Huan Bao’s account for a few months before they went back into the 13^th defendant’s account.

60. Ms Chan once said by way of a general comment that to fully comply with the Unless Order, the defendants should have produced fund flow charts for each relevant sum of the proceeds. I take it to mean that for example … for the US$15 million, Item (j), there should be another fund flow reconstruction account of the same nature which tells what had happened to this US$15 million in the relevant Huan Bao account.

61. In my view, the failure to explain the whereabouts of the US$15 million (Item j) alone constitutes a breach of the Unless Order. The Unless Order requires the defendants to give a complete and proper disclosure of ‘what has become of the monies received by the 13^th defendant ...’: para 1(c).

62. Plainly, this US$15 million (Item j) was, according to the defendants’ own accountant report, part of the US$38,709,674 (Item a) which represented monies received by the 13^th defendant. Mr Yuen said this amount was the source of the funds in Items (q), (s) and (t). But this is the accountant’s own words of the flow. What is crucial and required under the Unless Order is that there should be first, a full explanation; and second, supported by all documents. Fundamentally, I cannot see how, in the absence of documents relating to Item (j), such as the accounts, ledgers and bank statements of Huan Bao, that Mr Yuen could conclude that Item (j) was the source of funds for Items (q), (s) and (t).

63. I note from Appendix 1 of Yuen’s 1^st report, that the defendants had only produced the bank statements of Huan Bao Steel’s DBS HKD account: see Item 16 of Appendix 1 of Yuen’s 1^st report. At para 35 of Yuen’s 1^st report, he said:

‘35. According to the Confirmation for Outward Chats dated 3 January 2012 issued by CBI to Huan Bao Steel (‘Huan Bao’) (Appendix – 36), Wellrun remitted US$15,000,000 (Table 7 Item (j)) to Huan Baos’ account numbered 53293149418 in Bank of Communications Company Limited (‘Huan Bao BOCOM Account’). Nevertheless, it is noted that US$4,000,000 (Table 7 Item (q)), US$8,700,000 (Table 7 Item (s)) and US$2,299,997, net of bank charges of US$3 (Table 7 Item (t)) were remitted from Huan Bao to Wellrun CKW USD Savings Account on 29 March 2012, 17 May 2012 and 17 May 2012 respectively which together make a total of US$14,999,997.’

64. The Huan Bao BOCOM account statements for the relevant [period] which would show the deposit of US$15 million and its subsequent movements have never been produced. This is a clear breach of para 1(d) of the Unless Order. Without the production of the BOCOM statements, or the Huan Bao ledgers of the relevant period, it is unknown whether this enormous sum of US$15 million has been applied for some other use or has acquired some other assets which the defendants were under a duty to disclose. There is no evidence that the defendants were not in possession of the documents evidencing the movements of this US$15 million.

…..

67. It is further noted that no documents at all in relation to Items (q), (s) and (t) US$4,000,000, US$8,700,000 and US$2,299,997 were produced. At para 36 of Yuen’s 1^st report, he said:

‘36. Out of the sum of US$14,999,997, US$4,000,000 was transferred to Chung Shing on 29 March 2012 while US$8,700,000 and US$2,299,997 were transferred to Wellrun’s Sarasin USD current account numbered 8.00188.8.4000 (‘Wellrun Sarasin USD Current Account’) on 18 May 2012 as set out in Table 10 below.’

68. No documents were produced. In the absence of the relevant documents, how can Mr Yuen conclude that these three big sums were sourced from Item (j)? The obligation to give a full explanation of US$4,000,000, US$8,700,000 and US$2,299,997 is absolute. It is the defendants’ own case these sums came from Item (j) US$15 million which in turn was sourced from Item (a). Similarly, there is no evidence to suggest that the defendants did not have the relevant documents to show the flow of items (q), (s) and (t).

69. The failure to give a full explanation of Items (q), (s) and (t) and non‑production of documents in relation thereto constitute breaches of paras 1(c) and (d) of the Unless Order.

70. I am aware it was accepted by the plaintiffs themselves that no tracing was required: para 33, Decision of Chow J. However, the defendants were alive to the fact that the money flow was circular and extremely complicated. Given the complexity, tracing was inevitable in order to comply with the court order. Indeed, most parts of the accountant report were about tracing.

71. The fact that the defendants fully understood what was required of the Unless Order could be seen by the detailed tracing of the US$4,000,000 (Item (l)) in section E.2.5.4 of Yuen’s 1^st report.

72. The situation is compounded by the lack of full explanation. For example, why was it necessary to transfer part of the proceeds to Huan Bao, then back to the 13^th defendant before injecting into Chung Shing? Why was it necessary to create a money market loan to fund the capital injection before part of the sale proceeds were used to repay part of the money market loan? These remain unanswered and the defendants are in breach of the Unless Order.

…..

79.  I find that the complaint that the defendants had not given a full explanation of the US$11 million established.”

15.The Judge held that the sanction of strike out of the 1^st and 13^th defendant’s defence automatically took effect by reason of their failure to comply with the Unless Order (see paragraphs 2 and 141 of the Striking Out Decision). She did not, however, enter judgment for the plaintiffs against the 1^st and 13^th defendants on the ground that the plaintiffs still had to prove their case against the 2^nd defendant and had to prove fraud against the 2^nd defendant to establish liability (paragraph 143 of the Striking Out Decision).

16.On 19 October 2015, before the order of the Judge made on 12 October 2015 had been sealed, Messrs Anthony Siu & Co (on behalf of the 1^st and 13^th defendants) wrote to the court seeking to re-open her decision on the ground of “certain misunderstanding of the relevant facts and matters”, details of which were set out in that letter.  At paragraph 13 of Messrs Anthony Siu & Co’s letter, the following was stated:-

“Having regard to all the circumstances, including the above, our Clients respectfully submit that, it would be appropriate for this matter to be dealt with by relief being granted through an extension of time (as intimated in §138 of the Decision). This course would appear to be particularly apposite, particularly in light of the Court’s observation at §73 of the Decision that ‘the parties have not made direct submissions to [the above‑mentioned] observations of the court’, which had not been raised by the Plaintiff and was mentioned for the first time in the Decision.”

17.As earlier mentioned, on 5 November 2015, the 1^st and 13^th defendants also took out a summons seeking relief from the sanction imposed by the Unless Order.

18.In support of their applications, the 1^st and 13^th defendants filed (inter alia):-

(1)  Mr Yuen’s 1^st affirmation dated 5 November 2015 “in response to observations made in relation to [Mr Yuen’s 1^st Report] in [the Striking Out Decision]”;

(2)  the 1^st defendant’s 20^th affirmation dated 11 November 2015;

(3)  Mr Yuen’s 2^nd affirmation dated 27 November 2015 in response to various matters raised in the 17^th affidavit of Cosimo Borrelli dated 19 November 2015[2];

(4)  the 1^st defendant’s 21^st affirmation dated 4 December 2015;

(5)  Mr Yuen’s 3^rd affirmation dated 28 December 2015.

PRINCIPLES FOR RE-OPENING A DECISION

19.There is no doubt that the court has jurisdiction to re-open a decision, whether final or interlocutory, where the relevant judgment or order has not yet been drawn up or sealed.

20.In Charlesowrth v Relay Roads Ltd [2000] 1 WLR 230, a defendant applied to amend its pleadings between judgment and the drawing up of the order.  It was held by Neuberger J (as he then was) that the court had a discretion to permit the defendant to do so, even if the proposed amendments would involve a new argument being put forward and further evidence being adduced.  In relation to the principles for the exercise of this discretion, Neuberger J, after reviewing a number of authorities, stated as follows at 238E-H:-

“In these circumstances, I conclude that the following principles apply where a party is seeking to call fresh evidence on a new point after judgment has been given but before the order has been drawn up: (1) the court has jurisdiction to grant an application to amend the pleadings to raise new points and/or to call fresh evidence and/or to hear fresh argument; (2) the court must clearly exercise its discretion in relation to such an application in a way best designed to achieve justice; (3) the general rules relating to amendment apply so that: (a) while it is no doubt desirable in general that litigants should be permitted to take any reasonably arguable point, it should by no means be assumed that the court will accede to an application merely because the other party can, in financial terms, be compensated in costs; (b) as with any other application for leave to amend, consideration must be given to anxieties and legitimate expectations of the other party, the efficient conduct of litigation, and the inconvenience caused to other litigants; (4) quite apart from, and over and above, those principles, because it is inherently contrary to the public interest and unfair on the other side that an unsuccessful party should be able to raise new points or call fresh evidence after a full and final judgment has been given against him, it would generally require an exceptional case before the court was prepared to accede to an application where the applicant could not satisfy the three requirements in Ladd v. Marshall ; (5) almost inevitably, each case will have particular features which the court will think it right to take into account when deciding how to dispose of the application before it; (6) the court should be astute to discourage applications which involve parties seeking to put in late evidence, but cases where new evidence is found after judgment is given and before the order is drawn up will be comparatively rare.”

21.In Re Blenheim Leisure (Restaurants) Ltd (No 3), Times 9 November 1999, Neuberger J expressed the view that:-

(1)  Even in relation to an interlocutory judgment in which the order had not been drawn up, it was undesirable for a court to be asked to reconsider an earlier decision unless there were strong reasons for doing so.

(2)  Those strong reasons included: a plain mistake on the part of the court; a failure of the parties to draw to the court's attention a fact or point of law that was plainly relevant; or discovery of new facts subsequent to the judgment being given. Another good reason was if the applicant could argue that he was taken by surprise by a particular application from which the court ruled adversely to him and that he did not have a fair opportunity to consider.

(3)  It would be foolish to pretend that that was a comprehensive list of all the possible circumstances in which it would be appropriate to ask the court to reconsider its decision.

(4)  It would be equally foolish to pretend that in every application where one or more of those requirements was satisfied the court should think it right to reopen the case.

22.In Chow Siu Po v Wong Ming Fung [2004] 1 HKC 10, the plaintiff commenced a probate action seeking (i) a revocation of a grant of probate in respect of a will made in 1994, and (ii) an order that an earlier will made in 1990 be admitted to probate.  After trial, Deputy High Court Judge Lam (as he then was) decided to revoke the grant, but did not pronounce for the 1990 will in view of the absence of evidence of due execution of that will, stating also that “the action is not finally disposed of in any event … and it might be possible for the Plaintiff to argue that he should be allowed to re-open the case on this issue and to adduce evidence as to due execution”[3].  Thereafter, the plaintiff made an application to re-open his case to adduce evidence to prove due execution of the 1990 will.  Deputy High Court Judge Lam considered that exceptional circumstances were required for a court to re-open a decision following judgment, and held that adopting such a course would be appropriate on the facts of that case.  In relation to the need to show exceptional circumstances, the following was stated at paragraphs 11 and 12 of his judgment:

“11. … In general, the court should not offer an opportunity to a litigant to supplement his evidence after judgment. In Born Chief Co v Tsai George [1996] 2 HKC 282 at p. 292E, Nazareth VP (as he then was) said,

‘Such a result … must have offended the judge’s sense of justice. But the good, efficient and increasingly, the affordable administration of justice requires that parties present their entire cases and cannot expect a second bit at the cherry simply because they failed to … produce their requisite evidence.’

…

12. The crucial issue is therefore whether there are exceptional circumstances to justify the re-opening of the case as to prayer (b). In this connection, in Townsend v Achilleas (unreported, 6 July 2000), the English Court of Appeal held that the test is slightly more flexible than Ladd v Marshall when the application to re-open the case is made to the trial judge instead of the Court of Appeal. Mummery LJ said,

‘In principle, however, it is difficult to see why there should be a more restrictive test for the reception of fresh evidence by the judge who has tried the case than would be applied by the Court of Appeal on an appeal from the judge.  Indeed, there is a good case for the cautious application of a slightly more flexible test for the reasons given by Neuberger J in Charlesworth v Relay RoadsLtd (supra) at 238 B-H.  The trial judge would have the advantage over the Court of Appeal of having seen the witnesses.  He would be in a better position to look at the evidence as a whole closer to the trial.  In that way it might be possible to avoid the risk of the Court of Appeal having to inflict on the parties the expense and delay consequent on ordering a retrial by a different judge at a much later date.’”

23.In all, although the court undoubtedly has jurisdiction to permit a party to re-open a decision where the judgment or order has not yet been drawn up or sealed, the circumstances in which it would be appropriate for the court to exercise this jurisdiction must be exceptional.   In my view, a party who is dissatisfied with a decision made by a court should ordinarily lodge an appeal or apply for leave to appeal (where required) against that decision.  The need for exceptionality is all the more obvious where the party seeking to re-open a decision wishes to rely on fresh evidence but could not satisfy the requirements laid down in Ladd v Marshall for admission of fresh evidence on appeal.

NO PROPER BASIS TO PERMIT THE 1^ST AND 13^TH DEFENDANTS TO RE‑OPEN THE STRIKING OUT DECISION

24.In his submissions in support of the Re-Opening Application, Mr Johnny Mok SC raised three main points.

25.First, Mr Mok argued that the Judge’s finding that the 1^st and 13^th defendants had failed to give a full explanation of the US$11 million was based on certain “observations” on her part which the parties had no notice and the defendants had not been given an opportunity to address the Judge on those matters.  It was said that this amounted to a breach of natural justice which alone would justify the court in re-opening the Striking Out Decision (see paragraphs 17 to 20 of Mr Mok’s Revised Skeleton Argument dated 4 January 2016).

26.The Judge in fact gave express consideration to the question of whether the 1^st and 13^th defendants ought to be given an opportunity to specifically deal with her “observations”.  She considered that, in the circumstances before her, there was no unfairness to the 1^st and 13^th defendants for her to proceed without giving them the opportunity to make direct submissions on those observations or, in the words of the Judge, “another chance to explain”.  The Judge also considered that her analysis was covered by a particular submission that had been made by Ms Linda Chan SC who then appeared on behalf of the plaintiffs before her.  The Judge’s detailed reasoning for deciding to proceed in the way that she did appears in paragraphs 73 to 77 of the Striking Out Decision, as follows:-

“73. I am also aware that the parties have not made direct submissions to these observations of the court. It might be suggested by the defendants that they ought to be given an opportunity to specifically deal with these observations.

74. I disagree. The defendants were at all times most ably represented by leading counsel and solicitors. They knew full well it was their obligation to comply fully and properly with each term of the Unless Order. They had been given a number of opportunities to make good their own disclosure.

75. More importantly, this is not a matter of submissions. This is a factual matter. If they had not provided a complete disclosure of what had happened to Items (j) and (k) with documentary evidence; and had not provided documents evidencing that Items (q), (s) and (t) sourced from Item (j), they had not fully explained the application of the US$11 million and are in breach of the Unless Order.

76. There is no unfairness to the defendants. They could apply for relief from sanction if they faced any difficulty about disclosure. They had practically done this once before A Chan J when they applied for leave to file more reports to tackle the plaintiffs’ complaints in relation to the HK$53 million odd. After all, this is an Unless Order, the final chance the court gave to the defendants, subject only to relief from sanction if an application has been made. I am of the view that it is wrong and unfair to the plaintiffs if the defendants were given another chance to explain.

77.    Moreover, the aforesaid analysis was certainly covered by the wider and general submission of Ms Chan that the court should not assume that one sum which has gone at a particular point of time into a particular account of the defendants was the same sum which was paid out later, even though they looked similar or was of the exact amount.  Ms Chan has helpfully drawn my attention to the fact that the defendants had many accounts which were in turn divided into various sub‑accounts.  There were many sums which were of the same or very similar amounts going in and out and travelling between the defendants’ various accounts.  The burden of showing a complete picture of the fund flow falls squarely on the defendants.” 

27.Second, Mr Mok argued that there was a factual error in the Judge’s “observations”, in that the Judge had apparently mixed up 2 companies with similar names, one being “Huan Bao” (which is the abbreviation for “Huan Bao Steel Ltd” in Mr Yuen’s 1^st Report) and the other being “Asia Huan Bao” (the abbreviation for “Asia Huan Bao Steel Limited”) (see paragraphs 21 to 23 of Mr Mok’s Revised Skeleton Argument).  The factual error, it was said, appeared in the Judge’s statement in paragraph 63 of the Striking Out Decision that “the defendants had only produced the bank statements of Huan Bao Steel’s DBS HKD account”, and the further statement in paragraph 64 of the decision that “[w]ithout the production of the BOCOM statements, or the Huan Bao ledgers of the relevant period, it is unknown whether this enormous sum of US$15 million has been applied for some other use or has acquired some other assets which the defendants were under a duty to disclose”.

28.According to Anthony Siu & Co’s letter dated 19 October 2015, the “Huan Bao Steel’s DBS HKD account” mentioned in paragraph 63 of the Striking Out Decision was a reference to an account of “Asia Huan Bao Steel Limited”, a private company owned by the 1^st defendant, while the “BOCOM statements” mentioned in paragraph 64 of the Striking Out Decision was a reference to the statements of “Huan Bao Steel Ltd” which was an indirect subsidiary of the 1^st plaintiff.  It was further said in Anthony Siu & Co’s letter that “Huan Bao Steel Ltd” had been taken over by the then provisional liquidators a long time ago and there was no basis to infer that the 1^st and 13^th defendants had possession or control of that company’s documents.

29.Even if there was some confusion regarding these two entities, it is apparent, from paragraphs 67 to 68 of the Striking Out Decision, that the Judge also found that the 1^st and 13^th defendants had failed to produce documents relating to Items (q), (s) and (t) mentioned in paragraph 13(3) above and failed to give a full explanation of the three sums in question (ie, US$4,000,000, US$8,700,000 and US$2,299,977), and she concluded at paragraph 69 of the Striking Out Decision that the failure to give a full explanation of Items (q), (s) and (t) and non-production of documents in relation thereto constituted breaches of paragraph 1(c) and (d) of the Unless Order.

30.Third, Mr Mok took the court through the relevant parts of Mr Yuen’s 1^st Report to show that the Judge was wrong in her conclusion that the 1^st and 13^th defendants had failed to give a full explanation of the US$11 million (see paragraphs 24 to 35 of Mr Mok’s Revised Skeleton Argument).  Mr Mok also relied upon, in so far it might be necessary to do so, the additional evidence not before the Judge to make good his submission. It is not with disrespect to Mr Mok that I do not propose to examine in detail the analysis carried out by counsel, for I am clearly of the view that even if I were to disagree with the Judge’s conclusion (a matter on which it is not necessary for me to express any view), that cannot be a sufficient basis for me to re-open her decision.  The Striking Out Decision is made by a judge of co‑ordinate jurisdiction.  I have no appellate jurisdiction over that decision.  Disagreement between two judges hearing any issue on two separate occasions, particularly one involving detailed examination of accounting records and forensic accounting evidence, cannot amount to an exceptional circumstance justifying the re-opening of the first judge’s decision.  In my view, the 1^st and 13^th defendants’ proper avenue to challenge the Judge’s conclusion is to lodge an appeal to the Court of Appeal.  This comment also applies to the other two grounds advanced by Mr Mok on behalf of 1^st and 13^th defendants to seek to re-open the Striking Out Decision.

31.In all, I reject that the 1^st and 13^th defendants’ Re-Opening Application.

THE RELIEF APPLICATION

32.I can deal with this application briefly.  If, as found by the Judge, the 1^st and 13^th defendants failed to fully comply with paragraph 1(c) and (d) of the Unless Order, I would not exercise my discretion to grant any relief from the sanction imposed by the Unless Order, having regard to the following matters:-

(1)  The application for an extension of time to comply with the Unless Order was made on 5 November 2015, which was more than 11 months after the deadline for complying with the Unless Order (1 December 2014).

(2)  The 1^st and 13^th defendants’ obligation to make the relevant disclosure was first imposed by L Chan J on 9 April 2014, that being nearly 19 months before the date of the application.

(3)  At paragraphs 51 to 56 of the Unless Order Decision, I explained why an unless order should be made in the present case.  I also expressed the view, at paragraph 54(4) of that decision, that “it is well within [the 1^st and 13^th defendants’] ability to fully and properly comply with the Chan Order”.

(4)  The history of this matter, as summarized in paragraphs 7 to 23 of the Unless Order Decision, clearly indicates that the 1^st and 13^th defendants are not willing to make full and proper disclosure of their assets as required by various orders that have been made by the court.

DISPOSITION

33.I dismiss both the Re-Opening Application and Relief Application, with costs to the plaintiffs to be taxed if not agreed.

34.Lastly, it remains for me to thank Mr Mok and Mr Dobby for the assistance that they have rendered to the court.

Mr Chris Dobby, of Hogan Lovells, for the 1^st and 2^nd plaintiffs

Mr Johnny Mok, SC, Mr Alexander Tang and Mr Val Chow instructed by Anthony Siu & Co, for the 1^st and 13^th defendants