Re Kim Dotcom and Others
Read the full judgment text of HCMP 116/2012 on BabelCite. This High Court CFI judgment was delivered on 7 August 2017.
1. This is an application by the 1 st and 2 nd defendants to vary the restraint order granted by Madam Justice Bokhary on 18 January 2012. The original restraint order had since been varied by a series of subsequent court orders. It was last varied by Deputy Judge Chan (as Mr Justice Wilson Chan then was) on 14 November 2016 (‘ 2012 HK restraint order ’).
Cites 2 cases
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HCMP 116/2012 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE MISCELLANEOUS PROCEEDINGS NO 116 OF 2012 ____________________________
AND ____________________________
____________________________
___________________ D E C I S I O N ___________________ 1.This is an application by the 1st and 2nd defendants to vary the restraint order granted by Madam Justice Bokhary on 18 January 2012. The original restraint order had since been varied by a series of subsequent court orders. It was last varied by Deputy Judge Chan (as Mr Justice Wilson Chan then was) on 14 November 2016 (‘2012 HK restraint order’). 2.By way of a summons dated 15 June 2017, the 1st defendant seeks to release the following sums from the restrained account(s)[1]:
3.The 1st and 2nd defendants also seek the return of certain personal items[4]. 4.The Secretary for Justice (‘SJ’) filed a cross summons dated 30 June 2017 seeking an interim stay or adjournment of the 1st and 2nd defendants’ summons pending determination of the application on the merits in the New Zealand High Court (case no: CIV‑2014‑404‑001272)[5]. 5.In case this court grants the stay or adjournment, the SJ agrees to make a mirror order in Hong Kong to give effect to the prospective order from the New Zealand High Court. 6.If this court refuses to stay or adjourn, the SJ opposes the variation of the RO. 7.The SJ however agrees to release rental expenses up to the existing amount for a further two years with relocation costs. The SJ also agrees an increase in education allowance for two more children of the 1st defendant. 8.The SJ further agrees to return the personal items sought by the 1st and 2nd defendants. The background 9.In 2012, the 1st defendant and others were arrested in New Zealand pursuant to an indictment issued by a Federal Grand Jury in the United States. The charges included conspiracy to commit criminal copyright infringement and conspiracy to commit money laundering[6]. 10.The 1st defendant’s assets in New Zealand was under a restraint order registered in New Zealand pursuant to the Mutual Assistance in Criminal Matters Act 1992 (‘2012 NZ restraint order’). The original restraint order was issued by the US District Court for the Eastern District of Virginia in 2012. 11.About the same time in January 2012, the SJ applied to the High Court of Hong Kong for a restraint order against the Hong Kong assets of the 1st defendant and others[7]. It was granted by Madam Justice Bokhary and varied by subsequent court orders—the 2012 HK restraint order. 12.In 2014, the film studios (copyright holders) commenced civil proceedings against the 1st defendant and others in New Zealand. They obtained a freezing order from the New Zealand High Court against all assets of the 1st defendant and others in New Zealand and in Hong Kong on 25 November 2014 (‘2014 freezing order’)[8]. 13.The 2012 NZ restraint order expired on 18 April 2015. All assets under that order was made subject to the 2014 freezing order by consent of the parties. 14.Since the granting of the 2014 freezing order, Madam Justice Courtney of the New Zealand High Court has been dealing with applications for variation of the 2014 freezing order including matters on rent and monthly living expenses[9]. 15.In August 2016, after hearing arguments from parties, Madam Justice Courtney refused the application of the film studios to reduce the monthly living expenses of the 1st defendant to NZ$10,000. The judge however made other variation to the 2014 freezing order[10]. The Hong Kong High Court had granted a mirror order giving effect to those variations in November 2016. The gist of the defendants’ argument 16.Mr McCoy, SC, for the defendants pointed out the following:
17.In response to the application by the SJ for stay or adjournment, Mr McCoy argues that the issues of forum, efficiency and jurisdiction should have been raised during the hearing before Deputy Judge Chan in December 2015. This court should not allow the SJ to re‑litigate the issues. 18.The 1st defendant and others are accused of committing a worldwide conspiracy. For this court to rule that one forum is more appropriate than another, in dealing with the restraint orders, would defeat the purpose of cross‑jurisdictional assistance in criminal matters. 19.Despite the order of Madam Justice Courtney that the quantum of living expenses for the 1st defendant shall be determined from time to time by the Court in New Zealand, Mr McCoy stresses that this would not preclude an application to vary or rescind the 2014 freezing order. The 1st defendant has expressly reserved that right[14]. 20.The advance payment of rent and the contingent funds are issues that have not been decided by the New Zealand High Court. There is no risk of conflicting court orders. There should not be any issue of comity. 21.The build‑in safeguards will prevent any misuse of funds. There is no need for this court to assess the local conditions in New Zealand. 22.The only funds available are restrained in Hong Kong. The Hong Kong High Court should take the lead and deal with the application. The other parties in the New Zealand civil proceedings could have joined as parties in the present application if they want to. The gist of SJ’s argument 23.Mr Walsh, SC, anticipates that the MPAA[15] would oppose the variation proposed by the 1st defendant in this application. He argues that it would be more cost effective and expeditious to have the matter heard on the merits by the New Zealand High Court. There is no need for a contested hearing in Hong Kong as the SJ agrees to a mirror order giving effect to the prospective order of the New Zealand High Court. 24.Mr Walsh invites this court to stay or adjourn the application, pursuant to the power under O 1B, r 1(2)(b) and (e), pending the outcome of the hearing on the merits in New Zealand. He invites this court to apply the principle analogous to forum non conveniens[16]. 25.Mr Walsh argues that the New Zealand High Court is the more appropriate forum for the following reasons:
26.If this court refuses to stay or adjourn the application, Mr Walsh points out the following in opposing the variation:
Forum non conveniens 27.It is common ground that the assets in Hong Kong are restrained under the 2014 freezing order and the 2012 HK restraint order. 28.In principle, the defendants may apply to release funds from these assets either in Hong Kong or in New Zealand. However, there must be a corresponding order from the subsequent court giving effect to the order of the preceding court. In most cases, the subsequent court dealing with the matter would issue a mirror order giving effect to the order of the preceding court[17]. This is to give due regard to the reasoning of the preceding court and to avoid conflicting orders. 29.What then is the principle governing the choice of jurisdiction in this situation? Should the defendants apply for variation in Hong Kong or in New Zealand? 30.The courts in Hong Kong have consistently adopted the principles, set downby the House of Lordsin Spiliada Maritime Corp v Cansulex Ltd, The Spiliada[18], governing the stay of Hong Kong proceedings by reason of forum non conveniens. 31.In SPH v SA[19], the Hong Kong Court of Final Appeal adopted those principles as re‑stated by Cheung JA in DGC v SLC[20],
32.I note that the above authorities concern matrimonial cases. Our present application concerns variation of a restraint order. In my judgment, the central issue in both kinds of cases is the choice of jurisdiction to commence proceedings, the same principle should apply. There is no reason for a different principle in relation to variation of a restraint order. 33.The 2014 freezing order has been dealt with by Madam Justice Courtney in the past few years. The 1st defendant is resident in New Zealand. Most prospective witnesses are also resident in New Zealand. The issues including living expenses and rent have been extensively argued and evidence heard before the Judge who is familiar with the complex background of this case. The legal teams involved are stationed in New Zealand and ready. Madam Justice Courtney is most appropriate to assess the local conditions and living standard whenever necessary. 34.I can see no personal or juridical disadvantage to the 1st and 2nd defendants even if the variation is dealt with in New Zealand. 35.Mr McCoy argues that the issue of living expenses had been dealt with by Deputy Judge Chan in December 2015, the SJ should not be allowed to re‑litigate the issue. 36.In my view, in December 2015, Deputy Judge Chan had not actually dealt with the application on the merits. His Lordship correctly gave due regard to the judgment of Madam Justice Courtney given in April and October 2015[21]. Deputy Judge Chan also emphasized the importance of having those issues adjudicated at a hearing attended by all parties concerned. 37.In the hearing before Deputy Judge Chan in December 2015, the SJ filed evidence to dispute the quantum of specific items. Deputy Judge Chan decided the case adopting the preceding order of Madam Justice Courtney. His Lordship saw no need to decide on the merits. Given this background, it is logical that the SJ invites this court to consider the present application in the perspective of forum non conveniens. 38.In fact, the 1st defendant anticipates that there would be opposition of the present application from the MPAA in New Zealand[22]. 39.In my view, it is most appropriate for similar issues of variation be heard before the same court and with all parties present. 40.It is true that the 1st defendant had reserved his right to rescind or vary the 2014 freezing order or the 2012 HK restraint order[23]. This however must be subject to the principles of forum non conveniens as stated above. 41.Mr McCoy pointed out that the judgment of Madam Justice Courtney given on 26 August 2016 only covers ‘living expenses’[24]. He argues that the term ‘living expenses’ does not include rent and contingent funds. This court is invited to decide issues not before Madam Justice Courtney. 42.The opening sentence of paragraph 73(c) is important:
43.Madam Justice Courtney had ordered, in effect, that the Hong Kong funds may not be diminished in value, disposed of or otherwise dealt with, except by order of the New Zealand High Court. 44.Even accepting the narrow meaning of the term ‘living expenses’, the adjustment of rent and the provision for contingency funds are within the ambit of the order of the New Zealand High Court. 45.Mr McCoy invited this court to grant an interim order for releasing NZ$648,000 (being two years’ rent based on the current rent allowance) to facilitate negotiation of alternative accommodation by the 1st defendant during the interim. While Mr Walsh opposed in principle stressing that this should be dealt with in one‑go in New Zealand, however, the SJ has no objection for the 1st defendant to continue with the current monthly rent allowance of NZ$27,000. In the circumstances, I grant an interim order to release NZ$648,000 for two years’ rent to facilitate negotiation of alternative accommodation. 46.For the reasons above, I agree with Mr Walsh that the application for variation of the 2012 HK restraint order should be stayed until the issues are adjudicated by the New Zealand High Court in due course. It is in the interest of justice. 47.Given the above decision, I do not have to consider the objections on the quantum of specific items. 48.I make the following orders:
Mr Wayne Walsh, SC, Deputy Law Officer, leading Ms Ada Chan, instructed by the Department of Justice, for the Secretary for Justice Mr Gerard McCoy, SC, leading Mr Albert N B Wong, [1] For details see paragraphs 2 to 7 of the 1st and 2nd defendants’ summons dated 15 June 2017. [2] Being two years’ rent payable in advance at NZ$40,000 per month. [3] This fund provides for medical expenses of the family, car maintenance, household repairs and two holidays of the family. [4] For details see paragraphs 8 and 9 of the summons dated 15 June 2017. [5] The SJ argues that the New Zealand Court is a more appropriate venue. [6] For detail see the affirmation of Inspector Sunny Yu Yat Ming at bundle A1/15/104‑123. [7] Pursuant to s 27 of the Mutual Legal Assistance in Criminal Matters Ordinance, Cap 525. [8] Case no: CIV‑2014‑404‑001272. [9] In December 2014, October 2015 and July‑August 2016. [10] See bundle B/16/106‑133, paragraphs 73‑77 of the judgment by Courtney J dated 19 August 2016. [11] The Association represents the film studios ie the copyright holders. [12] See para 7, 28‑47. 7th affirmation of the 1st defendant, bundle A2/257‑277. [13] See para 8, 52‑59. 7th affirmation of the 1st defendant, bundle A2/257‑277. [14] See paragraphs 73(c)(ii) and (d)(i) of the judgment of Madam Justice Courtney, bundle B/16/106‑133. [15] The Association represents the film studios, ie, the copyright holders. [16] Established in Spiliada Maritime Corporation v Cansulex Ltd [1987] AC 460. [17] This is what Deputy Judge Chan did in December 2015 and November 2016. Likewise, Madam Justice Courtney did the same in August 2016. [18] [1987] AC 460. [19] [2014] 3 HKLRD 497, at paragraphs 50‑52. [20] [2005] 3 HKC 293, 297‑298. [21] HCMP 116/2012, at paragraphs 7‑8, 11‑16. [22] See paragraph 7.3.1 of the 7th affidavit of the 1st defendant dated 14 June 2017. [23] Judgment of Madam Justice Courtney dated 26 August 2016, at paragraph 73(d)(i)‑(ii). [24] Ibid at paragraph 73(c)(ii). |
Cases cited in this judgment
Further hearings and rulings under HCMP 116/2012