Waddington Ltd v. Chan Chun Hoo Thomas and Others

HCA 3291/2003

[2018] HKCFI 580

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 3291 OF 2003

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D E C I S I O N

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INTRODUCTION

1.The principal issue which I have to decide is whether to order Reed Smith Richards Butler (“RSRB”), the solicitors on record for the 5^th Defendant in this action until 13 January 2017, to make further disclosure of information and documents relating to the funding arrangement in respect of the 5^th Defendant’s costs in this action and in CACV 142/2015 (collectively “the Proceedings”).

BACKGROUND FACTS

2.The background facts relevant for the present purposes have been set out in my previous decision handed down on 25 January 2017 (“the First Disclosure Decision”), and will not be repeated here.  Unless otherwise expressly indicated, I shall continue to use the expressions and abbreviations as defined in the First Disclosure Decision.

3.On 9 September 2016, the Plaintiff took out a summons (“the First Disclosure Application”) against RSRB seeking disclosure of:-

(a)   the identity/identities of each of the funder(s) of the 5^th Defendant’s costs or any part thereof incurred in the Proceedings;

(b)   an itemised breakdown of the 5^th Defendant’s costs incurred in the Proceedings; and

(c)   whether, and if so when and the amount(s) thereof, RSRB received costs on account and/or payment in respect of the 5^th Defendant’s costs incurred in the Proceedings or any part thereof (including but not limited to those in respect of Counsel’s brief fees).

4.On 6 December 2016, the Plaintiff took out a further summons (“the Second Disclosure Application”) seeking leave to amend the aforesaid summons by adding the following item to be disclosed by RSRB:-

“whether the agreement(s) concerning the funding of the 5^th Defendant’s costs incurred in the Proceedings was/were made orally or in writing; if made orally, the parties thereto and the terms thereof; if made in writing, copies of such agreement(s) and/or record(s) or document(s) evidencing such agreement(s).”

5.By the First Disclosure Decision, I allowed paragraph 1(a) of the First Disclosure Application, but rejected the rest of that application and the Second Disclosure Application.

6.In compliance with the order made in the First Disclosure Decision, Ms Asha Sharma of RSRB made an affirmation on 6 February 2017 stating that the 5^th Defendant’s costs in the Proceedings were paid by the following parties:-

(a)   Playmates Holding Limited (ie, the 3^rd Defendant);

(b)   PIL Finance Limited; and

(c)   Belmont Limited.

7.On 14 March 2017, the Plaintiff issued a summons (“the Third Disclosure Application”) against RSRB seeking disclosure of further information and documents relating to the funding arrangement in respect of the 5^th Defendant’s costs in the Proceedings, in particular:-

(a)   in respect of the costs on account and/or payments received by RSRB from (i) Playmates Holdings Limited; (ii) PIL Finance Limited; and (iii) Belmont Limited (collectively “the Companies”) (or any of them) in respect of the costs of the 5^th Defendant (including but not limited to Counsel’s fees) incurred in the Proceedings or any part thereof:-

(i)   the amounts thereof, with itemized breakdown stating clearly the amounts paid by each of the Companies respectively; and

(ii)   when RSRB received such costs on account and/or payments from each of the said Companies;

(b)   whether any retainer and/or agreement was entered into by RSRB with the 5^th Defendant in respect of the Proceedings and if yes, the terms thereof concerning the payment of the 5^th Defendant’s costs (including Counsel’s fees) incurred in the Proceedings;

(c)   whether any agreement(s) was/were made between RSRB on the one hand and the Companies (or any of them) and/or other individual(s) or entity/entities on the other hand concerning the payment of the 5^th Defendant’s costs (including but not limited to Counsel’s fees) incurred in the Proceedings;

(d)   if the answer to (c) above is “yes”:-

(i)   whether such agreement(s) was/were made orally or in writing;

(ii)   if made orally, the parties thereto and the terms thereof; and

(iii)   if made in writing, copies of such agreement(s) and/or record(s) and/or document(s) evidencing such agreement(s);

(e)   if the answer to (c) above is “no”, whether any inquiries were made by RSRB concerning the payments received by RSRB in respect of the 5^th Defendant’s costs (including but not limited to Counsel’s fees) incurred in the Proceedings;

(f)   if the answer to (e) above is “yes”, with whom were such inquiries made; whether such inquiries were answered; and if answered, what was the information obtained by RSRB upon making such inquiries;

(g)   the identity/identities of the individual(s) from whom instructions were taken by RSRB in respect of (i) the conduct of the Proceedings on behalf of the 5^th Defendant and (ii) the payment of costs on behalf of each of the Companies;

(h)   whether the said PIL Finance Limited and Belmont Limited are wholly­owned subsidiary companies of Playmates Holdings Limited as referred to in the relevant Annual Reports of Playmates Holdings Limited;

(i)   information and/or documents requested and obtained by RSRB from each of the Companies in relation to (i) identity of its shareholders and directors and(ii) approval and/or authorization from each of the said Companies to fund and/or agree to fund the Proceedings on behalf of the 5^th Defendant;

(j)   the extent of the Companies’ involvement in the conduct of the Proceedings by the 5^th Defendant; and

(k)   the nature and extent of the Companies’ interest (financial or otherwise) in the conduct of the Proceedings by the 5^th Defendant.

8.As confirmed in paragraphs 13 and 15 of the 5^th Affirmation of Mr Sidney To (a director of the 5^th Defendant):-

(a)   PIL Finance Limited and Belmont Limited were at all material times, and are, wholly owned subsidiaries of the 3^rd Defendant.

(b)   The 5^th Defendant obtained interest-free loans from the 3^rd Defendant in order to fund its legal representation in this action.

(c)   The 3^rd Defendant procured PIL Finance Limited and Belmont Limited to advance the loans to the 5^th Defendant.

(d)   The total amount of the loans advanced by the 3^rd Defendant (through PIL Finance Limited and Belmont Limited) to the 5^th Defendant for the purpose of these proceedings amounted to approximately HK$11,871,409.45 as at 27 March 2017, as stated in a demand letter of that date issued by King & Wood Mallesons on behalf of the 3^rd Defendant to ONC Lawyers (the 5^th Defendant’s solicitors) for repayment of the loans.

9.By a letter dated 28 March 2017, RSRB informed the court that they would take a neutral stance in respect of the Third Disclosure Application, and asked to be excused from attending the hearing of the application.

10.On 5 April 2017, I granted leave to the 5^th Defendant to intervene in the Third Disclosure Application.  The Plaintiff did not appeal against the substantive order granting leave to the 5^th Defendant to intervene, but sought leave to appeal against the costs order made by the court consequent upon the Plaintiff’s unsuccessful opposition to the 5^th Defendant’s application to intervene.  The application for leave to appeal was dismissed by me on 25 May 2017, and by the Court of Appeal on 18 October 2017 (in HCMP 1326/2017).  I shall come back to an aspect of the decision of the Court of Appeal later.

11.On 10 November 2017, the Plaintiff issued a further summons (“the Expert Evidence Application”) seeking leave to file and serve the 17^th Affirmation of Mr Albert Chan in order to admit into evidence an expert report on BVI law for “the interpretation of the BVI Court Order dated 30 September 2005” (“the BVI Court Order”) referred to in paragraph 3 of the First Disclosure Decision (see paragraph 1(b) of the Plaintiff’s Skeleton Argument dated 7 December 2017).

12.The Third Disclosure Application and the Expert Evidence Application came before me on 12 December 2017.  This is my decision on the two applications.

THE THIRD DISCLOSURE APPLICATION SHOULD BE REFUSED

13.As mentioned in paragraph 17 of the First Disclosure Decision, the Plaintiff made the First and Second Disclosure Applications with a view to pursuing a non-party costs order under Section 52(A)(2) of the High Court Ordinance, Cap 4 against the 5^th Defendant’s funder in respect of the costs which the 5^th Defendant had been ordered to pay to the Plaintiff in the Proceedings.

14.The Plaintiff has now been told that the funder was, effectively, the 3^rd Defendant, with PIL Finance Limited and Belmont Limited acting upon the procurement of the 3^rd Defendant to advance the relevant loans to the 5^th Defendant.  The Plaintiff is not, however, satisfied with the information obtained or the ability to pursue the 3^rd Defendant and/or PIL Finance Limited and Belmont Limited for payment of the relevant costs, but wishes to obtain further information and documents with a view to identifying “the real individuals, against whom an application for non-party costs should properly be made”.  It is said that the mere disclosure by RSRB of the Companies is insufficient to enable the Plaintiff to take out an application for non-party costs orders against “the person(s) behind the said Companies who is/are the real party to the litigation between Profit Point and the Plaintiff” (see paragraphs 1 and 10 of the 14^th Affirmation of Mr Albert Chan).  It is obvious, from the 14^th and 15^th Affirmations of Mr Albert Chan that the Plaintiff considers Mr Thomas Chan to be the “real party” who ought to bear the costs which the 5^th Defendant has been ordered to pay to the Plaintiff in the Proceedings.  The Third Disclosure Application is, in reality, an attempt by the Plaintiff to gather evidence or materials in support of the intended application against Mr Thomas Chan.

15.In paragraph 19 of the First Disclosure Decision, I set out Blake J’s summary, given in his judgment in Thomson v Berkhamsted Collegiate School [2009] 6 Costs LR 859, at paragraph 19 (quoted with approval by Leveson LJ in Flatman v Germany [2013] 1 WLR 2676, at paragraph 49), of the factors relevant to the court’s exercise of its discretion whether to order disclosure of information and documents sought for the purpose of an intended application for a non-party costs order, as follows:-

(1)   the strength of the application as it now appears unassisted by disclosure;

(2)   the potential value to the fair determination of the application of the documents of which the claimant seeks disclosure and whether they are likely to elucidate considerations highly probative of the exercise of the court's discretion, or threaten to drag the application into a side alley of satellite litigation with diminishing returns for the overall issue;

(3)   whether on a summary assessment it is obvious that the documents for which disclosure is sought will be the subject of proper legal professional privilege; and

(4)   whether the likely effect of any order the court might be minded to make will be proportionate and just in all the circumstances.

16.In respect of the strength of the application, the starting point is the statutory basis under Section 52(A) of the High Court Ordinance providing for the court’s jurisdiction to make a non-party costs order, as follows:-

“(1) Subject to the provisions of rules of court, the costs of and incidental to all proceedings in the Court of Appeal in its civil jurisdiction and in the Court of First Instance, including the administration of estates and trusts, shall be in the discretion of the Court, and the Court shall have full power to determine by whom and to what extent the costs are to be paid.

(2)   Without prejudice to the generality of subsection (1), the Court of Appeal or the Court of First Instance may, in accordance with rules of court, make an order awarding costs against a person who is not a party to the relevant proceedings, if the Court of Appeal or the Court of First Instance, as the case may be, is satisfied that it is in the interests of justice to do so.”

17.Section 52A(2) of the High Court Ordinance confers upon the court a general discretion to make a costs order against a non-party where it is in the interests of justice to do so.  As a matter of principle, such discretion can be exercised not only against the “funder” of the litigation, but may be exercised against a person who controlled the litigation, or the real party interested in the outcome of the litigation who actively assisted a party in pursuing a claim or defence which eventually failed (see To Pui Kui v Ng Oi Che, CACV 67 & 156/2014, 27 February 2015, at paragraphs 49.2 and 49.3 per Yuen JA; Chiu Tak Kwong v Tan Yufang [2010] 5 HKLRD 718).

18.This having been said, the court’s discretion must be exercised having regard to the purpose of Section 52A(2) of the High Court Ordinance.  That section is, in my view, primarily about “costs recovery”, in particular to enable a party to recover costs from a non-party to an action.  Generally speaking, it should be a matter of indifference to the receiving party as to where his costs would come from, so long as he is able to recover the costs that he has been awarded by the court.  There may, of course, be special circumstances where the receiving party may justifiably argue that his costs should not be paid by a particular person, or come out from a particular source.  I alluded to this possibility in paragraph 25 of the First Disclosure Decision when I stated that it was not a pre-condition to the exercise of power to award costs against a non-party that the unsuccessful party (ie, the party liable to pay costs) was impecunious.  Nevertheless, I consider it to be clear, as a matter of principle, that Section 52A(2) is not designed to be used, and should not be used, as a means to enable a party to gather evidence of, or pursue, a complaint of breach of fiduciary duties.  An application for a non-party costs order under Section 52A(2) is inherently not suitable for determining such issue.  Like most applications for costs, an application for non-party costs ought generally to be disposed of swiftly without the need for any detailed investigation of contested facts or complicated arguments on law.  The danger of allowing Section 52A(2) to be used for collateral purposes, such as for pursuing a complaint of breach of fiduciary duties, is that it could become the source of satellite litigations, contrary to the underlying objectives of the CJR.

19.Take the present case as an example.  The Plaintiff has already obtained confirmation that the 3^rd Defendant is the actual funder of the 5^th Defendant’s costs in the Proceedings, and can pursue an application for non-party costs against the 3^rd Defendant, jointing PIL Finance Limited and Belmont Limited as parties to the intended application if it is considered necessary to do so.  Prima facie, that should be sufficient to satisfy or protect the Plaintiff’s position as regards costs.  Unless there are some good reasons justifying the Plaintiff’s attempt to go beyond or behind the actual funder of the 5^th Defendant’s costs, I do not consider that the court should exercise its discretion to order RSRB to provide further disclosure to assist the Plaintiff in such exercise, which would likely, or at least potentially, lead to further satellite litigations.

20.The Plaintiff’s current application for disclosure is launched on the basis that it wishes to hold the real party to the litigation between the 5^th Defendant and the Plaintiff to bear the costs which the 5^th Defendant has been ordered to pay to the Plaintiff in the Proceedings.  It is clear, from an examination of the information and documents sought, as well as the fact that the application is directed against RSRB, that the application is linked to the funding arrangement in respect of the 5^th Defendant’s costs. In other words, the Plaintiff is seeking to make out a case against the so-called “real party” through his participation or involvement in relation to the funding arrangement in respect of the 5^th Defendant’s costs.  It is now clear that it is the 3^rd Defendant who has been funding the 5^th Defendant’s litigation.  The 3^rd Defendant, being a company, can of course only act through the agency of individuals, in particular its board of directors acting collectively.  The Plaintiff says that Mr Thomas Chan is in de facto control of the 3^rd and/or 5^th Defendants.  Even if one assumes, in the Plaintiff’s favour, that the 3^rd and/or 5^th Defendants are controlled by Mr Thomas Chan and he has caused or procured the 3^rd Defendant to fund the 5^th Defendant’s litigation, it does not follow that he should be personally responsible for the costs liabilities of the 3^rd and/or 5^th Defendants.  Were it otherwise, the controller of a company involved in a litigation would generally be at risk of having to personally bear the other party’s costs should the company fails in its claim or defence in the litigation.  In this regard, it has to be recognized that many companies are, in actual practice, controlled by a person (or a few persons), with the approval, consent or authority of the relevant board of directors.

21.I shall now deal with a number of features in the present case which the Plaintiff relies upon in support of the contention that Mr Thomas Chan, or any other person who may be described as the “real party” to the litigation between the 5^th Defendant and the Plaintiff, ought properly to be made the target of the Plaintiff’s intended application for non-party costs.

22.First, Ms Audrey Eu, SC (for the Plaintiff) submits that an application against the Companies “completely defeats the purpose of seeking a non-party costs order in respect of D5’s costs, which is to preserve the assets of D5 (and of D3) for the benefit of D3’s public shareholders and shift D5’s costs liability to the real person(s) responsible”, and “funds of the Paying Companies are funds of D3 in the same way as funds of D5” (see paragraphs 11 and 14(a) of the Plaintiff’s Skeleton Argument).  The validity of this submission depends on what should be regarded as the proper purpose of a non-party costs order.  As earlier mentioned, I consider the primary purpose of an application under Section 52A(2) to be “costs recovery”.  In the special circumstances of the present case where the 5^th Defendant’s assets consists solely of the fruits of this action brought specifically by the Plaintiff on its behalf, it is, I believe, reasonably arguable that the assets of the 5^th Defendant should be preserved for the benefit of the 5^th Defendant and not be used to pay the Plaintiff’s costs (as mentioned in paragraph 25 of the First Disclosure Decision).  I pause to add that whether the court should ultimately order the funder (or some other party) to be responsible for the 5^th Defendant’s liability to pay costs to the Plaintiff remains, of course, to be fully argued in due course.  However, the same consideration does not apply to the assets of the 3^rd Defendant.  As submitted by Mr Edward Chan, SC (for the 5^th Defendant), it is prima facie a matter for the 3^rd Defendant to decide how it wishes to deploy its assets.  In view of the fact that the 5^th Defendant is a wholly-owned subsidiary of the 3^rd Defendant, there is, I consider, a valid basis for the 3^rd Defendant to lend monies to the 5^th Defendant to fund litigations which the 5^th Defendant would otherwise be unable to pursue for lack of funds.  The fact that the 3^rd Defendant is a public company, and/or that the Plaintiff is a shareholder of the 3^rd Defendant, does not seem to me to make any difference.

23.Second, Ms Eu argues that the 5^th Defendant’s opposition to the Interim Payment Application was “to cover for the real party benefiting from the stance taken by D5 and who had been the wrongdoer behind D5” (see paragraph 7 of the Plaintiff’s Skeleton Argument).  Although the 5^th Defendant’s opposition to the Interim Payment Application, if successful, may incidentally benefit Mr Thomas Chan, I do not consider that it would, by that reason alone, be improper for the 5^th Defendant to resist the Interim Payment Application.  It will be recalled that in the Interim Payment Applicant, the Plaintiff sought an order that the bulk of the recovery made in the derivative action and paid into court by Mr Thomas Chan, to the extent of HK$30,913,708.30, should be paid out to the Plaintiff as interim payment of its costs incurred in the action.  Since the money in court belonged, as a matter of law, to the 5^th Defendant, it seems to me to be clear that the 5^th Defendant had a proper interest to oppose the Interim Payment Application, even though the opposition ultimately turned out to be unsuccessful. 

24.Third, Ms Eu says that the 5^th Defendant has spent almost HK$12 million by way of legal costs when it ought to remain neutral in the present derivative action brought by the Plaintiff for its benefit (see paragraphs 1(b), 8 and 13 of the Plaintiff’s Skeleton Argument).  From what is known to the court, it would appear that the 5^th Defendant started to become actively involved in this action since the Plaintiff’s launched the Interim Payment Application on 22 August 2014.  Up to 27 March 2017, the 5^th Defendant has been involved in quite a number of contested hearings before the court, including (i) a hearing in November 2014 before Mr Recorder P Fung SC to resist the Interim Payment Application, (ii) two hearings before this court in December 2014 and June 2015 respectively in relation to its applications for leave to appeal against the November Order and a stay of the November Order pending appeal, (iii) an appeal hearing in February 2016 before the Court of Appeal in CACV 142/2015, (iv) a hearing before this court in December 2016 relating to pre-judgement and post-judgment interest, and (v) a hearing before this court in February 2017 to resist the Plaintiff’s application to vary a costs order nisi made in relation to the court’s decision regarding pre-judgement and post-judgment interest.  Since the court has not seen the relevant bills, the court is in no position to comment on the reasonableness of the costs incurred by the 5^th Defendant in respect of the above matters.  In any event, the court is not presently concerned with the amount, or reasonableness, of the 5^th Defendant’s own costs incurred in the Proceedings, but with the question of whether it should order RSRB to make further disclosure to assist the Plaintiff in its intended application for a non-party costs order.  In so far as the stance that the 5^th Defendant ought to take in the present derivative action is concerned, it is, I believe, not controversial that the 5^th Defendant should adopt a neutral position in relation to the principal claim brought by the Plaintiff against Mr Thomas Chan.  It does not, however, follow that the 5^th Defendant should also remain neutral in relation to other applications which may directly affect its interests.  As remarked by the Court of Appeal in paragraph 19 of its decision handed down on 18 October 2017 in HCMP 1326/2017 (referred to in paragraph 10 above):-

“We also agree with Mr Chan that whilst a company in a derivative action should take a neutral stance in the trial of the action, this is not necessarily the case in respect of interlocutory applications that may directly concern or affect the interest of the company.”

25.The matters ventilated at the hearings mentioned above all directly concern or affect the interests of the 5^th Defendant.  I do not consider that it was improper for the 5^th Defendant to be legally represented and take part in the relevant applications.

26.Fourth, Ms Eu argues that the 5^th Defendant’s opposition to the Interim Payment Application was in breach of the BVI Order (see paragraph 8 of the Plaintiff’s Skeleton Argument).  I shall deal with this point when I come to consider the Expert Evidence Application below.

27.Fifth, Ms Eu says that the Companies were at all material times and are under the same wrongdoer control as the 5^th Defendant, and that directors of the Companies who authorised the funding of the 5^th Defendant’s costs are likely to be in breach of fiduciary duties (see paragraphs 11 and 21(d) of the Plaintiff’s Skeleton Argument).  The theme of breach of fiduciary or directors’ duties is repeatedly emphasised by Mr Albert Chan (see, for example, paragraphs 14, 16 and 21 of his 14^th Affirmation, and paragraphs 13 and 17 of his 15^th Affirmation).  As earlier mentioned, I do not consider that Section 52A(2) should be used by the Plaintiff to gather evidence of, or pursue, a complaint of breach of fiduciary duties.  If Mr Thomas Chan, or any other person, has acted in breach of fiduciary duties owed to the 3^rd Defendant in causing or procuring it to fund the 5^th Defendant’s litigation, the proper complainant would be the 3^rd Defendant, and the Plaintiff may bring a derivative action on behalf of the 3^rd Defendant against Mr Thomas Chan or such other person (if it can satisfy the conditions for bringing a derivative action).

28.Sixth, Ms Eu refers to and relies on a previous observation made by this court in paragraph 32 of the First Disclosure Decision, viz, “[s]hould it be shown at some future time that there is in fact more than one funder of the 5^th defendant, the plaintiff can make a further application for disclosure of additional relevant information (assuming that such application can be justified)”.  It should be noted, however, that observation was made with reference to the Plaintiff’s application for disclosure of information under paragraph 1(b) and (c) of the First Disclosure Application (namely, for a breakdown of the 5^th Defendant’s costs incurred in the Proceedings, and for information as to when and the amount(s) of costs that RSRB had received) and in answer to the argument of Mr Lam (for the Plaintiff) that such information would be relevant to the Plaintiff’s intended application for non-party costs should there be more than one funder of the 5^th Defendant’s costs.  As stated in paragraph 32 of the First Disclosure Decision, I was not persuaded by that argument.  In any event, I made it clear that the Plaintiff could make a further application for disclosure of additional relevant information assuming that the application could be justified.  As it is, I do not consider the present application to be justified.

29.For the above reasons, I am not satisfied that the Plaintiff has made out a prima facie or reasonably arguable case that the so-called “real party” to the litigation between the 5^th Defendant and the Plaintiff, be it Mr Thomas Chan or any other party, should be ordered to bear the costs which the 5^th Defendant has been ordered to pay to the Plaintiff in the Proceedings.

30.Further, it is by no means clear, in my view, that the information and documents sought by the Plaintiff as itemised in sub-paragraphs (a) to (k) of the Third Disclosure Application would likely be of great potential value to the fair determination of the Plaintiff’s intended application for non-party costs order, or elucidate considerations highly probative to the exercise of the court's discretion on whether to make a non-party costs order.  In the ordinary course of the events, the 3^rd Defendant’s decision to advance loans to the 5^th Defendant to fund its litigation would have been made by the board of directors of the 3^rd Defendant (or by person(s) duly authorized by the board to make such decision) and executed by the 3^rd Defendant employees or agents.  Bearing in mind Mr Sidney To’s evidence that decisions made in relation to the present derivative action were made by an independent committee set up by the 3^rd Defendant as long ago as 2003 and Mr Thomas Chan has been excluded from the said independent committee to avoid any conflict of interest, it is, I believe, unlikely that the information and documents sought by the Plaintiff from RSRB (eg, the person who made the oral agreement with RSRB concerning the 5^th Defendant’s costs or who signed the relevant retainer or agreement with RSRB, the person who gave instructions to RSRB in respect of the conduct of the Proceedings on behalf of the 5^th Defendant or the payment of costs on behalf of the Companies, or the information or documents requested or obtained by RSRB in relation to the approval and/or authorization from each of the Companies to fund and/or to agree to fund the Proceedings on behalf of the 5^th Defendant) would actually identify the so-called “real party” (whom the Plaintiff believes to be Mr Thomas Chan) to the litigation between the 5^th Defendant and the Plaintiff.  The likelihood is that the information and documents disclosed by RSRB would simply lead to further inquiries or applications for more information and documents and lead to more satellite litigations.  At least, the Plaintiff has failed to demonstrate that the information and documents sought have great potential value, or would be highly probative to the exercise of the court's discretion on whether to make a non-party costs order.  On the other hand, I consider that requiring RSRB to give further disclosure as sought by the Plaintiff would likely lead to more satellite litigations.

THE EXPERT EVIDENCE APPLICATION

31.On behalf of the 5^th Defendant, Mr Chan opposes the Expert Evidence Application on the ground that (i) Order 32, rule 11A(4) of the Rules of the High Court provides that where the determination of an application is adjourned for the hearing of a summons, no further evidence may be adduced unless it appears to the court that there are “exceptional circumstances” making it desirable that further evidence should be adduced, and (ii) there are no exceptional circumstances here to justify the admission of expert evidence on BVI law (in the form of an opinion by Mr Richard Millet QC) at the adjourned hearing of the Third Disclosure Application on 12 December 2017.  Although Order 32, rule 11A(4), on its terms, applies only to a hearing before a Master, I agree with Mr Chan that the same principle must be applicable to a hearing before a Judge.

32.In the present case, the Third Disclosure Application was made on 14 March 2017, whereas the Expert Evidence Application was made on 10 November 2017, after Mr Albert Chan had filed his 15^th Affirmation on 15 May 2017 in reply to the 5^th Affirmation of Mr Sidney To filed on 31 March 2017. The Plaintiff’s explanation for the late application to adduce expert evidence on BVI law is, as I understand it, that the need to adduce such evidence was raised by this court in its previous decision handed down on 25 May 2017 dismissing the Plaintiff’s application for leave to appeal against the costs order made in relation to the 5^th Defendant’s application to intervene in the Third Disclosure Application, where it was observed (at paragraph 27) that “[w]hether the 5^th defendant’s application amounted to a breach of the BVI Court Order dated 30 September 2005 is a matter of BVI law, and cannot be determined simply on the basis of the wording of that order.”  However, as pointed out by Mr Chan, the Plaintiff had already made an allegation that the 5^th Defendant acted contrary to the BVI Court Order in Mr Albert Chan’s 9^th Affirmation filed in September 2016 in support of the First Disclosure Application.  In any event, there is no explanation for the further delay between May and November 2017.  In all the circumstances, I am not minded to allow the Expert Evidence Application.  For the sake of completeness, I shall briefly deal with the expert evidence sought to be adduced by the Plaintiff.

33.Mr Richard Millet QC’s opinion is that, as a matter of BVI law and under the BVI Court Order:-

(1)   The 5^th Defendant’s opposition to the Third Disclosure Application is outside the scope of the BVI Court Order, and the 5^th Defendant’s directors are acting beyond their directorial powers conferred by paragraph 3 of the BVI Court Order in so doing.

(2)   The 5^th Defendant’s director (Mr Sidney To) has no actual or ostensible authority either to oppose that application or to instruct lawyers to do so.

(3)   The 5^th Defendant (as a nominal defendant) is not entitled to take a stance that is adversarial to the Plaintiff in this derivative action, subject to one qualification, viz, ensuring that there is no overcharging of the Plaintiff’s expenditure under the indemnity in the March Order.

(4)   The 5^th Defendant is bound to take a neutral stance so far as concerns any disputes within the proceedings, save in the one aspect mentioned above, simply because the 5^th Defendant has no power under the BVI Court Order to do anything else.

34.Even I were to admit the Plaintiff’s expert evidence and accept the above propositions as a matter of BVI law, it would not affect my conclusion on the Third Disclosure Application, because the question that I have to decide is not whether the 5^th Defendant is acting within the powers conferred by the BVI Court Order, or its directors have actual or ostensible authority, to oppose the application, but whether I should exercise my discretion to order RSRB to disclose the information and documents sought by the Plaintiff.  I would have come to the same conclusion with or without the participation of the 5^th Defendant.  I would only add that, as stated by the Court of Appeal, the 5^th Defendant is not bound, at least as a matter of Hong Kong law, to adopt a neutral stance in respect of interlocutory applications that may directly concern or affect its interest (see paragraph 24 above).  I do not consider the 5^th Defendant to be acting improperly in resisting the present application by the Plaintiff.

DISPOSITION

35.For the foregoing reasons, I dismiss the Plaintiff’s summonses dated 14 March 2017 and 10 November 2017 respectively, with costs to the 5^th Defendant, to be taxed if not agreed, with certificate for two counsel.

Ms Audrey Eu, SC, and Mr Justin Lam, instructed by Kao, Lee & Yip, for the Plaintiff

Mr Edward Chan, SC and Mr Law Man-chung, instructed by ONC Lawyers, for the 5^th Defendant

Reed Smith Richards Bulter, absent