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

HCA 1412/2013

[2019] HKCFI 1068

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1412 OF 2013

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DECISION

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Introduction

1.By a summons filed on 21 March 2019 (“the summons”), the 2^nddefendant seeks an order that (a) the trial which has been scheduled to commence on 14 October 2019 with 30 days reserved, i.e. until 22 November 2019 (“the Civil Trial Dates”), be vacated; and (b) the trial be re-fixed to commence on a date not before 16 December 2019 with 30 days reserved.  The application is opposed by the plaintiffs.

2.I would first set out the relevant background.

Background

3.In these proceedings, the 1^st plaintiff is a listed company now in liquidation.  The 2^ndplaintiff is the 1^stplaintiff’s main operating subsidiary.  On 9 March 2015, Harris J handed down a judgment in which the learned judge found, in acceding to the Securities and Futures Commission’s petition to wind up the 1^st plaintiff on public interest ground, that a fraud on a massive scale had been perpetrated by those in charge of the 1^stplaintiff, on the basis that of, inter alia, the “Round Robin Scheme” and false bills of lading relating to the 2^nd plaintiff in 2007 – 2009, 2012 and2013 involving the 2^nd plaintiff’s suppliers and customers which were set up upon the instructions of the 1^stdefendant or persons associated with him.  The learned judge found that the 1^stdefendant exercised control over the 1^stplaintiff and its subsidiaries at the relevant time [1].

4.These proceedings were commenced by the liquidators acting on behalf of the plaintiffs against the 1^st defendant (Chairman, CEO and majority shareholder of the 1^st plaintiff), the 2^nd defendant (the 1^st defendant’s wife and co-founder and director of the plaintiffs), and various entities controlled or associated with them (the 3^rd to the 10^th defendants).  The 13^thdefendant is the corporate vehicle and alter ego of the 1^stdefendant.  The liquidators are trying to recover the loss and damage the plaintiffs have suffered by reason of a large-scale fraudulent scheme operated by those in control thereof and the related parties.

5.The 2^nd defendant is now the only defendant defending these proceedings.  The plaintiffs have discontinued this action against the 11^th and the 12^th defendants.  In respect of the other defendants, there have been default judgments entered against some of them, and the remaining defendants have been debarred from defending this action.

6.Apart from these civil proceedings, the 2^nd defendant is also a defendant in a set of criminal proceedings, HCCC 66/2018. The matters in the criminal proceedings are related to these civil proceedings. The 2^nddefendant has been legally represented at all times in the criminal proceedings.

7.In these civil proceedings, the 2^nd defendant was legally represented at all times until 21 September 2017.  From that time onwards, the 2^nddefendant has been acting in person. Her legal representatives representing her in this case management conference only have limited instructions to act for her in relation to the summons.  The 2^nddefendant claims that due to the financial burden created by these civil proceedings and the criminal proceedings, she intends to act in person in the trial in these civil proceedings.

8.On 1 February 2018, in a hearing before DHCJ Kent Yee in which the 2^nddefendant appeared in person, the 2^nddefendant agreed that this action should be set down for trial and raised no objection to the plaintiffs’ estimated length of the trial, ie 30 days.  The court ordered that this action be set down for trial with 30 days reserved.

9.On 10 April 2018, the plaintiffs’ representatives and the 2^nddefendant attended an appointment before the listing clerk and the Civil Trial Dates were fixed in that appointment.

10.On 17 April 2018, the court issued a notice to the parties in this action, notifying the parties the Civil Trial Dates.

11.On 27 December 2018, the liquidators’ solicitors received a letter from the 2^nddefendant dated 21 December 2018, in which the 2^nd defendant for the first time told the liquidators that the trial in HCCC 66/2018 had been fixed to commence on 16 September 2019 with 60 days reserved, ie until 10 December 2019 (“the Criminal Trial Dates”).  In her letter, the 2^nd defendant said since the Criminal Trial Dates overlapped the Civil Trial Dates, she requested the liquidators to consent to postpone the trial in these civil proceedings.  Thereafter, there was correspondence passing between the liquidators’ solicitors and the 2^nddefendant.  The liquidators do not agree to postpone the trial herein.

12.The 2^nd defendant has filed her 5^thaffirmation in support of the summons, in which she claims the following:

(1)   On 18 December 2017, the criminal case was committed to the High Court.

(2)   On 26 February 2018, there was a hearing in the High Court, in which the prosecution sought an adjournment.

(3)   On 18 April 2018, the 1^st case management hearing (“CMH”) in the criminal proceedings was held.

(4)   On 28 May 2018, the 2^nd CMH was held.  In this CMH, it was pencil marked that the criminal trial would commence on1 August 2019.  The 2^nd defendant realized that if the criminaltrial did last for 60 days, a few dates in the criminal trial would overlap with the Civil Trial Dates.  However, since the dates were only pencil marked and not yet confirmed, “it was entirely reasonable for [her] not to seek an adjournment of the Civil trial at that time.” [2]

(5)   On 12 July 2018, the 3^rd CMH was held.

(6)   On 28 September 2018, the 4^th CMH was held.

(7)   On 21 December 2018, in the 5^th CMH, the Criminal Trial Dates were fixed.

(8)   After the 5^th CMH, the 2^nd defendant wrote to the liquidators notifying them the overlap of the Criminal Trial Dates and the Civil Trial Dates and requesting the liquidator to consent to postpone the trial in these civil proceedings. The liquidators have not agreed.

(9)   On 22 February 2019, the 6^th CMH was held.  The liquidators’ solicitors attended this CMH.  The overlap of the Criminal Trial Dates and the Civil Trial Dates was discussed in that CMH.  The criminal court took the view that the criminal trial should proceed as scheduled.  

13.The liquidators are not privy to the matters in the criminal proceedings, save and except that they attended a hearing in the Eastern Magistrates’ Court on 16 January 2017 and the 6^thCMH.

Discussion

14.Now there is a complete overlap of the Criminal Trial Dates and the Civil Trial Dates. The 2^nddefendant must be present in the criminal court throughout the criminal trial.  That means if the Civil Trial Dates remain unchanged, the 2^nddefendant would not be able to be present in the civil court during the civil trial.

15.In my view, the 2^nd defendant herself is the author of this difficult situation:

(1)   As pointed out by the liquidators, prior to the issue of the summons, the 2^nd defendant has never informed the civil court the progress of the criminal proceedings in all the 13 case management conferences herein which took place over the period of July 2014 to February 2018.  I further note that in the hearing on 1 February 2018, the 2^nddefendant did not draw the civil court’s attention to the fact that the criminal case had been committed to the High Court on 18 December 2017.  Had this been done, the civil court would have had been able to take the progress of the criminal proceedings into account in deciding whether this case should be set down for trial before the conclusion of the criminal case, and if yes, whetherit should be specified that the civil trial should take place after the conclusion of the criminal trial.

(2)   On 10 April 2018, while the parties were fixing the trial datesin these proceedings before the listing clerk, the 2^nd defendant did not tell the liquidators’ representatives that the criminal case had been committed to the High Court.

(3)   In the criminal proceedings, in all the CMH took place between 18 April 2018 and 21 December 2018, the 2^nddefendant did not tell the criminal court the Civil Trial Dates. 

(4)   At the time of the 2^nd CMH held on 28 May 2018, the 2^nddefendant knew that the trial dates in the criminal proceedings might at least partially overlap with the Civil Trial Dates.  Notwithstanding this, the 2^nddefendant chose to remain silent.  The 2^nd defendant did not tell the criminal court, nor the prosecution, nor the civil court, nor the liquidators of the risk of the overlap of the trial dates in the criminal case and the Civil Trial Dates.

(5)   In the 5^thCMH held on 21 December 2018, before the criminal court fixing the trial dates, the 2^nddefendant did not tell the criminal court the existence of the Civil Trial Dates.

16.As the matter now stands, if I do not alter the Civil Trial Dates,the 2^nd defendant would not be able to attend the civil trial.  On the other hand, if I re-fix the trial dates, realistically the liquidators would have to wait for a much longer time in order to have their day in court.  Ms Eva Sit, counsel for the plaintiffs, informs the court that the latest estimation of the length of the trial is approximately 18 – 20 days.  Ms Sit requests that the trial be re-scheduled to take place in the period between January and March 2020.  I have tried to accommodate counsel’s request but a 20-day timeslot is not available in the first quarter of 2020 in the court’s diary.  I have also checked the court’s diary and it is also not possible to find a 20-day timeslot to accommodate the civil trial before the commencement of the criminal trial on 16 September 2019.  In other words, once the trial dates are re-fixed, the trial would take place at a time after March 2020, probably a long time after the 1^st quarter of 2020.  The delay caused by the re-fixing is substantial.

17.Having considered the matter anxiously, I reluctantly come to the conclusion that the trial dates in these proceedings should be re-fixed, but the 2^nddefendant has to pay the costs of and occasioned by the summons, including the costs thrown away by the adjournment of the trial, on an indemnity basis forthwith.  I would direct that the trial be re-fixed with 20 days reserved and the earliest available dates be given, in consultation with counsel’s diary. 

18.The Civil Trial Dates are milestone dates and may not be varied unless there are exceptional circumstances justifying the variation[3]. In my view, the fact that the 2^nd defendant would not be able to attend the civil trial if the Civil Trial Dates remain unchanged constitutes exceptional circumstances justifying the variation of the trial dates. 

19.The court has the duty to ensure that all the parties in these proceedings have a fair trial [4].  A fair trial means, inter alia, that each party would have the opportunity to attend the trial and to participate in the trial process, including to give evidence as a witness in the trial [5]. The 2^nddefendant now intends to defend herself in person in the civil trial.  The 2^nddefendant has the right to do so.  Even if the 2^nddefendant is legally represented in the trial, the 2^nd defendant still has the right to attend the trial in person to observe the trial process.  Further, the 2^nddefendant herself is a factual witness in the trial.  She has the right to attend the trial to give evidence in support of her case.  The court cannot deprive the 2^nddefendant of these rights.  In these circumstances, there is no other alternative and the trial dates in these proceedings have to be re-fixed.

20.As said in the above, I am of the view that the 2^nd defendant herself is the author of this difficult situation.  To show the court’s disapproval of her conduct, I am of the view that the 2^nd defendant must pay the costs of and occasioned by the summons, including all costs thrown away, to the plaintiffs forthwith on an indemnity basis.  Those costs are to be summarily assessed on paper.

Disposition

21.For the reasons above, I make the following order on the summons:

(1)   The trial scheduled to commence on 14 October 2019 with 30 days reserved be vacated;

(2)   The pre-trial review fixed on 12 June 2019 be vacated;

(3)   The trial be re-fixed with 20 days reserved in consultation with counsel’s diary, and the earliest available dates be given;

(4)   The pre-trial review be re-fixed with 30 minutes reserved in consultation with counsel’s diary, and the date of the pre-trial review be not less than 16 weeks before the re-scheduled trial;

(5)   The parties do attend the registry by tomorrow to re-fix the trial dates and the date of the pre-trial review;

(6)   Costs of and occasioned by the summons, including all costs thrown away by the adjournment of the trial, be paid by the 2^nddefendant to the plaintiffs forthwith on an indemnity basis, and such costs be summarily assessed on paper.

22.I further direct that the plaintiffs do lodge a bill of costs for summary assessment with the court and provide the same to the 2^nddefendant within 7 days, and the 2^nddefendant do provide a written reply to that bill to the court and to the plaintiffs within 7 days thereafter.

23.Lastly, it remains for me to thank counsel for the assistance rendered to the court.

Ms Eva Sit, instructed by Hogan Lovells, for the 1^st and 2^nd plaintiffs

Ms Sharon HW Chan, instructed by Chong & Partners LLP, limited instructions to act for the 2^nd defendant in relation to the summons only

The 2^nd defendant appeared in person (for the case management conference)