China Medical Technologies, Inc (in Liquidation) and Others v. Wu Xiaodong and Others
Read the full judgment text of HCA 3391/2016 on BabelCite. This High Court CFI judgment was delivered on 15 September 2023.
1. By summons dated 13 October 2022 (“ Joinder Summons ”), the 2 nd Defendant viz Mr Samson Tsang applies:
Cited by 2 cases · Cites 7 cases
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HCA 3391/2016 & HCA 1417 /2013 [2023] HKCFI 2350 HCA 3391/2016 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO 3391 OF 2016 _______________________
_______________________ HCA 1417 /2013 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO 1417 OF 2013 _______________________
_______________________ (Consolidated by Order of Master Chow dated the 23rd day of July 2018)
________________ J U D G M E N T ________________ Introduction 1.By summons dated 13 October 2022 (“Joinder Summons”), the 2nd Defendant viz Mr Samson Tsang applies:
2.The Joinder Summons is opposed by the Plaintiffs, BOC and BEA. Further, none of the other active Defendants in the present Action support the Joinder Summons - the 3rd, 5th, 6th and 13th Defendants had indicated that they would adopt a neutral stance. Specifically, regarding para 1b, no other appropriate case management directions have been provided in Mr Lung’s skeleton. 3.BOC is the defendant in HCA1742 of 2018 (“BOC Action”) brought by the Plaintiffs. The nature of the Plaintiffs’ claims against BOC can be seen in a Judgment of this court dated 15 October 2021 in relation to BOC’s application to strike out the entirety of the Plaintiffs’ claims (“BOC Judgment”). BEA is the defendant in HCA1741 of 2018 (“BEA Action”) also brought by the Plaintiffs. The nature of the Plaintiffs’ claims against BEA can be seen in a Judgment of this court dated 8 September 2023 in relation to BEA’s application to strike out the entirety of the Plaintiffs’ claims (“BEA Judgment”). Suffice it to say that both striking out applications have only been partly successful which means both actions are still very much alive. 4.The present Action is at a relatively advanced stage. Pleadings have closed, discovery has been given and witness statements have been exchanged. The Plaintiffs’ Expert Evidence Summons, the 2nd Defendant’s Security for Costs Summons and Specific Discovery Summons have all been disposed of. There will be a 2nd CMC scheduled at the end of October this year. 5.As far as the BOC Action is concerned, pleadings have closed but discovery was still underway at the time of the hearing. 6.As far as the BEA Action is concerned, pleadings have not even been closed - by the BEA Judgment, BEA has been directed by this court to file its Defence within 14 days. Deliberation 7.The gist of the 2nd Defendant’s case on joinder is summarised in Mr Lung’s skeleton as follows:
8.It can be seen from the above summary that identification of the “Common Issues” is the linchpin of the 2nd Defendant’s application. 9.RHC O 15 r 6(2)(b) provides the court may order the joinder of the following person as a party:
10.Mr Lung has indicated in his skeleton that he is only relying on the just and convenient limb of RHC O 15 r 6(2)(b). 11.In Wing Mou Construction Co Ltd v Cosmic Insurance Corporation Ltd unrep, HCCT 40 of 2001, 20 June 2002, at [15], Ma J (as he then was) had set out the principles applicable under RHC O 15 r 6 (2)(b)[2]. They are helpfully summarised in Mr Keith Lam’s skeleton for BEA as follows:
12.In Lin Man Yuan v Kin Ming Holdings International Ltd [2012] 3 HKLRD 550, DHCJ Mimmie Chan (as she then was) expressed the view at [15] that the joinder of parties envisaged and permitted by RHC O 15 r 6 should be given a liberal application, particularly in the aftermath of the CJR; and at [24] that in considering whether to grant an application for joinder, the Court should give effect to the underlying objectives of the RHC including inter alia to increase the cost-effectiveness of any practice and procedure to be followed and to promote a sense of reasonable proportion and procedural economy in the conduct of proceedings. 13.On the other hand, in support of his application, Mr Lung has cited Advanced Connection Ltd v Able Technology (Hong Kong) Ltd & Ors [2019] HKCA 1092 which was the 2nd defendant’s renewed application for leave to appeal against the Judgment of this court dismissing her appeal against the decision of Master KW Wong joining her and the 3rd defendant to the action upon the application of the plaintiff. 14.Advanced Connection Ltd case was a case concerning a plaintiff’s prima facie entitlement to choose the person against whom it wishes to proceed. The relevant test and approach set out in this court’s Judgment and quoted by Chu JA at [14] should be looked at in that light. It is difficult to see how that authority assists Mr Lung at all. Instead, the opposite is true. The Plaintiffs have no wish to proceed against BOC or BEA in the present Action and that is their prima facie entitlement - they even oppose the joinder of BOC or BEA as interested parties. 15.The next case cited by Mr Lung is Man Whi Chung v Man Ping Nam [2003] 1 HKC 549. That case was concerned with the applicant who applied to be joined as a 2nd defendant to the action, against the wishes of the plaintiff, on the ground that he had sufficient interest in the subject matter of the litigation to be joined. The guidance by DHCJ Andrew Cheung (as he then was) set out in [21] on RHC O 15 r 6(2)(b)(ii), including the requirement that the would-be intervener has to possess some interest which is in some way directly related to the subject matter of the action, has no relevance to the present case. Neither BOC nor BEA have applied to be joined in the present Action and they do not claim to have an interest relating to the subject matter of the present Action. Not only does the case not assist Mr Lung, it is against him. 16.The other authorities cited by Mr Lung viz Convoy Collateral Ltd v Cho Kwai Chee & Ors [2022] HKCFI 3406 and Yau Pak Kin v Sound Plan International Ltd & Anor unrep, HCA 541 of 2012, 19 March 2013, are not cases on joinder of parties. They are cases under RHC O 4 r 9. This is not to say that the existence of common issues, factual or legal, in 2 different actions or more is only relevant to applications under RHC O 4 r 9. Clearly it can be taken into account as a factor in considering joinder applications, as accepted by the Plaintiffs at least. 17.In Mr Lung’s skeleton, the so-called “Common Issues” to the present Action, the BOC Action and the BEA Action are defined as follows:
18.At para 25 of Mr Lung’s skeleton, he submits that Sections D (The Theft) and G (Fraudulent Trading and Misfeasance) of the Amended Statement of Claim in the present Action provide a comprehensive outline of the Common Issues which BOC and BEA may wish to respond to. It should be noted that Sections D and G cover over 60 pages of pleaded facts in the Amended Statement of Claim. Mr Lung has not even attempted to identify which pleaded facts are supposed to be Common Issues. Mr Lung also submits in the same para 25 that once joined as interested parties in the present Action, BOC and BEA will need to indicate their respective stance to the Common Issues. If any of them decides to contest, this Court may give appropriate directions such as directing a Defence or Points of Opposition to be filed. 19.This court does not agree that identifying the 2 “base claims” alone is sufficient to identify the “Common Issues” or to justify the joinder application. 20.As Mr Manzoni SC submits, within the 2 “base claims”, there are multiple issues that the Court needs to consider and determine in the present Action. In this court’s present estimation, a majority of these issues will be contested by the active Defendants, in particular the 2nd Defendant, and will occupy a large part of the trial of the present Action. The same cannot be said of the BOC Action or the BEA Action, at least at this stage. This is because their involvement only began after the FISH and SPR Transactions had been entered into and they may well be advised to take a passive position by just putting the Plaintiffs to prove. This is of course entirely up to BOC and BEA and their legal advisers. 21.The suggestion by Mr Lung that this court may give directions to them to file a Defence or Points of Opposition highlights the problem of delay as a prejudice to the Plaintiffs in the present Action and the additional costs occasioned to BOC and BEA (since they have filed or will have to file a Defence in their own actions) in their respective actions. 22.A joinder application need to identify the issues which are said to be common and need to be resolved within the 2 “base claims”. The 2nd Defendant has failed to do so. 23.The failure to identify precisely the so-called Common Issues is not the only problem with the 2nd Defendant’s application. The 2nd Defendant need to show it is just and convenient to grant the joinder application. 24.In this respect, the 2nd Defendant’s case is set out in Section E of Mr Lung’s skeleton. Basically, it boils down to (i) the present Action is the natural one to deal with what this court considers to be imprecise Common Issues; (ii) the joinder will not delay the BOC or BEA Action or the present Action; and (iii) the joinder will not result in escalation in costs in the present Action. This court has considered them but does not find them convincing at all. 25.As submitted by Mr Manzoni SC for the Plaintiffs, delay to the present Action is inevitable since first there would have to be an identification of the common issues so that the Plaintiffs and the Banks can work out what is going to be being determined as between them. That would require the Banks to conduct a detailed consideration of the claims in the present Action, and then most likely to file pleadings in order to crystalize what issues there are among them. Since BOC’s position is different from BEA’s position (BOC was the banker of the 1st Plaintiff while BEA was not the banker of any of the Plaintiffs), the Plaintiffs will have to deal with each bank separately. 26.Further, the case management of the present Action with 2 additional parties will become far more complicated. BOC and BEA will have to speedily advance their cases to a stage that is ready for trial. That may require discovery and exchange of evidence, depending on the degree of challenge they wish to make to the Plaintiffs’ case. Every interlocutory application will involve 2 additional parties. Each of them will have an opportunity for appeals. 27.Just from considering the above, the increased costs and delay to the Plaintiffs in the present Action would be significant. 28.From the Banks’ point of view, as submitted by Mr Keith Lam for BEA, the proposed joinder would essentially require BEA to participate in the present Action while at the same time the BEA Action will continue. This means that BEA will have to deal with 2 separate sets of active proceedings. This would inevitably mean incurring additional time and costs, given that BEA would have to go through the pleadings and discovery stages of both actions. In particular, it cannot be suggested that BEA need not incur costs on those matters in the present Action that do not concern it. By being a party, BEA will have to incur costs to understand the whole set of pleadings, discovery and witness statements of the original parties in order to identify what are relevant to the yet unclear Common Issues and what are not. Further, while the nature of the FISH and SPR Transactions is a main issue in the present Action, it is unlikely that the other issues eg the extent of the involvement of each original Defendant are sufficiently distinct so that BEA can safely leave the court room during the trial. This means that in practice BEA will have to sit through the entire trial in the present Action. 29.Importantly, which party is responsible for the costs of the Banks in participating in the present Action? Since the Banks are not Defendants as such, the general rule that costs should follow the event cannot apply. Instead, costs of each of the “Common Issues” will have to be examined and apportioned among the Plaintiffs, the original Defendants and the Banks. This will significantly increase the burden on judicial resources. 30.These points apply mutandis mutatis to BOC. 31.And this court asks: what is the benefit to the 2nd Defendant if the Banks are joined? The answer is none. In the 5th affidavit of Mr Tang Shu Pui Simon (“Tang” and “Tang 5” respectively) for the 2nd Defendant, Tang does not claim the joinder application is for the 2nd Defendant’s own benefit. Rather, it is for the benefit of the Banks. This is what Tang says in Tang 5 at paras 33 - 34:
32.This is wholly unconvincing. The Banks, being independently advised by reputable solicitors and counsel, do not want the purported benefit conferred on them by the 2nd Defendant. The 2nd Defendant should have withdrawn the Joinder Summons. 33.In these circumstances, it is difficult to escape the conclusion, submitted by Mr Manzoni SC in his skeleton, that the application is just another attempt to delay the present Action by the 2nd Defendant. 34.In conclusion, this court is of the view that the Joinder Summons is without merits and should be dismissed. Disposition and costs order 35.The Joinder Summons is hereby dismissed. 36.Costs of and occasioned by the Joinder Summons be to the Plaintiffs, BOC and BEA on an indemnity basis to be summarily assessed and paid by the 2nd Defendant forthwith. Since the parties have already made submissions on costs at the hearing, this court’s costs Order is not on a nisi basis. 37.The Plaintiffs, BOC and BEA are directed to file and serve their statements of costs within 7 days. The 2nd Defendant is directed to file and serve his list of objections within 7 days thereafter, including in conclusion a figure of the costs that he considers reasonable to be paid to the Plaintiffs, BOC and BEA. Costs will be assessed on paper unless otherwise directed by this court. Postscript 38.While this court has dismissed the Joinder Summons for reasons explained, the numerous proceedings instituted by the Plaintiffs against various parties do impose an enormous burden on judicial resources and call for active case management so as to achieve the underlying objectives of the RHC to (i) ensure the resources of the Court are distributed fairly and (ii) promote a sense of reasonable proportion and procedural economy in the conduct of proceedings. This court will examine the available options and may make management decisions to streamline the various proceedings in consultation with other Judges in charge of the other proceedings. The parties will be heard. As a start, the Plaintiffs are directed to lodge with the clerk of this court with proposals to achieve those objectives at the latest 7 days prior to the next CMC of the present Action.
Mr Charles Manzoni, S.C., instructed by Mr Jason Karas, Solicitor Advocate of M/s Karas LLP, for the Plaintiffs Mr Vincent Lung and Mr Newton Mak, instructed by M/s P. C. Woo & Co., for the 2nd Defendant Mr Julian Lam, instructed by M/s Allen & Overy, for Bank of China (Hong Kong) Limited Mr Keith Lam, instructed by M/s Linklaters, for Bank of East Asia Limited M/s Charles Yeung Clement Lam Liu & Yip, for the 3rd Defendant: excused from attendance M/s Tony Kan & Co., for the 5th Defendant: excused from attendance M/s Sidley Austin, for the 6th Defendant: excused from attendance M/s Eversheds Sutherland, for the 13th Defendant: excused from attendance [1] The Joinder Summons in relation to Paul, Weiss, Rifkind, Wharton & Garrison LLP and Paul, Weiss, Rifkind, Wharton & Garrison (collectively, “Paul Weiss”) was adjourned sine die with liberty to restore. [2] As well as RHC O 16 r 4 because in that case it was a third party who applied to be joined as a defendant in the main action. [3] Amended Statement of Claim of the Principal Actions dated 30 September 2019 (“ASOC”). | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cases cited in this judgment
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Further hearings and rulings under HCA 3391/2016