Re Peter Lawrence Oppenheim Leaver Qc

HCMP000043/1991

IN THE HIGH COURT OF JUSTICE

MISCELLANEOUS PROCEEDINGS

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Coram: Fuad V.-P.

Date of Hearing: 28 January 1991

Date of Judgment: 28 January 1991

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JUDGMENT

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Fuad, V.-P. :

1. This is an application made on behalf of Mr. Peter Leaver, a Queen's Counsel practising in England, for him to be admitted as a barrister of this Court for the limited purpose of representing the plaintiff in High Court . Action No.A6690 of 1987. It is brought under section 27(2) of the Legal Practitioners Ordinance, Cap.159.

2. The plaintiff in the action is Richardson Greenshields of Canada (Pacific) Limited which is a subsidiary of Richardson Greenshields of Canada Limited a Canadian firm of brokers. The defendant is Mr. Tse Yim and the plaintiff claims a sum in the region of HK$65 million with interest which they say is due and owing to them by the defendant after they had liquidated his share margin account by selling the shares to another customer of the plaintiff, Mr. Li Ka Shing.

3. I am indebted to Miss Susan Kwan, who appears on behalf of the Bar Association, in opposition to this application, for a helpful summary of the contents of what has been called "the Fresh Defence and counterclaim" in the action filed by the defendant on 22nd November 1990. I mention here that the Law Society, although served with notice of the application, is not represented before me today and I take it that they take no stand in the matter.  The Attorney General is represented by Mr. William Marshall, Q.C. who has taken a neutral stand although he has made a number of helpful observations in his efforts to assist the Court in reaching its decision.

4. I summarise the Counterclaim. It is pleaded that on 16th December 1986 a customer trading agreement was entered into between the plaintiff and the defendant. The plaintiff was to open and operate a margin account for the defendant. Express and/or implied terms of the agreement are set out and the plaintiff is alleged to have been the defendant's agent, thus owing him fiduciary duties. Shares were deposited by the defendant with the plaintiff as security for operating the margin account as shown in Schedule A.

5. The plaintiff is averred to have approached the defendant on 20th October 1987 to dispose of shares 6 days later following the stock market crash. It is said that the defendant refused, and that he denied and disputed that the margin account had fallen below margin. It is then pleaded that the defendant did not authorise the transactions of the sale and purchase of shares allegedly carried out by the plaintiff on his behalf on 19th October 1987 as set out in two further Schedules (B & C), and further that the transactions carried out on that date were not in compliance with rule 536 of the Rules of the Hong Kong Stock Exchange in that the plaintiff did not deliver to the defendant, within 7 days, duly stamped contract notes recording the relevant transactions.

6. The pleading goes on to aver that there were discussions on 22nd October 1987 between the plaintiff and the defendant about the latter's outstanding indebtedness, followed by a letter from the plaintiff's solicitors. A deadline was imposed for the payment of part of the indebtedness. The deadline was 26th October 1987. The letter said that if the deadline was not met the plaintiff would be left with no alternative but to liquidate the defendant's account without further notice. A letter from the plaintiff dated 26th October 1967 and addressed to the defendant is mentioned in which it was stated that the plaintiff intended to sell the defendant's shares since no funds had been received. The defendant alleges that the relevant letter provided him with insufficient particulars and did not give him reasonable notice or adequate opportunity to make good the deficiency.

7. It is then pleaded that there were sales by the plaintiff of the defendant's shares in the market as set out in Schedule D on 26th and 27th October 1987. These sales are alleged to have been in breach of the terms of the customer trading agreement entered into in December 1986.  In the alternative it is pleaded that the plaintiff was in breach of duty as an agent and guilty of conversion. It is further said that the 27th October 1987 sales by the plaintiff of the defendant's shares in a private sale to Mr. Li Ka Shing and/or Penkilan were at undervalue as shown in Schedule E.  It is alleged that the plaintiff's decision to proceed with the private sale was taken after discussions with and/or instructions given by its parent company in Canada. It is further alleged that the plaintiff was in breach of certain terms of the agreement or its duty as agent and was guilty of conversion. It is said that the private sale was in contravention of certain specified provisions of the Securities Ordinance, Cap. 333 and in breach of a number of the Rules of the Hong Kong Stock Exchange. It is alleged that the private sale was not bona fide and that the plaintiff had failed to take reasonable care to obtain the best price.

8. It is then pleaded that the plaintiff had utilised shares deposited by the defendant as security for the margin account by depositing them as security for facilities granted to the plaintiff by Canadian Eastern Finance; particulars of the shares are given in the Schedule F. Conversion is alleged, and breach of certain terms of the agreement and of the plaintiff's duty as agent, as well as a breach of another provision of the Securities Ordinance.

9. The pleading goes on to say that the plaintiff had dealt with or disposed of the securities which the defendant caused to be transferred to margin account from other brokers; the particulars of the shares are given in Schedule G and conversion is alleged and/or breach of the terms of the December 1986 agreement and/or of their duty as agent. Apart from an averment that the agreement was not in compliance with the formal requirements of a particular rule of the Rules of the Hong Kong Stock Exchange, it is said that the agreement was not in Chinese, did not contain a Risk Disclosure Statement and had other defects, with the result that it was invalid. It is also said that the plaintiff was not entitled to charge the defendant brokerage or commission on the private sales. The outstanding balance of $64 million claimed is denied.

10. There is then the Counterclaim against the plaintiff's parent company in Canada (Richardson Greenshields of Canada Limited), Mr. Li Ka Shing and Penkilan Limited. The defendant avers that Mr. Li Ka Shing and/or Penkilan converted the shares set out in Schedule E. It is further alleged that Mr. Li Ka Shing and/or Penkilan knew or failed to make adequate enquiry that the plaintiff was acting in breach of its fiduciary duties in concluding the private sale of the shares. It is further averred that they had assisted the plaintiff to act in breach of its fiduciary duties or had participated in the breach themselves, and that they had received the defendant's property for their own benefit and were thus liable to account for it. They were liable as constructive trustees.

11. As regards the Canadian parent company it is averred that they had procured the plaintiff to act in breach of the agreement and/or of their fiduciary duties and that they well knew that the private sale was made in breach of the plaintiff's fiduciary duties. Thus it is pleaded that the parent company is liable in tort and/or as a constructive trustee.

12. In the supporting affidavit for this application, sworn by a partner of the solicitors firm acting for the defendant, it is submitted that the claim, Defence and Counterclaim involve a number of difficult and complex issues of fact and law, and these are listed. In the light of the fact that I have summarised the pleadings, I do not think it is necessary for me to spell out all the issues which are said to be difficult and complex.

13. It is stated in the affidavit that there have been many developments in the law concerning constructive trusts in the last few years and that Mr. Leaver himself had represented one of the parties in an action the judgment in which is reported in [1990] 1 Ch. 265. It is also submitted that there are two additional features which make it desirable for overseas counsel to appear in the instant case: (a) there is an international element in the case because allegations were made against the Canadian parent company, and (b) there were allegations made against Mr. Li Ka Shing who is "a very well-known local personality".

14. The affidavit in support goes on to say that Mr. Leaver is one of the leading practitioners in commercial matters, and in particular securities matters, and has been practising in England and Wales in these areas of work. It is said that his expertise would be of substantial assistance in the conduct of the proceedings. The affiant expressed the view that "it is necessary and essential for the full and efficient preparation and conduct of the [case] to engage leading counsel with the experience and expertise possessed by [Mr. Leaver]."

15. The trial dates have been fixed, and it is clear that it will be a long hearing (between 26th June 1991 and 30th July 1991).  In correspondence between the solicitors acting for the defendant and the Bar Committee, the question whether or not the Bar Association would oppose the application for Mr. Leaver's limited admission was canvassed. By a letter dated 21st December 1990 the Bar Association indicated that the Bar Committee was not prepared to give its consent to the proposed admission.

16. Counsel have helpfully referred me to all the authorities that are relevant. It is well established that the public interest is the paramount consideration. It is clear that the application before me is founded firmly on the submission that the case to which it relates is of unusual difficulty or complexity. I note that the affidavit does not suggest that no local counsel with appropriate skill and experience is available, nor did Mr. Eddis, who appears on this application (and is briefed for the defendant in the action itself), submit that that was the position. When one reads the cases of Re Coles [1985] HKLR 480 and Re Glasgow [1988] 1 HKLR 607, it is clear that as the authorities stand if the averment is that the case is one of unusual difficulty or complexity it is necessary only to satisfy that condition. As Roberts, C.J. said in the Glasgow case at page 609:

17. For convenience, I set out what Roberts, C.J. said at pp.482 and 483 of Coles:

18. In the light of the decision I am minded to give on this application, it is not necessary for me to discuss the difficulty that seems to me to arise if paragraphs 6(a) and (b) of the principles set out by Roberts, C.J. in Coles are to be read in the way laid down in Glasgow.  I can well understand the proposition that if paragraph 6(a) is satisfied there is no need to satisfy paragraph 6(b); what I find much more difficult is the principle that if the case is shown to be of unusual difficulty or complexity (paragraph 6(b)) "it is necessary only to satisfy this".

19. Miss Kwan has touched on this interesting and difficult point. She suggests that on the assumption that Glasgow is right, although the criteria in paragraphs 6(a) and 6(b) are framed in the alternative, there is some connection between the two, for if a case is of unusual difficulty or complexity, this must carry the connotation that local counsel with the appropriate skill and expertise required to conduct the case are necessarily few in number. Hence, she argues, there is no need for solicitors to embark on the exercise of approaching such appropriate local counsel.  Conversely, she submits, if there is a sufficiently large number of local counsel of appropriate skill and experience, and willing to accept the case, the ground of unusual difficulty or complexity would appear to fall away. She draws some support for this submission from the case of Denny HCMP No.2728 of 1987 (unreported), a decision of Roberts, C.J. dated 19th January 1988.

20. Miss Kwan contends that if the Court is of the view that the instant case does not require specialist knowledge of a kind not readily available in Hong Kong and that the case is well within the competence of local leading counsel, then a case of unusual difficulty or complexity has not been made out.

21. As I have said, I do not propose on this occasion to comment further on this aspect of the matter but in my respectful opinion the question will need to be addressed one day, and Roberts, C.J.'s explanation in Glasgow of the interrelation between paragraphs 6(a) and (b) will have to be reviewed.

22. I have been told from the Bar that Mr. Leaver has been advising the defendant ever since May 1989. I accept that this is a factor to be taken into account but it cannot, of course, be a governing consideration for obvious reasons.

23. After anxious consideration, and recognising the desire of the defendant to continue to be represented by counsel of great experience, in whom he has already placed his trust, I am quite satisfied that the burden has not been discharged of showing that this is a case of unusual difficulty or complexity. Of course, an enormous amount of money is involved, and I know from an interlocutory appeal we had to deal with recently, that thousands of documents and a mass of evidence will have to be considered. However, we must not be mesmerized by the figures. I see nothing in this case that would justify the granting of an application based on the ground advanced.

24. I will add here that in reaching my conclusion I have not considered that this case has an international element of the kind that influenced the decision of Cons, V.P. in the case of Lord Irvine of Lairg [1988] 2 HKLR 582, nor did I consider that the fact that one of the defendants by counterclaim is undoubtedly a well-known local personality should, on the material facts pleaded, affect the outcome of this application.

25. For the reasons I have attempted to give, the application is refused

Representation:

Mr. F. Eddis s, Q.C. & Mr. Jeremy Cheung (K.B. Chau & Co.) for the Applicant

Miss Susan (C.Y. Kwan & Co.) for the Bar Association

Mr. William Marshall, Q.C. & Miss Duke for the Attorney General