All Overseas Ltd and Another v. Wylie Industrial Ltd and Others

HCA 405/2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 405 OF 2003

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BETWEEN

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Before : Hon Stone J in Chambers (Open to public)

Date of Hearing : 24 September 2007

Date of Judgment : 24 September 2007

Date of handing down Reasons for Judgment : 28 September 2007

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R E A S O N S  F O R  J U D G M E N T

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The principal applications

1.At this hearing there were two principal applications before the court:

(1)	by Notice of Appeal dated 21 June 2007 the 1st and 2nd defendants herein sought to appeal against, and to set aside, an Order of Master Kwang dated 8 June 2007 whereby the learned Master lifted a stay of proceedings in this action as had been ordered by Master Levy on 6 October 2004;
(2)	by Summons dated 30 July 2007 (the hearing of which had been ordered by Master Kwan to be heard before a judge on the same day and immediately subsequent to the appeal against the uplifting of the stay of proceedings), the plaintiffs sought various Order 14 relief.

2.In the event, this court dismissed the appeal from the Order of Master Kwang, and declined to hear the substantive Order 14 application, ordering that this application be adjourned to a Master to be heard at the same time as other pending applications in these cases.

3.I now give brief reasons for these decisions.

The factual background

4.The dispute in HCA 405 of 2003 cannot sensibly be viewed in isolation.

5.There are two other actions arising from the same broad factual matrix, and which all involve the affairs of one ‘Billion Top Garment Company’:

(a)	the first in time was HCA 4515 of 2002;
(b)	the last in time was HCA 742 of 2006.

6.Billion Top, as I shall term it, is (by very recent amendment) the 2^nd plaintiff in the instant proceedings, HCA 405 of 2003, and also is the 1^st plaintiff in HCA 742 of 2006; whilst not a party in HCA 4515 of 2002, this latter action is concerned with who was, or was not, a director of Billion Top at the time of certain transactions.

7.It appears to be the situation – although I am unsure why this should have transpired – that it was considered appropriate that proceedings in HCA 405 of 2003 should be stayed pending ‘final determination’ of proceedings in HCA 4515 of 2002: hence Master Levy’s Order of 6 October 2004 in these terms.

8.In this latter action, HCA 4515 of 2002, the plaintiffs therein took out applications for Order 14 and Order 14A relief.

9.Such relief was refused by Yam J by Order dated 20 September 2005, who dismissed the summonses and granted unconditional leave to defend, which Order substantially was reversed on appeal by the Court of Appeal in CACV 329 of 2005 in a judgment dated 22 March 2006. 

10.The Court of Appeal in that case (Woo VP, Cheung and Yeung JJA) in fact granted certain declaratory and injunctive relief: two out of the three questions posed pursuant to the application under Order 14A were answered, and in addition the court restrained the defendants therein from holding themselves out as directors of Billion Top.

11.Mr Chain, who appears for the plaintiffs in HCA 405 of 2003, has told me that consequent upon this appellate judgment his clients, the plaintiffs, were granted leave, pursuant to the Order of Master Yu dated 27 July 2007, to withdraw the remaining prayers for relief (paragraphs 2A and 4) in HCA 4515 of 2002.

12.This, he said, effectively had cleared the way for the uplift of the stay of proceedings in the present case, and for his consequential application for summary judgment, wherein Mr Chain wished to obtain declaratory relief and – I suspect most important – an order for possession of an industrial property formerly owned by Billion Top which it is alleged was sold wrongfully and without authority by the 2^nd defendant, one Lau King Fai, to the the 3^rd defendant herein, Wylie Industrial Limited.

The Master’s appeal

13.As earlier indicated, the court dismissed this appeal.

14.I formed the firm view that the opposition on behalf of the 1^st defendant, represented by Mr Leung Yiu Kwong, and on behalf of the 2^nd defendant, represented by Mr Alexander Wong, to the lifting of the stay of proceedings by Master Kwang was as much due to the plaintiffs’ looming Order 14 application as to the intrinsic merits of maintaining the stay of proceedings in terms of Master Levy’s October 2004 Order.

15.Be that as it may.  In so far as argument was ventilated the retention of the stay, Mr Wong (with whose arguments Mr Leung agreed) maintained that in the circumstances there had not been a ‘final determination’ of proceedings in HCA 4515 of 2002 because first, there had been no Notice of Discontinuance filed by the plaintiffs, and second, by reason of the fact that, although they had not yet done so, the defendants would seek to amend their pleadings in HCA 4515 with the addition of a Counterclaim.

16.I was unimpressed with this argument, which may have had more force if such application to adduce a Counterclaim already had been mounted – which appears not yet to be the case, although I apprehend from that which counsel has told me that this is forthcoming.

17.For all practical purposes, therefore, as far as the plaintiffs’ claim is concerned – currently the only claim extant in the case – effectively there has been ‘final determination’ of the position coterminous with the withdrawal of the remaining prayers for relief, the plaintiffs professing themselves satisfied with the result of the Order 14/14A appeal in HCA 4515 of 2002.

18.However, there was another more general, and perhaps more compelling, reason underpinning the court’s dismissal of this appeal against the lifting of the stay, and I should have been minded to dismiss this appeal on this basis alone.  It is this.

19.It is as plain as a pikestaff that what is badly required in these three cases is some degree of case management.

20.In fact, the defendants appear to have recognized precisely this, given that Mr Wong informed me that there is an outstanding application on the part of the defendants, by summons dated 13 August 2007, for consolidation (in some form) of these three actions, an application that in principle strikes me as eminently sensible and desirable.

21.As matters currently stand, this summons to consolidate has been called on before Master de Souza, and by Order of the learned Master dated 10 September 2007 now has been adjourned for dates to be fixed in consultation with counsels’ diaries.

22.I pause to note that the existence of this ‘consolidation summons’ – which the face of the summons makes clear is taken out in all three actions – cuts across the defendants’ present opposition to the lifting of the stay, given that there could be no question of ‘consolidating’ HCA 405 of 2003 with the other two actions if HCA 425 of 2003 were still to be affixed with an order for a stay.  To be fair, in the course of argument Mr Wong recognized this anomaly.

23.The current state of play, therefore, is that these three actions are going to be subject, inter alia, to considered procedural direction at the forthcoming ‘consolidation’ hearing, and for my part I take the view that in all the circumstances this is the only appropriate manner in which to advance these cases towards that which, hopefully, will result in a judgment in the relatively near future, given that on the face of the papers the disputes the subject of these cases has been dragging on for too long.

24.In my judgment, therefore, the learned Master below was correct in the view that he took in terms of the uplifting of the stay of proceedings, and accordingly I made the following Order:

That the appeal against paragraph 1 of the Order of Master Kwang dated 8 June 2007 be dismissed.

25.As to costs, I see no reason in the circumstances why costs should not follow the event, and accordingly I make the following order nisi:

That these costs of this appeal are to be paid by the defendants to the plaintiff in any event, such costs to be taxed if not agreed.

The Order 14 application

26.Having thus disposed of the appeal against the Order of Master Kwang, Mr Chain for the plaintiff in HCA 405 of 2003 sought to mount his client’s application for Order 14 relief.

27.The background to this application, I am told, was that when the Master’s appeal against the uplifting of the stay was fixed for hearing before a Judge, the plaintiffs had made urgent application before the Practice Master to have the Order 14 application fixed on the same day, for subsequent hearing, the plaintiff apparently working on the assumption that the defendants’ appeal would not succeed.

28.As a matter of courtesy to counsel, I permitted Mr Chain to outline his case, and to say why he should be permitted to ‘leapfrog’ the usual procedure within the general High Court list that applications of this nature are first heard before a Master, and that a judge becomes involved only upon appeal.

29.Notwithstanding his usual forceful and persuasive submissions, in the event I declined to permit Mr Chain to argue his Order 14 application.

30.I did so for the following reasons.

31.Whilst I understood Mr Chain’s zeal in prosecuting his client’s case, not least in light of the judgment of the Court of Appeal in CACV 329 of 2005, given the tangled history of these cases I saw no reason in the circumstances to entertain the immediate hearing of this application for summary judgment, the prime aim of which appeared to be to obtain an order for possession of the disputed industrial property to which it is alleged Billion Top retains rightful title.

32.This initial (and instinctive) reason was buttressed by the fact that I took the view that to permit the Order 14 now to be argued in the context of a case in which the defendants insist that a stay should remain in place would not be consonant with any further appeal which might be mounted by the defendants, as of right, against the decision in the ‘stay appeal’ in the very proceedings in which the application for summary judgment now was sought to be advanced.

33.Of significance in this decision, also, notwithstanding Mr Chain’s insistence that HCA 405 of 2003 was a ‘discrete action’, I was of the firm view that the court was being asked, prematurely in my opinion, effectively to sound in isolation to the merits of an application under Order 14 in but one of the three interlinked cases involving the activities of Billion Top at a time when there was a forthcoming application for consolidation, and also for the mounting of a counterclaim in HCA 4515 of 2002; accordingly in my judgment nothing would be lost for the plaintiff’s Order 14 to be listed for hearing at the same time as these other interlocutory applications, and at a time when the court would have all three cases before it and thus would be able to see the ‘big picture’, which in my view is something which effectively has been obscured thus far in the conduct of this litigation.

34.For present purposes, therefore, I deliberately say nothing about the perceived merits of the arguments but briefly canvassed by Mr Chain in support of his summary judgment application; if and in so far as these arguments are good, they will be equally good when mounted at the appropriate time.

35.Finally, I was somewhat disconcerted by submissions made, both in the papers and by counsel on behalf of the defendants, that in causing the Order 14 to be listed immediately to follow the decision of the court in the Master’s appeal, that in effect the listing of this summary judgment application had been to “ambush” the defendants. 

36.I am disinclined to say a great deal about this – and I am certainly not going to sound to the merits of the competing arguments in this regard – save to note that, whilst there is always a place for forcefulness in litigation, care must always be taken to ensure that every party has the opportunity fairly to put its case before the court.

37.In the present instance, in fact, within the context of the plaintiff’s Order 14 application counsel on behalf of defendants canvassed the issue of leave to put in further affidavit evidence to be utilized on the summary judgment application, and whilst in the event I was not then persuaded to make any order in this regard – it appeared that any such affidavit would, in effect, take the form of little more than legal submission couched in affidavit form – I am of the view that if and in so far as this position be reconsidered in light of the adjournment of the Order 14 application, that opportunity should be accorded to the parties to reflect on the evidence to be advanced and, if necessary, either to agree or in the alternative to obtain appropriate direction from the Master as to the adducing of any such additional evidence.

38.In the event, therefore, upon the plaintiff by counsel seeking to mount the Order 14 application, in the exercise of its discretion this court made the following Order:

That the plaintiff’s application for summary judgment, by summons dated 30 July 2007, be adjourned for hearing before a Master on a date to be fixed at the same time as the hearing of the defendants’ applications, by summons dated 10 September 2007, for consolidation of HCA’s 4515 of 2002, 405 of 2003 and 742 of 2006, and for amendment by way of Counterclaim in HCA 4515 of 2002.

39.The plaintiff’s application for Order 14 relief having been thus adjourned for hearing before a Master, the question arises as to the costs of today.

40.In this connection, after reflecting on all the circumstances I make the following order nisi:

That there be no order as to the costs of the hearing on 24 September 2007, in so far as they are referable to the plaintiff’s application, by summons dated 30 July 2007, for summary judgment.

It is worth pointing out that this costs order nisi sounds only to the costs expended with reference to the day of the hearing on 24 September 2007.

Other matters

41.For the sake of completeness I record that this court was asked to make certain other orders referable to minor housekeeping matters.

42.Thus, on the application of Mr Chain for the plaintiff, an order in terms was granted upon the plaintiff’s summons dated 14 June 2007 seeking leave to reamend the amended Indorsement of Claim as per the draft attached to the summons.

43.Further, in terms of the plaintiff’s summons dated 19 September 2007 under Order 24, rule 10, the court made the Order following:

There be no order on the summons dated 19 September 2007, save that the costs of the issuance of the summons be paid by the 1^st defendant to the plaintiff, such costs to be taxed if not agreed.

Mr Benjamin Chain, instructed by Messrs So, Lung & Associates, for the plaintiffs

Mr Leung Yiu Kwong, instructed by Messrs Fong Yin Cheung & Co., for the 1^st defendant

Mr Alexander Wong, instructed by Messrs Kwan & Chow, for the 2^nd defendant