Akai Holdings Ltd (in Compulsory Liquidation) and Others v. Ho Wing on, Christopher and Others
Read the full judgment text of HCCL 37/2005 on BabelCite. This HCCL judgment was delivered on 23 July 2009.
1. There is before the Court a summons issued by the plaintiff liquidators dated 6 July 2009.
Cites 1 case
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HCCL 37/2005 and IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE COMMERCIAL ACTION NOS. 37 AND 40 OF 2005 ----------------------
---------------------- Before: Hon Stone J in Chambers (Open to Public) Date of Hearing: 15 July 2009 Date of Judgment: 23 July 2009 ---------------------- J U D G M E N T ---------------------- The application 1.There is before the Court a summons issued by the plaintiff liquidators dated 6 July 2009. 2.It is yet another discovery application in what is becoming a drawn-out saga between the liquidators of Akai and the 1st and 2nd defendants in this consolidated action, respectively Mr Christopher Ho and The Grande Holdings Ltd (‘Grande’), a publicly listed company on the Hong Kong Main Board. 3.In fact, this judgment dealing with this summons represents the fourth judgment this court has had to write in the space of six months dealing with the dispute between the plaintiff liquidators of Akai, and the 1st and 2nd defendants herein, although I apprehend that this may be the last; diary commitments are likely to preclude further involvement in this case, which is unfortunate, because if any case requires continuity of judicial thought/knowledge of its history, and consequential case management, this is it. 4.Be that as it may. In material summary this summons of 6 July 2009 seeks:
The background 5.The objective observer might suspect that the background to this summons is redolent with procedural history. This suspicion would be correct. 6.This application realistically cannot be regarded independently from the disputed matters which have gone before, and to which I must now briefly refer. 7.In this connection the court has been supplied by Mr Kosmin QC, who together with Mr Manzoni QC appears on behalf of the plaintiffs, with that which is entitled “Timeline of Non-disclosure by the 1st and 2nd defendants”. 8.The dates within this document speak for themselves, and I have no intention in this judgment of doing other than specifying certain ‘landmark’ features as they have involved hearings before, and decisions/judgments of, this court. The 1st Judgment: Mareva relief: 9 February 2009 9.On 9 February 2009 this court issued its Judgment upon the plaintiffs’ application for Mareva relief. 10.This inter partes application took five days of argument, which initially commenced on 22 December 2008, and finally was completed (after an adjournment for Christmas) on 21 January 2008. 11.Originally Mr Manzoni had made an application for like relief ‘ex parte on notice’ on 19 November 2008, an application this court then had declined to entertain having heard the submissions of Mr Yu SC, then acting for the 1st and 2nd defendants, who had come to court on an urgent basis. Accordingly, directions then were made, and the matter ultimately came on for hearing inter partes on 22 December 2008. 12.During this hearing the plaintiffs were represented by Mr Kosmin QC and Mr Manzoni, and the 1st and 2nd defendants were represented by Mr Snowden QC leading Mr Godfrey Lam SC and Mr Abraham Chan on the instructions of M/s Baker & McKenzie. 13.This application was of some dimension; as I recall the position, Mr Kosmin was asking for Mareva relief against the 1st and 2nd defendants, Mr Ho and The Grande Holdings, in the sum of US$500 million, together with extensive disclosure. 14.This judgment, issued on 9 February 2009, is relatively full, of some 73 pages. In the event, Mr Kosmin did not get all that he had wanted – Mareva relief was granted against Mr Ho in the sum of US$200 million, together with an order against him for asset disclosure, whilst against Grande an order for asset disclosure only was made, the court taking the view that it was disinclined, on the evidence before it, to grant Mareva relief against a publicly listed company in Hong Kong. 15.It is the asset disclosure orders as then made, and as subsequently amended, which have proved a running sore thus far in this litigation, and regrettably have provided fertile ground for continuing dispute and recrimination. Settling the Mareva Order: 17 February 2009 16.It was clear on the face of the judgment of 9 February 2009 that certain matters of detail required to be sorted out, and thus it was that shortly after delivery of this judgment that a further hearing was held on 17 February 2009 specifically in order that these matters could be clarified. 17.This hearing was attended by Mr Dobby of M/s Lovells for the plaintiffs and by Mr Abraham Chan, instructed by M/s Baker & McKenzie, on behalf of the 1st and 2nd defendants. 18.Such matters of detail were canvassed, as was the general form of the draft Order, and at the end of the hearing the Order was settled with the express agreement of either side thereto: in particular, within the context of the present application, Schedule 3 of the Order – entitled ‘Particular Assets Subject To This Order – was agreed, this Schedule dealing with the assets of the 1st and 2nd defendants. 19.Accordingly, the Mareva Order dated 17 February 2009 formally was engrossed. 20.Pursuant to that Order, the 1st and 2nd defendants were to make the disclosure as thus ordered within 42 days of the date thereof, that is, by 31 March 2009. The 2nd Judgment: Stay of Execution/Clarification of the Order: 19 March 2009 [Date of Decisions], 16 April 2009 [Reasons for Decisions] 21.By summons dated 17 March 2009 the 1st and 2nd defendants applied for ‘clarification’ of the Mareva Order dated 17 February 2009, and also by summons dated 6 March 2009 taken out by the 1st defendant only, Mr Ho applied for a stay of execution of the disclosure order as made against him pending the hearing of his appeal in CACV 44 of 2009, under Notice of Appeal dated 5 March 2009, against the Mareva relief which this court had issued against him. 22.In turn a summons dated 17 March 2009 taken out by the plaintiffs seeking an order for leave to cross-examine Mr Ho with regard to two recent transactions which had come to the attention of the liquidators and which were said to have raised serious concerns as to the veracity of Mr Ho, and as to his compliance with the terms of the Mareva Order, was adjourned to a date to be fixed. 23.Accordingly, the hearing on 19 March 2009 was concerned solely with the defendants’ applications for ‘clarification’ of the existing Order and for a stay of execution thereof; at this hearing the defendants again were represented by Mr Snowden QC and Mr Abraham Chan, once more on the instructions of M/s Baker & McKenzie, and the plaintiffs by Mr Kosmin QC and by Mr Manzoni QC. 24.At the conclusion of argument on 19 March 2009 the court dismissed both of the defendants’ applications, and by its Reasons For Decision, dated 16 April 2009, the factors underpinning such dismissal were explained. 25.This judgment speaks for itself; for present purposes, however, I note that paragraph 27 thereof recited the argument of Mr Kosmin – with which this court ultimately agreed – that the Mareva Order had incorporated Schedule 3 thereof, which had specified the assets of the 1st and 2nd defendants, and which at the hearing of 17 February 2009 had been the subject of particular consideration by the parties, and that there now was no basis for Mr Ho and/or Grande to seek to rewrite it: he described this as “a blatant attempt to avoid making full and proper disclosure”, and thus to avoid scrutiny in relation to the recent transactions as identified by the plaintiff liquidators which had aroused cause for concern. 26.No appeal was launched against the dismissal of these applications, the Order consequent thereon being formally engrossed on 19 March 2009, albeit there remained extant and pending the substantive appeal by Mr Ho against the Mareva Order dated 17 February 2009, the existence of this forthcoming appeal – which had been set down for hearing on 22 July 2009 – having formed the basis of the stay of execution application. Disclosure as made by the 1st and 2nd defendants 27.On 31 March 2009 the 1st and 2nd defendants filed affirmations in purported compliance with the requirements within the Mareva Order. 28.The plaintiff liquidators took the view that such disclosure manifestly was deficient, and by letter dated 6 April 2009 from M/s Lovells to M/s Baker & McKenzie, the plaintiffs detailed their concerns in this regard. On 14and 15 April further letters were sent from the plaintiffs, and on 14 April 2009 a response came from Baker & McKenzie requesting a further 14 days, that is, to 28 April 2009, in which to respond to the content of the plaintiffs’ letters. 29.On 27 April 2009 the plaintiffs issued a summons (‘the specification summons’) seeking that the 1st and 2nd defendants (i) do properly comply with the terms as to disclosure within the Mareva Order, and (ii) that they be cross-examined on oath as to their assets. The 3rd Judgment: ‘the specification summons’: 1 June 2009 30.This court entertained argument upon this ‘specification summons’ on 8 May 2009; in fact, the content of this new summons had superceded the plaintiffs’ earlier summons (‘the interrogation summons’) issued on 17 March 2009, which in effect now fell by the wayside, and upon which this court made no order. 31.At the hearing of this application the plaintiff liquidators once more were represented by Mr Kosmin QC and by Mr Manzoni QC; acting on behalf of the defendants on this occasion were Mr Godfrey Lam SC leading Ms Queenie Lau, again on the instructions of the defendants’ then solicitors, M/s Baker & McKenzie. 32.At the hearing of this application, Mr Lam for the defendants made it clear that his instructions were that Mr Ho, the 1st defendant, and a Mr Adrian Ma, a director of Grande, the 2nd defendant, were prepared to appear before this court and to be cross-examined by Mr Kosmin. 33.For his part Mr Kosmin submitted that should the ‘disclosure’ as had been made to-date by these defendants be permitted to remain in its currently “hopelessly inadequate” state, any such cross-examination as now apparently offered would prove wholly ineffective, because, absent proper disclosure being made prior thereto, in response to detailed questioning the deponents would be able to take refuge in responses which were bound to be uninformative without there being to hand relevant documentation; in effect, said Mr Kosmin, the exercise now being proposed by the defendants would amount to a re-run of the earlier section 221 examinations conducted by the Akai liquidator, wherein little of practical assistance was gained by reason of a lack of documentary evidence available in advance upon which to found any serious cross-examination. It followed, Mr Kosmin opined, that there was a clear and pressing necessity for an appropriate level of asset disclosure in anticipation of any such cross-examination. 34.In the event, the court acceded to the application made by the plaintiffs. The Judgment consequent upon this application is self-explanatory, and the Order is set out in that Judgment (at para 71 thereof); this Order formally was engrossed on 1 June 2009. 35.The Order of 1 June 2009 is of particular significance in the context of the present applications. 36.In material part, it required Mr Ho, the 1st defendant, within 21 days of the date of service of the Order upon him, to make a further affidavit in “full and proper compliance” with the Mareva Order, setting out on its face the categories of information of which disclosure was required, whilst a correlative section of the Order dealt with the disclosure required to be made by the 2nd defendant, Grande. In addition, cross-examination on oath was provided for with respect both for Mr Ho and for representatives of Grande. 37.At this stage it reasonably might have been thought that matters relating to this apparently interminable disclosure dispute had been laid to rest, but this was not to be. Application for an extension of time: 26 June 2009 38.On 26 June 2009 the 1st and 2nd defendants made an application for an extension of time with which to comply with the order of 1 June 2009 for the filing of additional disclosure affidavits. 39.This application was mounted by Mr McCoy SC, appearing for the1st and 2nd defendants on the instructions of M/s Huen Wong & Co, who apparently now had taken over conduct of the case in place of Baker & McKenzie. 40.Mr McCoy explained that his clients recently had seen the necessity to change their solicitors, from M/s Baker & McKenzie to M/s Huen Wong & Co, and in the few days in which the new solicitors had had available – without, said Mr McCoy, the ready availability of all of the relevant files – it just would not prove possible to meet the time limit as prescribed by the court by its existing Order of 1 June 2009. 41.In fact, leading counsel said, what he was after in terms of a time extension was 28 days for the 1st defendant, and 42 days for the 2nd defendant, instead of the period of 21 days as then was in place. 42.At the same time Mr McCoy also confirmed to the court that the 1st defendant’s appeal against the Mareva Order of 9 February 2009 was to be withdrawn; in fact, I understand that such withdrawal of this appeal formally took place on 6 July 2009. 43.For his part Mr Manzoni, appearing for the plaintiffs, vigorously opposed this application, castigating the change of solicitors as nothing more than a “transparent ploy” in which to gain more time and with which to force yet another delay in rendering proper asset disclosure. 44.In the event, this court was persuaded to recognize the stark reality of new representation of the 1st and 2nd defendants – both of solicitors and, apparently now, of counsel also – and after, it must be said, some degree of hesitation, reluctantly agreed to order an extension of time, for each of the 1st and 2nd defendants, but of 21 days only. 45.However, that which this court then most certainly did not know (and, as I am sure, as Mr McCoy also then was unaware) was that the evening before this application for extension of time was mounted the 2nd defendant, Grande – which so far as this court was concerned was controlled by Mr Ho – publicly had announced entry into a contract to dispose of its headquarters building in Singapore, an event which subsequently had come to the notice of the plaintiff liquidators, and which in turn now has stimulated the application by the plaintiffs with which this court presently is dealing. 46.Accordingly, after condescending to the detail of the somewhat labyrinthine procedural background, it is to this new application that I now revert. The plaintiffs’ summons dated 6 July 2009 47.I have earlier set out the substance of this application, which, as I have said, resulted from the belated discovery of the 2nd defendant’s public announcement, at 9.39 pm on 25 June 2009, to the effect that it had entered into a contract for the sale of the Grande Building in Singapore for the sum of Sing$19.5 million (US$13.3 million approximately), and that this sale expressly had been approved by Mr Ho’s company, Barrican Investments Corporation. 48.This fact was not disclosed to the court or to the plaintiffs at the hearing on 26 June 2009 for the defendants’ extension of time in which to file further disclosure affidavits, and when viewed in the context of discovery pursuant to the Mareva order of fully some five months earlier, it is fair to observe that the imparting of this information would have made a significant difference to the manner in which this court then regarded the defendants’ position, the change of solicitors and counsel notwithstanding. 49.I am told that the plaintiffs first had learned of the announcement of this sale shortly after the hearing on 26 June 2009 at which the extension of time had been granted; in the circumstances I am a little surprised that the plaintiffs did not immediately return to court with this information prior to the engrossment of the order dealing with the extension of time, but for some reason this did not occur. 50.Instead, M/s Lovells took up the issue in correspondence with the defendants’ new solicitors, M/s Huen Wong & Co, by letter dated Monday 29 June 2009, in which they sought a comprehensive explanation from Mr Ho regarding the terms and circumstances of the sale of the property, and further sought an undertaking that Grande would not complete the sale of the property without providing 14 days written notice to the plaintiffs. 51.On 30 June 2009 M/s Huen Wong & Co replied on behalf of Mr Ho and Grande. 52.I rarely have cause to read solicitors’ correspondence, but on this occasion I have been constrained to do so, and by any standards this was an peculiar response, not only in terms of its aggressive, aggrieved and faintly hysterical tone, but because this letter raised for the first time that which Mr Kosmin has characterized as the “bizarre and extraordinary proposition” that Mr Ho was not the beneficial owner and controller of Grande. 53.The ineluctable fact is that this assertion was contrary to the basis of the submissions made to this court by English leading counsel, Mr Snowden QC, during argument upon the substantive Mareva application wherein such beneficial ownership never was disputed (indeed the now-unappealed Judgment of 9 February 2009 records that Mr Ho “is and was the majority shareholder, President, Group Chief Executive and a director of Grande”), and is wholly contrary to the manner in which the defendants’ case has been conducted to-date; moreover it flies in the face of the specific content of Schedule 3 forming part of the Mareva Order – which, it will be recalled, was settled at a hearing consequent upon submissions made by junior counsel upon the defendants’ behalf – and also is inconsistent with the disclosures in Grande’s Annual Reports and with representations made to the Stock Exchange of Hong Kong (and, it also now seems, to regulators in America). Quite how the Hong Kong regulators react to the revelation that factual representations as originally made on behalf of Mr Ho, and as now recorded in public filings, do not represent the true position is something which is not the immediate concern of this court. 54.This fundamental change of position as to Mr Ho’s status in relation to Grande also is reflected in the affidavit evidence filed by the 1st and 2nd defendants in opposition to this summons. 55.In this connection there is affirmation evidence from Mr Adrian Ma Chi Chiu (affirmation dated 13 July 2009) on behalf of Grande and the 5th and 6th affirmations, respectively dated 13 July and 14 July 2009), from Mr Ho himself. 56.So far as he is concerned Mr Ma, the CEO of Grande, asserts that “in actual fact, Mr Ho does not have any shareholding in Grande” (para 24), that “the plaintiffs have simply no basis at all to meddle with Grande’s business”, and – surprisingly in the circumstances – he goes so far as to say, in my view somewhat ambitiously, that he verily believes that “the present application made by the plaintiffs is vexatious and is wholly devoid of merits”. 57.For his part Mr Ho, in his 5th affirmation, seeks to uphold the sanctity (and legal effect) of the Ho Family Trust, in which, he says, his wife, daughter and himself “are all beneficiaries” (para 10), he informs the court that his brother in law and elder sister are directors of Grande (para 16) and are people of the utmost integrity who would not succumb to any outside influence, he suggests that the statement in the Mareva judgment of 9th February 2009 to the effect that he is the beneficial owner of 69/70% of Grande, whilst perhaps not disputed by his legal representatives at that hearing, had caused him to be “very surprised” and that this did not represent his instructions (para 18), that the corporate structure chart placed before the court at the Mareva hearing (Annexure D) had never been drawn to his attention – “It has only been produced to me by my present solicitors when this affirmation was being prepared” – and that the representation thereon is “completely untrue”. He continues that “I do not have any beneficial interest (direct or otherwise) in Grande’s shareholding” (para 22), that the allegation that he has such a shareholding “remains a mystery to me and is completely contrary to my understanding” (para 24), and that the apparently incorrect public filings in the Companies Registry represent inadvertent errors on the part of Baker & McKenzie, his former advisors and solicitors (para 29), and that he personally was not involved in the approval process for the sale of the Grande Building by Barrican Investments because he did not participate in the relevant Board Meeting of Grande, and also that he is not a director of Barrican Holdings (para 32). 58.Mr Ho’s 6th affirmation of the next day follows essentially the same theme: he has never been a director and shareholder of Accolade Inc, the trustee of the Ho Family Trust, which is not controlled by him, and that he is only a member of a class of potential beneficiaries (para 5), that public corporate circulars by Lafe Corporation Limited (as exhibited by Mr Borrelli) which on their face diametrically go against his current affirmation of the position “appear to have arisen as the result of inadvertence on the part of others and escaped my attention”, that he does not recall the circumstances in which these statements were actually made (para 5(4)), and that the statement in the Lafe Annual Report for 2007, which attributed to him a 100% beneficial interest in The Grande International Holdings Limited, which in turn owned a majority interest in the share capital of The Grande Holdings Limited through its wholly-owned subsidiary, Barrican Investments Corporation, are “incorrect”, and that he “does not recall the circumstances in which the above statements were actually made in the above annual report” (para 5(5). 59.Accordingly, the position now taken by Mr Ho may, I hope not unfairly, broadly be summed up thus: that in this litigation to-date his legal representatives fundamentally had misunderstood his position, and in turn have misrepresented that position to the court, and that the documents of public record as filed by his legal representatives with market regulators, the content of which demonstrate a picture wholly contrary to that now sought to be portrayed, were and are attributable to filing errors/misunderstandings on the part of Baker & McKenzie, to an erroneous understanding of Stock Exchange Codes (Code 205 having been mixed up with Code 210) and perhaps, also, can be explained by a ‘deeming provision so that, as he now put it, “I am nevertheless deemed to have such interest [in Grande] given that I am a beneficiary under a discretionary trust and by virtue of the relevant statutory provisions of the SFO, but solely for satisfaction of the statutory disclosure obligations to the public investors only” (Ho 5th, para 22). 60.In response to this wholesale change of position, Mr Kosmin went to some length to remind the court of the detailed manner in which this case had developed in terms of the portrayal of Mr Ho’s position; he noted also the withdrawal of his appeal against the judgment of 9 February 2009, and he also drew attention to a number of corporate public disclosure forms, in which so far as Mr Ho is concerned an antithetical position is represented; thus, for example, the Hong Kong Exchanges and Clearing Disclosure of Shareholder Interests represents Mr Ho as a Director of Grande with a 69.18 percentage shareholding, whilst in an extract from Lafe Technology Annual Accounts the following appears:
and in a Lafe Technology Memorandum of Understanding For Acquisition of Assets dated 25 April 2007, under the heading ‘Directors’ Interest’, Mr Christopher Ho Wing-On is described as:
Further, in a US filing on behalf of, I believe, Emerson Corporation, the following passage appears:
and with regard to the place of the Ho Family Trust in the scheme of things, a public release on behalf of Lafe Corporation Ltd regarding a proposed acquisition of shares reads thus:
In the same context I also have had sight of a ‘Memorandum of Wishes of the Ho Family Trust’, as signed by Mr Ho, paragraph 2 of which reads:
61.The foregoing represent examples of the documentary material pointed out by Mr Kosmin which run counter to the case as now posited on oath by Mr Ho, the apparent explanation being that such information is mistaken and in clear error and/or constitutes negligent oversight by professional advisers and/or arises as the result of certain statutory deeming provisions – and that with regard to all such matters it now transpired that hitherto Mr Ho had been wholly unaware of the misrepresentations made in his name. 62.At this stage of the case, therefore, and given all that had occurred thus far in this ongoing discovery dispute, Mr Kosmin asked the court to “disregard” the evidence now recently filed by Mr Ho. In my view he was justified in so doing. 63.At this stage it is right to record that the court’s apparent disregard for the probity of Mr Ho, arising as it did from the evidential volte face as now adopted by this gentleman, excited discomfort in Mr McCoy, and – whilst formally he did not get to the stage of making an application – leading counsel nevertheless trailed the suggestion that this court should consider recusing itself from further entertaining this summons by reason of bias, this view stemming from observations made by the court during Mr Kosmin’s submission as to the credibility of Mr Ho’s evidence as now had been filed in opposition to this latest summons. 64.Whilst the steadfast barrister fearlessly standing up on behalf of his client to an oppressive and unfair tribunal is one of the most, if not the most, notable features of our adversarial system – and, if I may say so, long may this remain the situation in Hong Kong – in the circumstances as now had arisen I am bound to say that it struck me as a bit rich to characterize the court’s obvious (and in my judgment perfectly justified) scepticism as to the truth of Mr Ho’s recent evidence, which legitimately might be regarded by any hard-nosed commercial judge as a singularly unfortunate and self-serving attempt to rewrite history, and thereby to avoid the disclosure as now sought, as manifesting ‘unfairness’ or ‘bias’ on the part of the Bench. Accordingly, whilst I make no criticism of leading counsel for acting as he thought fit, it seemed to me that in such extraordinary circumstances the premise for such submission was less than compelling. 65.For the avoidance of doubt, however, and in the event that this matter goes further, let me state unequivocally that in all the circumstances of this case I have decided to accord to Mr Ho’s recent evidence in his 5th and 6th affirmations – and, indeed, to similar evidence as now put forward on the part of Mr Adrian Ma – no credence. I am wholly disinclined to accept that black actually amounts to white, notwithstanding the ‘spin’ and convoluted explanation with which Mr Ho, and for that matter Mr Ma of Grande, wishes to invest the argument. 66.Moreover, and once again for the avoidance of doubt, I continue to hold the firm belief, expressed by this court as long ago as February 2009 in the substantive Mareva judgment (and repeated, I believe, in subsequent judgments), that Mr Ho remains the person who stands at the apex of the opaque worldwide corporate pyramid which he has established in order to hold and to exercise his wealth, and through which he exercises an wholly dominant influence over all commercial activities as are undertaken by such companies/entities within that complex structure, which clearly he has been at great pains to set up. 67.It is therefore through this prism that I view the efforts to-date of Mr Ho, and indeed Grande, to avoid making proper disclosure; indeed, a reasonable and fair-minded observer familiar with the course of events in this case might come to the view that in terms of asset disclosure the 1st and 2nd defendants have entered upon a calculated course of conduct which conveniently might be characterised as a combination of evasion, obfuscation, and disingenuous repudiation. 68.It is also in this context that I am ruefully reminded of Mr Manzoni’s forceful assertion at the 21 June 2009 hearing that this latest change of legal representation on the part of Mr Ho and Grande – against the background of which this court felt constrained to grant further temporal indulgence – clearly was purely opportunistic and was calculated to achieve yet further delay. This court takes particular and strong exception favourably to entertaining an eleventh hour plea for time by reason of a late change of solicitors when, as hindsight now so clearly illustrates, on the very evening preceding that application the 2nd defendant, in which company Mr Ho now disavows both shareholding and influence, was in the process of alienating what presumably is a very significant asset, namely its headquarters building in Singapore. 69.As to this sale of Grande’s headquarters, Mr Kosmin asserts in his skeleton argument filed on behalf of the plaintiffs that there is no doubt but that there has been a breach of the Mareva Order by the failure to disclose this transaction to the liquidators of Akai before the sale agreement was executed, and that given that the property in question is Grande’s Singapore headquarters, and that its sale was required publicly to be disclosed pursuant to the rules of the Stock Exchange of Hong Kong, the sale of the property clearly was and is not a transaction within the normal course of business for Grande. 70.Therefore, he said, in order to comply with the Mareva Order, Mr Ho should have notified Akai’s liquidators of the proposed sale of the property by no later than 1 June 2009, the day 14 days before the ‘Option Agreement’ dated 15 June 2009 referred to in the Announcement. 71.To the contrary, in his skeleton argument filed in opposition to this application, Mr McCoy sought to uphold that which he described as the “emphatic” and “unchallenged” evidence of Mr Ho, and maintained that “the plaintiffs also cannot establish that the sale of the Grande Building was not in the ordinary course of business”. He also submitted that in the absence of evidence that Mr Ho personally had caused or procured the Grande Building transaction, and in the absence of proof that the disposal was not in the ordinary course of business, that the plaintiffs could not establish any breach of the terms of the Mareva Order – although it should not be forgotten that by this application the plaintiff liquidators simply were seeking further – and now, apparently, highly relevant – discovery. 72.In any event, Mr McCoy also firmly submitted, at least in his written material, that there was no basis for the orders as sought by the plaintiffs, and that it was not a proper basis for the grant of a disclosure order that the court would assist the plaintiffs to “monitor compliance” or to “police” the Mareva Order, and that the terms of the orders sought clearly indicated that the plaintiffs were “fishing” and were seeking the orders for “purposes other than to make the Mareva Order effective.” 73.As shortly will be indicated, I did not have to sound to the issue of breach of the existing Mareva – it may be that this task will occupy another day – but on two points in particular I am minded to observe: first, that it strikes me as tolerably clear, if indeed the plaintiff bears the burden, that the sale of the headquarters building of the 2nd defendant most certainly does not fall within the rubric of “the ordinary course of business”; and second, as to the contention, based on the old Bekhor v Bilton [1981] 1 QB 923 rubric, to the effect that disclosure is not permissible to ‘monitor compliance’ with the constraints of a Mareva injunction, it should be emphasized that nowadays the Commercial Court is far more sympathetic to the evolving attitude relatively recently expressed by Arden LJ in Dadourian Group v Simms (No 2), [2007] 2 All ER 329, at 335E, which, whilst earlier quoted in the 3rd Judgment of this Court, dated 1 June 2009, seems to me to bear repetition:
74.I note also that in that same 3rd Judgment, this court had observed (at para 53) that the objective observer might think that the instant case in particular was one wherein the court should be “astute” lest a mockery be made of the disclosure process, and further (at para 54) that the fact that Mr Ho “appeared to care little about the opinion of and orders of the Hong Kong court” ultimately was nothing to the central issue, which was that the court took the view that wholly inadequate disclosure thus far had been made, and that upon appropriate application the court should take such reasonable steps as it had available within its judicial “armoury” to ensure that there was substantial practical compliance with its orders. Finally, the court further noted (at para 55) that thus far the history of events supported this position, and that the defendants’ assertions that the discovery obligations were more limited than the court regarded as appropriate, taken together with the tenor and content of the inter-solicitor correspondence (at that stage emanating from M/s Baker & McKenzie on behalf of the 1st and 2nd defendants), served to buttress the view that “Mr Ho and Grande are strongly motivated not to reveal the extent of their assets.” 75.Re-reading these observations at this later stage, and in light of subsequent events, this court is reinforced in the views it earlier had expressed, and is struck yet again by the sustained level of resistance demonstrated by these defendants towards the asset disclosure which the court considers warranted in the circumstances, and which, of course, remains appurtenant to the Mareva relief issued as far back as 17 February 2009. Decision 76.As matters transpired, the plaintiffs’ application for the discovery sought was compromised, at least in part, because when the court returned for the hearing’s afternoon session, it emerged that leading counsel for the parties helpfully had been conferring as to the terms of a draft Order which had been prepared by Mr Kosmin, consisting of 5 paragraphs and 2 Schedules, and to which, at least in substantial part, Mr McCoy felt able to agree. 77.In terms of this draft, Mr McCoy indicated a restricted level of agreement to paragraph 1(a) of the proposed order, dealing with the disclosure by the 2nd defendant of certain categories of information (as identified in Schedule A) relating to the disposal of the Grande Building in Singapore, and also as to paragraph 1(b), which was in relation to the disposal of shares in Sansui Acoustics Research Corporation (and which in turn was cross-referenced to the categories of information in Schedule B); Mr McCoy was able further to agree to paragraph 2, which was that the 2nd defendant was to give the plaintiffs at least 14 days’ advance written notice of the date of completion of the sale of the Grande Building in Commonwealth Lane, Singapore. If I may say so, in this regard Mr McCoy was entirely sensible to act as he did; even had such agreement not been forthcoming, this court would have had little hesitation in making an order very substantially in terms of these paragraphs. 78.Paragraph 4 of the Order, dealing with the amendment of the plaintiffs’ undertaking as to the disclosure of information obtained on discovery also was agreed. 79.This left specific non-agreement as to paragraph 3 and paragraph 5. 80.The thrust of paragraph 3 of the proposed draft Order went to the disclosure by the 1st defendant, Mr Ho, of affidavit evidence detailing his dealings with his assets (as defined within paragraphs 2 and 3 of the Mareva Order dated 17 February 2009, and in light of the decision of this court dated 1 June 2009) since 19 November 2008 “being the date on which the Plaintiffs’ application for a Mareva injunction was made”. 81.As to this, Mr McCoy submitted that this was clearly premature, since the disclosure as originally ordered after the 21 day extension was shortly due on 21 July, and until the plaintiffs saw what was contained in that disclosure there was no justified basis in asking the 1st defendant to catalogue any movement of his assets, if indeed there had been any such movement, from the starting point of any given date, and in this latter regard he certainly did not agree with the proposed commencement date of 19 November 2008, as now was proposed by the plaintiffs. 82.On reflection, however, and in light of all that has transpired in this case, not least in terms of the recent agreement for the sale of Grande’s Singapore headquarters, I do not consider that such disclosure as was said imminently to be forthcoming – as this judgment is written the court has no idea of precisely what was forthcoming – provided a sufficient basis to refuse the relief in paragraph 3, and therefore I have decided to order the relief therein sought. It seems to me that if there has been no, or no significant, asset movement, any such affidavit will be short; if, on the other hand, the contrary is the position, the necessity for such information is clear – in which context I am reminded of the sage words of David Steel J (earlier quoted with approval in this court’s 2nd judgment of 16 April 2009, at para 48 thereof) in Motorola Credit Corporation v Cem Cegiz Uzan [2002] 2 All ER (Comm) 945 to the effect that in situations wherein there was the possibility of a transfer or hiding of funds “the sooner the matter is clear on paper the better.” 83.Accordingly, I make an order in terms of paragraph 3, save that I order that the date for compliance (at line 1) therefor be varied to “by no later than 4 pm on 7 August”, and that the date from which any such asset movement had taken place (penultimate line of para 3) be varied to “since 9 February 2009”, which was the date of publication of the Mareva judgment. 84.As to paragraph 5, this is the part of the summons in which the plaintiffs seek costs, and more particularly indemnity costs. 85.I have reflected on the situation, and do not grant costs upon an indemnity basis; nevertheless, I do consider that in the circumstances of this case an enhanced order for costs is appropriate, and accordingly in the exercise of my discretion I make the following costs’ order:
86.I turn now to the detail in the two Schedules to this draft Order, Schedules A and B, to which, as earlier indicated, paragraphs 1(a) and 1(b) cross-refer. 87.Schedule A contains 11 paragraphs, and Mr McCoy has confirmed to the court his agreement to providing the information within paragraphs 1, 2, 6 and 11; he objected to the remainder. 88.After considering the categories of information contained within these remaining paragraphs, I order that there be disclosure of the information within paragraph 3, paragraph 4, paragraph 5, and paragraphs 8, 9 and 10. 89.However, I decline to make an order in terms of paragraph 7 of Schedule A; I cannot see particular significance or relevance in terms of the manner of the marketing of the property in Singapore. 90.As to Schedule B, Mr McCoy has indicated that he is willing to agree to paragraphs 1-6 inclusive, and also to paragraph 7, save for the last three lines thereof beginning with the words “together with…” 91.This latter exception deals with any Board Resolution of the 2nd defendant at which the Sansui Electric transaction was considered, and the production of associated materials relevant to the passage of that Resolution. 92.For present purposes, I consider that the information within paragraph 7 is to be given in toto, since I am unable to see the justification for, or the utility of, any ‘hiving off’ the Resolution from its underlying/associated Board materials; accordingly I also make an order in terms of this paragraph. Order 93.I should be grateful if as soon as possible after publication of this Judgment that counsel for the plaintiffs would prepare an Order for engrossment in the terms indicated above. 94.There is to be liberty to apply as to the form (but not the substance) of the Order.
Mr Leslie Kosmin QC and Mr Charles Manzoni QC, instructed by Messrs Lovells, for the plaintiffs Mr Gerard McCoy SC leading Mr Colin Wright, instructed by Messrs Huen Wong & Co, for the 1st and 2nd defendants |
Cases cited in this judgment
Further hearings and rulings under HCCL 37/2005