Grant Thornton International Ltd and Others v. Tang Chung Wah and Another

HCMP 1510/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO 1510 OF 2013

(ON AN INTENDED APPEAL FROM HCCL NO 17 OF 2012)

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REASONS FOR JUDGMENT

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Hon Yuen JA:

1.On 4 July 2013 at the conclusion of the hearing, we dismissed the defendants’ applications for leave to appeal three orders made by Ng J and their appeal against another interlocutory order of Ng J for which no leave was required, and ordered that the defendants pay the plaintiffs’ costs. We indicated we would hand down our reasons in writing in due course. We do so now.

Background

2.The 1^st plaintiff is an international firm of accountants and the 2^nd to 9^th plaintiffs are partners in the firm.  The defendants are former partners of the firm. The plaintiffs allege that there were arbitration proceedings involving the parties in the London Court of International Arbitration, and that a costs order was made against the defendants.

3.On 14 December 2012, the plaintiffs commenced proceedings HCCL17/2012 in the Hong Kong High Court to recover costs of GBP57,500 from the defendants.  The statement of claim was filed in English.

4.On 4 February 2013, the defendants filed a 2-page Defence and Counterclaim in Chinese.

5.This gave rise to the plaintiffs’ request and subsequent application to court (by way of summons filed on 19 February 2013) for an English translation of that pleading, and for an order that English translations be provided for all further Chinese documents. 

6.The plaintiffs also sought an order by summons filed on 25 February 2013(mistakenly shown as 22 February 2013) that the time for filing their Reply and Defence to Counterclaim be extended until after the English translation of the Defence and Counterclaim was supplied.

Ng J’s Order of 7 March 2013 (the Main Order)

7.On 7 March 2013, the summons was heard by Ng J.  For reasons handed down on 11 March 2013, he ordered that

(1)  the defendants do within 14 days provide an English translation of their Defence and Counterclaim;

(2)  the defendants provide English translations of all further Chinese documents;

(3)  the plaintiffs have 28 days after the provision of the English translation of the Defence and Counterclaim to file their Reply and Defence to Counterclaim; and

(4)  there be a costs order nisi that the plaintiffs pay to the defendants the costs of their summons for extension of time.

I shall call this “the Main Order” for convenience.

8.The translation parts of the Main Order were made as “a matter of good case management” and “for the purpose of a just and expeditious disposal” of the action (para.24, Reasons for Decision, 11 March 2013), and exercising the power conferred on a judge by Rule 4(2), High Court Civil Procedure (Use of Language) Rules, Cap.5C (“the Rules”).

9.On 20 March 2013 the defendants applied for leave to appeal and to stay execution of the Main Order.  No interim stay was sought. 

Ng J’s Order of 8 May 2013 (Variation of Costs Order)

10.As mentioned earlier, the Main Order included a costs order nisi that the plaintiffs pay to the defendants the costs of their summons for extension of time.

11.The plaintiffs applied on 21 March 2013 to vary the order nisi.  A hearing was held before the learned judge on 11 April 2013.  The 1^st defendant was absent but the 2^nd defendant was present.  The judge proposed that submissions be made on paper and on the 2^nd defendant’s request, gave the defendants 10 days after receipt of the plaintiffs’ submissions to reply.  The plaintiffs filed submissions on 16 April 2013, but the defendants did not.

12.On 8 May 2013 the judge made an order varying the order nisi, to the effect that the costs of the plaintiffs’ summons should be in the cause.

13.On 13 May 2013 the defendants applied for leave to appeal and to stay execution of the Variation of Costs Order. 

Ng J’s Order of 29 May 2013 (Unless Order)

14.The defendants failed to file an English translation of their Defence and Counterclaim within 14 days of the order.

15.The plaintiffs issued a summons on 22 March 2013 for an “unless order”.  At the hearing on 11 April 2013, the judge adjourned the application and gave an extension of time to the defendants to comply by 25 April 2013.

16.Again the defendants failed to comply by the extended deadline.

17.On 29 May 2013, at a restored hearing, the judge granted the “unless order”, requiring the defendants to comply by 5 June 2013.  Reasons were provided in a written Decision (29 May 2013). 

18.The same day, the defendants applied for leave to appeal and to stay execution of the Unless Order.  However in the event, on 5 June 2013 an English translation of the Defence and Counterclaim was filed. 

“Retainer Summons”

19.Further, on 29 May 2013 the defendants issued a summons that the plaintiffs and King & Wood Mallesons (“KWM”) file “documentary evidence” to prove that the firm had been authorized to institute proceedings before they were commenced, failing which the action be struck out.  I shall call this “the Retainer Summons” for convenience. 

Ng J’s Order of 5 June 2013 (Refusal of leave and stay, and dismissal of Retainer Summons)

20.The defendants’ applications for leave to appeal and to stay the Main Order, the Variation of Costs Order and the Unless Order were heard by the judge on 5 June 2013, together with the Retainer Summons.

21.For reasons set out in a written Decision of the same date, the judge held that

(1)  there was no reasonable prospect of success in the proposed appeals,

(2)  there were no grounds for a stay of any of the orders and

(3)  the Retainer Summons should be dismissed as there was no evidential basis for the application.

He ordered the defendants to pay the plaintiffs’ costs.

Proceedings in the Court of Appeal

22.On 19 June 2013 the defendants filed a summons in this court for leave to appeal the Main Order, the Variation Order and the Unless Order, leave for all of which had been refused by Ng J.  They also applied for leave to appeal Ng J’s order on the Retainer Summons, although in light of the application therein to strike out the action, leave to appeal was not required under Order 59 rules 21(1)(a) and 21(2)(b), Rules of the High Court, Cap. 4 and accordingly we treated the application as the appeal proper.  They also sought a stay pending appeal of the orders set out above. 

Grounds of Appeal

23.The defendants acknowledged that for the purposes of an application for leave to appeal, reasonable prospects of success were required.  They also acknowledged the difficulties of appeals against a judge’s exercise of discretion. 

24.However they argued that (in brief):

(1)  in relation to the Main Order, the plaintiffs had applied for translations on the basis of unfamiliarity with the Chinese language under Rule 5(4), which the judge rejected; instead the judge ordered translations by reason of Rule 4(2), without having given the defendants an opportunity to address him, which the defendants consider to be a breach of the rules of natural justice; they also argued that Rule 4 applied only to documents actually filed, and the judge could not make an order regarding any further documents not yet filed;

(2)  in relation to the Variation of Costs Order, the judge erred in making the order when the defendants allegedly did not receive the plaintiffs’ written submission (dated 16 April 2013) until 6 May 2013;

(3)  in relation to the Unless Order, the judge was wrong to make the order when the defendants had applied for leave to appeal and to stay the Main Order;

(4)  in relation to the Retainer Summons, the judge was wrong as he had failed to take into account that the burden was on those asserting authority (KWM) to prove it.

Discussion

25.In relation to the Main Order, it is clear from the judge’s reasons for decision that the translation orders were made as “a matter of good case management” and “for the purpose of a just and expeditious disposal” of the action (para.24), the latter language tracking Rule 3 of the Rules. 

26.In my view Rule 3, in referring to s.5(1) of the High Court Civil Procedure (Use of Language) Ordinance, deals with proceedings in court (such as hearings) rather than documents.  However the purpose set out in Rule 3 is consistent with one of the underlying objectives of the Rules of the High Court, viz “to ensure that a case is dealt with as expeditiously as is reasonably practicable” (Order 1A(b) RHC).  Accordingly, the judge was empowered to give directions, including directions under Rule 4(2), to promote the expeditious disposal of the action.

27.It is clear that before doing so, the judge had considered whether the direction would impose an undue burden on the defendants and he concluded that it would not.  They were both bi-lingual, the Defence and Counterclaim comprised only 2 pages, and they were free to choose the language of documents they intended to produce in the future (such as witness statements).  

28.Even if the defendants did not have an opportunity of addressing the judge on the case management grounds for making the translation orders, they have not shown what other relevant considerations they would have advanced.  Before this court, the 1^st defendant put forward 2 points: (1) that the plaintiffs did not require Chinese translations and (2) that the translation orders would affect his right as a natural person to litigate. 

29.I do not see how point (1) is relevant, as the judge did not make the orders on the ground that the plaintiffs required Chinese translations.  He did so as it would assist the court to effect the listing of this case before monolingual judges thereby assisting in the efficient deployment of the court’s resources.  As for point (2), I do not see how the direction impinged on the defendants’ right to litigate.  They are free to use Chinese in the documents they file, all they have to do is provide an English translation, and they have not indicated they have any difficulty doing so.  There is no obstruction to their right to litigate at all.

30.As for their argument that Rule 4 applied only to documents actually filed, and the judge could not make an order regarding any further documents not yet filed, I take the view that the judge was entitled to give the direction under his case management powers.  It is nonsensical to suggest that every time a document is filed, the judge would have to give a fresh direction.  That would be a waste of time and judicial resources that could be utilized for other cases. 

31.In relation to the Variation Order, the 1^st defendant asserted in paras. 13-16 of his “declaration” filed on 3 June 2013 that he received the plaintiffs’ written submission only on 6 May 2013.  However that assertion was not supported by any documentary evidence before us, such as the postmarked envelope in which the submission was sent.  During his oral submissions, the 1^st defendant claimed that he had filed such evidence in the court below.  However it was not in any of the bundles or the assorted papers before us.  I regret to say that the state of preparation of the defendants’ applications and appeal was unsatisfactory.  They had the carriage of the applications and appeal and they had insisted on the court giving them an early date for the hearing. 

32.As for the 2^nd defendant, she has not filed any evidence at all on this point.  She was present at the hearing on 11 April 2013 and would have been aware that the plaintiffs would be filing their submission at the latest by 21 April 2013. 

33.In relation to the Unless Order, it is well-established law that an application for leave to appeal, or an application for stay, does not operate as a stay of an order. The defendants did not obtain an interim stay of the Main Order, and so the plaintiffs were clearly entitled to apply for an Unless Order.

34.Finally, in relation to the Retainer Summons, the defendants argued that the judge was wrong as he had failed to take into account that the burden was on those asserting authority (KWM) to prove it.  The defendants relied on Kammy Town Ltd v Super Glory Corporation Ltd HCA3524/2003, 14 January 2005, a decision of A. Cheung J (now Cheung CJHC). 

35.That case concerned a dispute between two equal shareholders who were also the only directors of a company.  As such, the company was deadlocked.  The company issued an action against a company controlled by one of the shareholder/directors. He denied that he had given consent for the commencement of the action and applied to strike it out on the ground that the company had not authorised its commencement.

36.In the light of those circumstances, A Cheung J held that “the point [whether the action was authorised by the Company] has to be decided according to the burden and standard of proof - the burden lies with those suing in the name of the plaintiff to prove authorization” (para. 13, see also the passages at paras. 21-22 in relation to resolutions of deadlocked companies). 

37.However that should not be understood to mean that a litigant can require his opponent’s solicitors to prove authorization in the absence of any material evidence throwing doubt on the authorization.

38.In the present case, the only evidence put forward consists of the following.  First, the 1^st defendant said in his declaration filed on 3 June 2013 that the 3^rd plaintiff had told him on 6 March 2013 that he (the 3^rd plaintiff) had not authorized the 5^th plaintiff to swear an affidavit of 4 March 2013 on his behalf.  That of course is very different from evidence that the 3^rd plaintiff had not authorized KWM to commence the action on his behalf.

39.Then the 1^st defendant also said he met the 3^rd plaintiff on 7 March 2013 and the latter said that he had throughout not paid much attention to the action, and so he did not have much impression of the case.  However in my view that is far from material evidence showing that the 3^rd plaintiff had in fact not authorized KWM to commence the action on his behalf.  

40.Further the 1^st defendant also made various allegations in his declaration concerning communications with Mr Patrick Rozario, the CEO of JBPB & Co (which is said to be the current trading name of Grant Thornton Hong Kong).  The 1^st defendant said he asked Mr Rozario whether the 2^nd to 9^th plaintiffs had authorized KWM to commence the action.  According to the 1^st defendant, Mr Rozario told him after December 2012 some of the plaintiffs were aware that the 1^st plaintiff was about to sue the defendants, but he (Mr Rozario) did not know if there was “formal (or official) authorization”.  In my view, quite apart from the fact that there is no evidence that Mr Rozario was the 2^nd to 9^th plaintiffs’ agent authorized to speak on their behalf, the assertion that he was not aware whether there was “formal (or official) authorization” can hardly serve as evidence that any of the plaintiffs have denied that KWM was authorized to act for them.

41.Finally the 1^st defendant has exhibited 2 emails he had sent to Mr Rozario and all except the 2^nd and the 5^th plaintiffs.  The first email was sent on 25 March 2013 and the second was sent on 30 May 2013.  In the second email, the 1^st defendant asserted that he understood that the addressees had not authorized KWM to act on their behalf and asked them to inform him should that not be the case.  There was no reply one way or the other.

42.In my view, it stands to reason that a professional person, on learning that his name had been used as a plaintiff without his authority, would have immediately taken steps to distance himself from the proceedings, such as by way of applying to the court for withdrawal of the action.  None of the addressees of the emails has done so, even though more than a month has elapsed since the date of the second email.  I therefore agree with the judge’s view that the emails do not constitute evidence substantiating the defendants’ allegation that KWM were not authorized to commence this action.  In the absence of such evidence, there is no ground for the defendants to challenge the solicitors’ retainer by demanding production of it on threat of striking out the action.  Neither have the defendants referred us to any other ground for demanding production of the solicitors’ retainer.

Order

43.By reason of the matters discussed above, there were no merits at all in any of the defendants’ submissions and we dismissed their applications for leave to appeal the three orders made by Ng J as well as their appeal against the Retainer Summons order of Ng J.  We also ordered the defendants to pay the plaintiffs’ costs to be taxed if not agreed.  We would also record that the plaintiffs had filed a summons on 26 June 2013 for an English translation to be provided of the appeal proceedings but in light of our orders, it was not necessary to proceed with this summons and we made no order.  

Hon Poon J:

44.I agree and have nothing to add.

Mr Denis Brock, of King & Wood Mallesons, for the Plaintiffs

The 1^st Defendant, in person, present

The 2^nd Defendant, in person, present