Motorola Solutions Credit Co Llc (Formerly Known As Motorola Credit Corporation) v. Kemal Uzan and Others

HCA 2232/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO 2232 OF 2013

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BETWEEN

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REASONS FOR DECISION

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1.Plaintiff seeks an order to have 8^th defendant cross-examined on his affirmations on the hearing to continue the Receivership Order made on 18 February 2014 by Godfrey Lam, J and continued by him on 21 and 28 February 2014.

2.That Receivership Order related to all the assets of the 9^th, 11^th and 12^th defendants.

3.The 8^th to the 12^th defendants were ordered to file affidavits giving full details regarding the disposal/disposition of certain “downstream” assets of certain companies under the control, it is contended of the 8^th to 12^th defendants.

4.These assets were subject to a Mareva injunction order initially obtained on 15 November 2013 and extended since.

5.If these assets have been removed, there has been a breach of the Mareva injunction which is a serious matter.  Although the defendants have taken out a summons to be heard on 20 May before Deputy High Court Judge Madam Le Pichon, to discharge the Mareva injunction, I am not concerned with that.

6.Much of the content of the defendants’ affirmations is taken up with seeking to deny or refute the contentions advanced in support of the Mareva injunction and challenging the validity of the judgments and even the jurisdiction of the American courts.  That is a wasteful, repetitive and inappropriate exercise and a misuse of affirmations. The Mareva injunction stands unless and until it is cancelled or discharged.

7.In his 11^th affirmation sworn in Manila on 18 March 2014 but for some reason not filed in Hong Kong until 10 April 2014, over three weeks later, the 8^th defendant, Mr Cook accepts that he is the director of the 9^th defendant (HPF) and of the 11^th defendant (AA Capital).  But he says he is such as a mere nominee.  He is deposing in his personal capacity as a director of the two companies.  When one strips away the irrelevant material, the content is reduced to a denial of any involvement in the destruction of any documents, saying initially that all the relevant documents (without saying what he means by relevant) are in existence and kept by the landlord of HPF (see Vol C page 510).

8.The “downstream” assets owned by JDC (Jordan Dubai Capital) have been dissipated or disposed of.  Mr Cook says that they do not belong to him or HPF or AA Capital and neither he, nor any of the companies of which he is a director had any power or control over them. 

What are these “downstream” assets?

9.They are the interests of JDC in a number of other companies.  The 10^th defendant MME Kwong Ka Yin, who also happens to be the solicitor who has been acting for Mr Cook is likewise involved with the 9^th and 11^th defendants, and, somewhat bizarrely, is the solicitor responsible for the drafting of the affidavits of the 8^th defendant and some of his co‑defendants.  This fact and its potential implications will not have been lost on anyone.  Mr Wilson Leung appearing for the 8^th defendant today, informs me that she is no longer representing the 8^th defendant.

10.There are two letter from the 9^th defendant (HPF) to the Central Bank of Jordan, of significance[1].  The first is dated 11 September 2012.  The signatory is not entirely clear but it is obviously a precursor to the second letter in the following year.  It concerns the investment of HPF in JDC- “HPF is a dedicated vehicle for investment in the MENA(Middle East and North Africa(?)) and Levant regions.  The investment in JDC was carried out by HPF’s affiliated companies, HAJ Capital Pte Ltd, Levant One Investment Pte and AA Capital investments (the 11^th defendant.)”

11.The first two are Singaporean companies owned by the 8^th defendant who also is a director of AA Capital Investments.  So those three companies, apparently under the 8^th defendant’s control, own JDP (Jordan Decapolis Capital) which is or was a substantial asset of JDC.

12.The second letter is dated 27 March 2013 and appears to be signed by the 8^th defendant. It relates to the acquisition of JDC by HPF which is itself described as a “private investment fund” in Hong Kong which has two sources of funding ‑ shareholders equity and investment unites by unit holders ‑

“Special purpose vehicles (SPVs) were created and the shares placed under nominee arrangements with a licensed nominee company in Hong Kong.

No change has occurred at the ownership of JDIB.”

13.It then identifies the various financial investments.  These were substantial sums all paid in June 2012 –

Euros 35,709,771

Euros 54,564,507 and AED 18,357,000

and Euros 2,233,500.

JDC was placed in voluntary liquidation on or about 9 February 2014.  The directors and/or shareholders of HPF and/or JDC would have had to agree to this disposal.  JDC’s largest asset was JDP alleged to hold USD 100m worth of properties through 22 subsidiaries.  JDC held 77% of JDP through those subsidiaries.  Its disposal in January 2014 is alleged to be in breach of the Mareva injunction.  Mr Cook says in an affidavit in Singaporean proceedings that JDC was sold in effect for payment of its debt and $23 million (I assume USD) in cash to repay the debt of HAJ, Levant and AA Capital, all companies under the control or management of Mr Cook.

14.One of the planks of the plaintiff’s case embracing the 8^th defendant, is that he has links with the Uzan clan and is effectively yet another of their proxies.

15.It emerges from the 8^th defendant’s Further and Better Particulars of his Defence dated 20 February 2014 that he was asked to be a nominee of HPF (9^th defendant) by Al-Haddadein who has already been designated a proxy of the Uzans by the US courts.  He is the sole director also of the 12^th defendant.

16.Cook (the 8^th defendant) says he discussed this proposal with Jalal Nabulsi, also designated a Uzan proxy by the US courts.  There is a record of e‑mail contacts showing Nabulsi in regular contact with Hakan Uzan (3^rd defendant) and other designated Ukan proxies.

17.The 8^th defendant also says that the 12^th defendant is 100% owned by Hijaz Jordan whose owner, “nominal” or otherwise, is Zafer Perksu, yet another proxy of the Uzan clan according to the findings of the US courts, and that HPF (9^th defendant) of which he is the “nominal” director/owner or otherwise, is owned beneficially by the 12^th defendant (Hijaz HK).  Zafer Perksu and Al-Haddadein are also directors (since May 2009) of Hijaz Jordan (the owner of Hijaz HK).

18.Cook says that he was also asked to be the nominal shareholder of the 11^th defendant by Polkaco Holding Company Cyprus.  Polkaco is another proxy of the Uzan clan, as found by the US courts.

19.Polkaco is linked with Solamico, Tasselco and Standaco – more Uzan proxy companies in the Levant – and has the same initial shareholders and directors as Libananco (7^th defendant) and the three companies who were also incorporated in Cyprus.  These are, on the plaintiff’s case, all tentacles of the Uzan clan.

20.I have read the affirmations relied upon in support of and in opposition to this application.

Conclusion

21.There are clearly inconsistent statements or averments in the affirmations of the 8^th defendant, Colin Alan Cook, which are highly relevant to the issues in this case, in particular whether there has been a breach of the Mareva injunction order initially made on 15 November 2013 and continued by me on 22 November 2013, and subsequently in my absence.  The sale of JDC (Jordan Dubai Capital) and/or its asset Jordan Decapolis Capital took place some time after the Mareva injunction was imposed.  If the defendant had any hand in that disposal it is a very serious breach of a court order with serious penalties.

22.Some of the contents of his affirmations are arguably deliberately evasive.  Other material contents indicate obfuscation, deliberate or otherwise, in an attempt to deal with matters, or at least in a failure to deal with such.

23.There is much repetitive and irrelevant content which has no place in affirmations of this nature, or perhaps in any affirmations, since they concern argument not facts.

24.Although the defence has relied on an argument to the effect that in interlocutory matters the court should lean against ordering cross‑examination because great delay and expense might be caused, referring to the late Fuad JA’s judgment in Wendy Wenta Seng Yuen [1984] HKLR 431 at page 436 E-4.  It is important to note the following:

“The true rule must be that the court has an unfettered discretion to permit cross‑examination on an affidavit but the applicant is not entitled to this right as of course. He has to establish that in all the circumstances of the case there is good and sufficient reason for the application.

… it seems to me that what is essential for the applicant to show is that the proposed cross‑examination might be productive of a useful result at the stage that the application is made.”

That case, now over 30 years ago, was concerned with the financial dispute between husband and wife.  In the interim so much change has taken place that I cannot imagine the husband being asked to advance his argument these days.  It would be untenable.  Furthermore, the emphasis upon case‑management in litigation has rightly placed much importance, on resolving areas of dispute or issues as early and as economically as possible.  This also enables parties to see the strengths or weaknesses of their case at an early stage and act accordingly.  As Fuad JA said there will be cases where the interests of justice dictate that a deponent should be subject to cross-examination.

25.I have also been referred to the decision of Ma J, (as he then was), in Yau Chiu Wah which sets out comprehensively the criteria to be followed and the considerations to be applied.  The learned judge there expressed the same concerns about that defendant’s conduct as I have formed in relation to this defendant’s.  He also adopted a particular paragraph in the judgment of Cumming-Bruce LJ in House of Spring Gardens Limited v Waite which I find particularly apposite:

“It may be that there are situations in which the circumstances demonstrate that it is more sensible, if only for reasons of speed and urgency, not to order further affidavits in order to fill that vacuum alleged to exist in the affidavits filed pursuant to the original order, but to proceed at once to order that the defendants attend for cross‑examination upon their affidavits. The purpose of the cross‑examination would be to elicit with greater particularity the extent and the whereabouts of the defendants’ assets.”

26.In my view, this is a case where a breach of a Mareva injunction is alleged with some force, with significant consequences for the intended beneficiary of the injunction in the nature of the loss or potential loss of a significant asset which the injunction was designed to protect.  I consider that the interests of justice favour the course which the plaintiff wishes to take.  Order 38 rule Z gives the court an unfettered discretion to be exercised judicially.  Of course each case will have different facts.

27.It may be possible, though that of course may only be in pious hope, that an identified asset can be traced and brought back under the court’s control as a consequence of evidence in cross‑examination.

28.The matter of disclosure and preservation of documents should be dealt with at an early stage and there are, as I have indicated, some documents which call for explanation or clarification before any more time is lost.  The defendant’s averments on this score may reasonably be termed somewhat cavalier in style and ought to be examined promptly to establish whatever degree of certainty is possible.

29.If breach of the Mareva order is shown to have been committed, how it was done, what was the defendant’s involvement if any, and what steps, if any, can be taken to minimize the effect are material matters calling for early assessment.  That will also save time, cost and effort.  If there are channels to facilitate breaches they need to be stopped up as soon as possible.  It may be that there will be a severe test of credibility but that must not be allowed to inhibit earlier exercises to determine what is in the interests of justice.

30.I make the order accordingly.  I have been asked to order that the plaintiff formulates a list of questions so that the defendant can apply his mind to the matters on which he will be asked.  I decline to require such a formalised exercise.  The defendant will be well aware of the topics on which he will have to concentrate from the affidavits/affirmations on both sides.

31.Secondly I have been asked to order the plaintiff lawyers to formalise a list of the topics for cross‑examination.  I reject that for the same reason.  Whilst cross‑examination will have to be confined to matters already identified, there may be other avenues opened and it would be inappropriate at this stage to impose any restriction.

32.The defence have asked that the plaintiff discloses all documents on which they intend to rely.  I anticipate that these have already been identified within their affidavits.  In any event the defendant has already had ample opportunity to call for the production of any documents referred to, which he does not already have.  His lawyers should now promptly ask for copies of such documents which they do not already have.

33.The plaintiff’s counsel has agreed to supply a schedule of the e‑mail contacts on which he will seek to rely and of course if the defendant wants a copy of the contacts as supplied to the plaintiffs by the recording authorities he should have them.  Once again of course, he could have obtained these earlier and checked with his own e‑mail records.

34.The plaintiffs are entitled to the costs of this application with certificate for Senior Counsel.  I have however indicated to Mr Wilson Leung that if following the receivership hearing, he feels he has any justification for asking me to re‑open this matter of costs, I would not bar him from so doing.

Mr Simon Westbrook SC, instructed by Fried, Frank, Harris, Shriver & Jacobson, for the plaintiff

Mr Wilson Leung, instructed by Angela Ho & Associates, for the 8^th defendant