Motorola Solutions Credit Co Llc v. Kemal Uzan and Others

HCMP 1237/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO 1237OF 2014

(On an intended Appeal from HCA No. 2232 of 2013)

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BETWEEN

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JUDGMENT

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Hon Lam VP (giving the Judgment of the Court):

1.This is an urgent application for leave to appeal against the order of Deputy High Court Judge Seagroatt made on 5 May 2014. By that order, the learned judge gave leave for the cross-examination of the 8^th Defendant on his affirmations for the purpose of the hearing on 29 May 2014 for the continuation of the order appointing a receiver on the assets of the 9^th, 11^th and 12^th Defendants.

2.The cross-examination is to take place on 29 May, thus the apparent urgency when the 8^th Defendant applied by a summons dated 22 May 2014.  Though a certificate of urgency was filed on 22 May 2014 together with the summons, it did not explain what happened between 5 and 22 May. In a footnote to counsel’s written submissions of 22 May 2014 on the application for leave, Mr Leung mentioned that leave was refused by the judge on 21 May 2014.  

3.However, that was not the full picture. We have gathered from the lower court file that the 8^th Defendant only issued a summons to apply for leave from the judge on 19 May (returnable on 21 May) and there had been an attempt to adjourn the hearing on 21 May on the ground of non-availability of counsel on the part of the 8^th Defendant.

4.There is no explanation as to why the 8^th Defendant had up to 19 May adopted such a lay-back approach concerning the intended appeal when he knew from the outset that the intended cross-examination was scheduled to take place on 29 May. Such a position is inconsistent with his belated attempt to try to expedite the process. It also gives him a forensic advantage in terms of the lead time he had enjoyed (which others involved in the process, particularly the court, do not share) in respect of the preparation of the application for leave and if leave is granted, the intended appeal.     

5.In Citibank NA v Days Properties Ltd CACV 192/2013, 29 Nov 2013, this Court expressed our misgivings about self-generated urgent applications.  What were said at paras 4 to 6 in that judgment are equally apposite in the present context:

“4. We must express our view that this is highly unsatisfactory. Litigants and those advising them are expected to proceed with due expedition in the making of an urgent application. The Court of Appeal in this jurisdiction is extremely busy and the diaries of our judges are tightly scheduled. Nowadays, apart from the time spent on hearing cases in court, judges have to spend many hours on reading the documents lodged in cases to be heard, preparing for hearings, dealing with paper applications and writing judgments. It is high time that those involved in litigation need to appreciate that modern appellate practice places more emphasis on pre-hearing preparations on the part of the judges and this means we now spend more time on such preparations than hearing oral arguments in court. In order that the Court of Appeal, with its limited establishment in terms of manpower, may accommodate for hearing urgent applications (the preparation for which also requires hours of advanced reading), litigants would be well-advised that it is in their interest to make such the application with as much lead time as practicable. Inevitably, a judge who spends time on an urgent application (including preparation for the same, hearing the same and then giving judgment on the same) would have to cut the time he or she would have spent on other cases as originally scheduled. Though the court will strive to accommodate requests for urgent appointment, given the tight schedule of our diaries, we need to scrutinize such requests cautiously to avoid unfairness to other court users who have legitimate interest in the fair and proper distribution of judicial resources.

5. Further, an urgent application often means that less time is being given to the opposing party to prepare. Consequently, on some occasions (we are happy to say that it did not occur in the present case) judges may not receive the level of assistance from those representing the other side as it should be. … The court will be vigilant to guard against urgent application being conducted in a manner which would occasion injustice on the opposing party.

6. In the past, there had been a practice of requiring a party who wished to make an urgent application to the Court of Appeal to prepare a certificate of urgency signed by counsel to justify the same.  In our view, it is necessary to revive such practice and the certificate should also account for why the application was not made earlier.  Short of cases of extreme urgency which render it impracticable to do so, the certificate should be lodged together with all hearing bundles and skeleton submissions prepared by counsel in support of the application to facilitate the proper estimation by the court as to the length of hearing as well as the preparation time required by the judge(s).  The documents will then be placed before a judge for consideration.  The court would also need to assess how much time should be given to the opposing party to prepare for the application.  Any misinformation in these respects may result in an adjournment of the matter to another date. Late instructions from the client or dilatoriness in the preparation of an application mean that the urgency is self-induced and generally it would not be accepted as adequate ground for entertaining the application on an urgent basis.  If the justification is inadequate, the court will not give an urgent appointment and the matter would have to be listed in accordance with the usual diary position of the Court of Appeal in respect of interlocutory applications.”

6.A certificate of urgency should address the reasons for the lapse of time between the decision below and the issue of the summons for the urgent application.  With respect to Mr Leung (counsel for the 8^th Defendant) who signed the certificate of 22 May 2014, there is not a single word on the reasons why these defendants did not make any application prior to 19 May.

7.In Singh Arjun v Secretary for Justice HCMP 590/2014, 21 March 2014, this Court explained the need and the importance of the general rule that leave for appeal should first be made to the Court below.  As stated at paras 7 to 9, the rule is equally applicable in the context of urgent appeals.

8.In the present case, though we know that leave has been applied and refused by the Deputy Judge, we do not know whether the intended grounds of appeal advanced before the judge were the same as those advanced before us and what were reasons given by the Judge for refusing leave. As it has been said in Singh Arjun, it is important that this court should have the benefit of the reasons for refusing leave by the lower court in considering an application for leave to appeal. It may be that due to the manner and tight time schedule that the leave application was handled in the lower court, no written reasoned judgment had been delivered. However, counsel or solicitor making such an application to the lower court should invite the judge below to give brief oral reasons for his refusal and it is their duties to make a record of such oral reasons available to the Court of Appeal in the application for leave to this court. They should also inform this court whether the intended grounds of appeal had been canvassed at the court below, both at the substantive hearing and at the application for leave.  In our judgment, the Certificate of Urgency should also set out these matters.        

9.We are also aware that the 8^th to 12^th defendants had made an unsuccessful attempt to adjourn their application for the discharge of the Mareva injunction before Deputy Judge Le Pichon on 20 May.  The learned judge refused the adjournment and dismissed the application for discharge.

10.We must say that these shortcomings in the defendant’s application and the surrounding circumstances call into question whether the urgent leave application (and if leave is granted, an urgent appeal) is a forensic attempt to out-manoeuvre the other party.  Given the tight time frame, there is a real risk that the appeal cannot be heard before 29 May and the 8^th defendants could then achieve the de facto avoidance of his cross-examination on 29 May.  Bearing in mind that this cross-examination is in the context of the continuation of the appointment of receiver and that there is a Mareva injunction with allegations of insufficient disclosure of assets by the defendants in the background, this Court must guard itself against litigation tactics aiming at depriving the other party of the practical benefits of the orders made below.  

11.In the bundle of documents placed before us in support of the application for leave, solicitors for the 8^th Defendant only chose to include the 11^th Affirmation of the 8^th Defendant.  We have not been given copies of the other affirmations of the 8^th Defendant.

12.The court gave directions on 22 May to facilitate the expeditious disposal of the leave application.  Solicitors for the 8^th  Defendant were directed to serve the papers on the solicitors for the Plaintiff by 9:30 am on 23 May.  The Plaintiff was required to file its statement of opposition pursuant to Order 59 Rule 2A(4) by 10:00 am on 26 May.

13.The Plaintiff filed its statement accordingly. In that statement, Mr Westbrook SC opposed the application.

14.Having considered the submissions of the parties, we are not minded to give leave. 

15.The decision by the judge to allow cross-examination is a matter of case management.  This court has stated on many occasions that the Court of Appeal will only intervene in case management decision when it is plainly wrong: see Wong Kar Gee Mimi v Severn Villa Ltd [2012] 1 HKLRD 887; Li Xiao Yun v China Gas Holdings Ltd HCMP 466 of 2013, 11 March 2013.

16.Mr Leung submitted that the Judge’s decision is plainly wrong in that the reasons given for allowing cross-examination are insufficient to displace the general rule that interlocutory applications are determined on the basis of affidavit evidence.  In short, weaknesses in the evidence of 8^th Defendant did not warrant cross-examination.  He also said the intended cross-examination would cover issues which underlie the substantive dispute on ownership of assets.  He also complained that the cross-examination would be unfair when the 8^th Defendant did not have any idea on documents which the Plaintiff may deploy and the scope is unlimited.

17.Further, he submitted that the continuation of receivership is in issue and therefore one should not allow cross-examination to facilitate the protection of the assets by the receiver.  He also contended that cross-examination with a view to investigate whether there had been breach of the Mareva injunction is not proper.

18.In our judgment, the Judge had reminded himself of the relevant principles governing the exercise of his discretion which are set out by Ma J (as he then was) in Yau Chiu Wah v Gold Chief Investment [2002] 2 HKLRD 832.  The ultimate test on whether an order for cross-examination should be made in interlocutory proceedings is whether it is necessary in the interests of justice.  Though cross-examination is not that frequently allowed in the context of interlocutory applications, we agree with the Judge that the court has an unfettered discretion to allow cross-examination even in such context.

19.The context of the application is important.  The Plaintiff is seeking to continue with the appointment of the receiver.  By the 11^th Affirmation of the 8^th Defendant, he disputed ownership of the assets and he claimed that “neither the 9^th, 11^th defendants or myself have the power, whether directly, or indirectly, to dispose of or deal with” the relevant assets.  He claimed that there is no property to be dissipated.  He also took the point that even if there were evidence on substantial links between the 8^th, 9^th and 11^th Defendants and the Uzans, it would not prove that they hold any properties as nominees for 1^st to 7^th Defendants.

20.Since these Defendants relied on these allegations to oppose the continuation of receivership, the Plaintiff must be entitled to challenge the same.  Though the Plaintiff could choose to attack the weaknesses in the affirmations by way of submissions, it is also open to the Plaintiff to challenge these allegations by way of cross-examination.  If, in the course of such challenge, the Plaintiff may touch upon issues which are also the subjects of dispute in the eventual trial, then so be it.  The Judge would have to exercise his control over the line of cross-examination to ensure that it would not be blown out of proportion bearing in mind the scope of the summons before him.  But there is no rule which absolutely bars cross-examination in the interlocutory stage on matters which may also be relevant at the main trial.  What is impermissible is to conduct the cross-examination solely for the purpose of eliciting materials to be used at trial.  The Judge must also ensure that the cross-examination is not conducted in a manner aiming at investigating whether there has been any breach of the Mareva injunction.  We have no doubt that, with the assistance of counsel, the Judge is able to adhere to the principles set out in Yau Chiu Wah v Gold Chief Investment [2002] 2 HKLRD 832 in the overseeing the conduct of the cross-examination on 29 May and confining it to its legitimate scope for the purpose of the summons before him. 

21.The Judge would also have to ensure that cross-examination is conducted in a fair manner.  It is not usual for the court to require the cross-examining party to provide in advance a list of question or list of documents to be relied upon beforehand.  The scope of the cross-examination is confined by the nature of the proceedings before the court for which cross-examination is allowed.  The Judge’s rejection of the requests of the defendants at paras 30 to 33 of his Reasons for Decision does not in any way militate against the fairness of the cross-examination. As submitted by Mr Westbrook, other measures are in place to give adequate protection to the 8^th Defendant.   

22.We do not see any merit in the submission that cross-examination should not be allowed because continuation of receivership is in issue when one of the grounds for opposing such continuation raised by these Defendants is the lack of relevant assets.

23.Whether cross-examination is warranted in the circumstances of this case is primarily a matter for the Judge.  We do not see any reasonably arguable basis for suggesting that he was plainly wrong in his decision.

24.We are also of the view that the application is totally without merit and we make an order pursuant to Order 59 rule 2A(8) that no party may request this determination to be reconsidered at an oral hearing inter partes.

25.The 8^th Defendant should bear the costs of this application.  Unmeritorious urgent interlocutory appeals are to be discouraged.  More so in cases where the intended appellant is at least partly responsible for the delay in mounting such “urgent appeal”.  In the circumstances of the present case, we are of the view that it is appropriate to follow the practice adopted in Li Xiao Yun v China Gas Holdings Ltd HCMP 466 of 2013, 11 March 2013 and Citibank NA v Days Properties Ltd CACV 192/2013, 29 Nov 2013 to order them to pay the Plaintiff’s costs of this application on an indemnity basis, such costs to be taxed and payable forthwith.

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

Mr Wilson Leung, instructed by Tanner De Witt, for the 8^th defendant