UPPLAN CO LTD v. LI HO MING AND ANOTHER

HCA 1915/2009

[2023] HKCFI 2370

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1915 OF 2009

________________________

(By Original Action)

________________________

(By Counterclaim)

________________________

________________________

DECISION

________________________

1.  This is the Summons of the 2^nd and 3^rd Defendants by Counterclaim (respectively “Anita” and “Mother”)  seeking to enforce paras 6(a)  to 6(c)  of the Schedule to a Tomlin Order dated 1 December 2021 (“Schedule”)  against the Plaintiff by Counterclaim (“Virginia”)  for shortfalls in the net rental income of the 3 properties :

(1)  Flat 5A, Tower 7, South Horizons (“South Horizons”)  (§6(a)  of the Schedule);

(2)  Unit A1 of Khuan Ying Commercial Building (“Khuan Ying”)  (§6(b));

(3)  Flat 2C and Flat Roof of Fortuna Building (“Fortuna”)  (§6(c)).

2.  The rental income of South Horizons is no longer in dispute.  The dispute is therefore limited to §§6(b)  and (c).  In addition, Anita and Mother further claim that Virginia is in breach of a warranty under §14 of the Schedule.

3.  There is no dispute that the amount of shortfall in rent (“Shortfall”)  in respect of Khuan Ying and Fortuna is solely attributable to tax payments made by Kong Wah Por Investment Co Ltd (“KWP”)  through which the two properties were held.

Issue

4.  The issue in this application turns upon the proper construction of §§6(b), 6(c)  and 14 of the Schedule.  In particular, whether Virginia is solely responsible for the tax payments represented by the Shortfall pursuant to those terms. 

Background

5.  In December 2021, the parties to various legal proceedings (including those to this Summons)  reached a global settlement by way of a Consent Order.  The Consent Order was signed and executed by all parties to the related proceedings and approved by the Court.  It took the form of a Tomlin Order with the attached Schedule, which set out the terms agreed by the parties.

6.  Altogether 7 sets of proceedings were involved, 5 in the High Court and 2 in the District Court.  The main antagonists of the proceedings were Anita, Mother and Virginia.  They are mother and daughters. The proceedings concerned some landed properties or sale proceeds and 2 companies.  KWP was one of companies and it owned, inter alia, both Khuan Ying and Fortuna.

7.  Essentially, by the settlement the mother and daughters had agreed how the assets were to be divided.  They were legally represented and the Schedule was drafted by lawyers. 

Relevant clauses

8.  The relevant clauses provided as follows :

“6(b)

all rental incomes from the Fortuna Property from 1^st April 2018 shall, after discharge of all expenses incurred in relation to the Fortuna Property (such expenses shall not include the payment of property and/or profit tax), be shared by Virginia and [Mother] equally,

6(c)

all rental incomes from Unit A1 of the Khuan Ying Property from February 2006 shall, after discharge of all expenses incurred in relation to Unit A1 of the Khuan Ying Property (such expenses shall not include the payment of property and/or profit tax), be shared by Virginia and Anita equally,

14

Virginia warrants and confirms that she has paid on behalf of KWP the estimated tax assessed by the Inland Revenue Department up to 31^st March 2019 and she shall not claim contribution from Anita.”

[all emphasis added]

9.  KWP was at the time of settlement owned by Anita and Virginia as 50/50 shareholders, and they were the directors of the company. It is not in dispute that all rental income derived from Khuan Ying and Fortuna were paid into KWP’s bank accounts (“KWP Accounts”).  Virginia and Anita were the authorized signatories of those accounts. 

10.  The total amount of tax in question paid by KWP was HK$620,293.  Anita and Mother claim half of such amount as Shortfall from Virginia.  After an agreed adjustment[1], their claim now stands at HK$297,930.50.

Applicable principles

11.  The principles of construction are well settled. In Eminent Investments (Asia Pacific)  v DIO Corp (2020)  23 HKCFAR 487, the CFA restated them in [45] :

(a)  it does not matter whether the more detailed analysis commences with the factual background and the implications of rival constructions or a close examination of the relevant language in the contract, so long as the Court balances the indications given by each;

(b)  the Court must be alive to the possibility that one side may have agreed to something which with hindsight did not serve its interest, or that a provision may be a negotiated compromise or that the negotiators were not able to agree more precise terms;

(c)  some agreements may be successfully interpreted principally by textual analysis, for example because of their sophistication and complexity and because they have been negotiated and prepared with the assistance of skilled professionals, whereas the correct interpretation of contracts which are marked by informality, brevity or the absence of skilled professional assistance may be achieved by a greater emphasis on the factual matrix;

(d)  but negotiators of complex formal contracts may often not achieve a logical and coherent text because of, for example, the conflicting aims of the parties, failures of communication, differing drafting practices, or deadlines which require the parties to compromise in order to reach agreement; and

(e)  commercial common sense and surrounding circumstances should not be used to undervalue the importance of the language of the provision which is to be construed, and the mere fact that a contractual arrangement, if interpreted according to its natural language, has worked out badly for one of the parties, is not a reason for departing from the natural language.

12.  In [43] of Eminent Investments, it was held that the starting point to interpretation is the ordinary and natural meaning of the words of the contract, and “in the vast majority of cases that is the ending point also”.

Analysis

13.  In my view, the language and meaning of the relevant provisions of the Schedule are clear.  First, the rental income from both Fortuna and Khuan Ying, net of expenses, would be shared.  Tax payments were specially excluded from the expenses (clauses 6(b)  and (c)). 

14.  Second, Virginia warranted and confirmed that she had paid the tax “on behalf of KWP”, and she should make no contribution claim against Anita (clause 14). 

15.  Mr But, who appeared for Virginia, submitted that the tax liabilities were those of KWP and Virginia had, in discharge of her duty as its director, paid the tax from KWP’s Accounts.  Anita, being KWP’s director either knew that the tax was so paid or could have found out about it. 

16.  I do not believe that the submission detracts from the clear meaning of the provisions.  Assuming[2] in Virginia’s favour that Anita knew that the tax was paid from KWP’s Accounts, there would have been no reason for clause 14 unless Virginia had assumed the tax liabilities of KWP.  In the absence of such assumption, there was no reason to describe the tax payments as having been made by Virginia “on behalf of KWP”.  They were simply payments by KWP of its own liabilities. 

17.  Equally, there was no basis for any contribution claim against Anita by Virginia.  It is difficult to see how Virginia could have a claim of contribution against Anita if it was not agreed for the purpose of the settlement that she had paid the tax.  Further, if the tax was not paid by Virginia, why would clauses 6(b)  and (c)  exclude tax from expenses?

18.  In respect of Mr But’s suggestion that clause 14 was erroneous in stating that the tax was paid by Virginia on behalf of KWP, the point was made half-heartedly because there is no application for rectification of clause 14.

19.  Mr But also submitted that under the settlement it was intended that Virginia on one hand and Anita and Mother on the other would be treated equally, and having the tax liabilities shouldered by Virginia alone would be unequal.

20.  This is an over simplistic view of the settlement.  In addition to Fortuna and Khuan Ying, the settlement covered South Horizons, a company called Upplan, KWP (which in addition to Fortuna and Khuan Ying, owned another unit in the Khuan Ying building), the rent of all the properties and cash payment to Virginia.  Further, the settlement provided for various liabilities of Upplan and KWP which were to be taken over by Anita. 

21.  Under clause 14, Virginia’s warranty only covered the period up to 31 March 2019, whereas the settlement was reached over 2 ½ years later, in December 2021.  By taking over KWP, Anita would (at least indirectly)  be liable for KWP’s tax from 31 March 2019 to December 2021.  Under clause 9 of the settlement, Anita had agreed to indemnity Virginia in respect of “any and all claims against, as well as any liabilities of … KWP” (see also clause 10). 

22.  This is a case which illustrates that it would not be appropriately or possible for the Court to second-guess the parties’ rationale behind a settlement, which is normally the result of much horse-trading. 

Disposition

23.  For these reasons, I agree with Anita and Mother that they should be entitled to the total payment of HK$297,930.50.  I make an order in terms of para 1 of their Summons filed on 25 May 2023, save that: (a)  the stated sums require amendment (see para 10 above); and (b)  interest is awarded on the payment at prime plus 1% from the date of Summons until today and thereafter at judgment rate(s)  until payment.

24.  The parties had agreed that costs should follow the event and summarily assessed.  Based on the Statements of Costs of both sides and Virginia’s List of Objection, costs are awarded to Anita and Mother and assessed at HK$300,000 (which include counsel’s fee at HK$220,000).  In this assessment the costs awarded to Anita and Mother in respect of Virginia’s Summons filed on 23 August 2023, which were included in their Statement of Costs, have been taken into account.

25.  I am grateful to counsel for their assistance.

Mr Benjamin Chain, instructed by Au, Thong & Tsang, for the 2^nd – 3^rd Defendants (by counterclaim)

Mr Adrain But, instructed by Foo, Leung & Yeung, for the 1^st Defendant (by original action)  and Plaintiff (by counterclaim)

HCA 1915/2009

[2019] HKCFI 2273

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1915 OF 2009

________________________

(By Original Action)

_______________________

(By Counterclaim)

_______________________

_______________

D E C I S I O N

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1.  I deal firstly with the costs of the Summons filed on 8 May 2019 by the Defendants (in the original action). It is the only live issue because the institution and continuation of this action have been ratified as a result of the actions taken by Upplan after the PTR on 28 May 2019.

2.  Let me say at the outset, and with respect, that I find that the conduct of these proceedings to be lacking.  It is common ground that the challenge to Upplan’s authority to bring these proceedings was raised at the outset and yet no action was taken by either side to remedy the situation or to bring a proper application to have the issue determined by the court.

3.  Although it is unfortunate that the Summons was only filed at a very late stage, one cannot escape the conclusion that the issue would have to be adjudicated by the court (it is one of the issues in the List of Agreed Issues).

4.  Dealing briefly with the many arguments advanced on behalf of Upplan, firstly, I see no adequate reason to take the view that the Defendants were precluded from challenging the authority in question by reason of election or delay.  In particular, the authority of Liquidation Committeeof Foshan Hongda Development Ltd v East Legend Investment Ltd [2009] 1 HKLRD 169 is distinguishable in that the defendant in that case had clearly accepted the authority of the substituted plaintiff after having considered the merits of its substitution application.  In any event, this court would be obliged to look into the matter when the issue had been raised. 

5.  As regards any alleged prejudice to Upplan, it is very difficult to be sympathetic to such suggestion given that the challenge was raised at the outset.  Further, the fact of the matter is that Upplan was able to and had remedied the deficiency.

6.  Finally, on the submission that the defect was curable, the events show that Upplan had failed to take any action in that regard, and would not have done so but for the Summons.

7.  For these reasons, I see no good reasons not to award costs to the Defendants when the Summons had led to the resolution of an important issue in this case.  I also grant a certificate for 2 counsel in favour of the Defendants.

8.  Moving on to the Defendants’ application to amend their Defence and Counterclaim, it is of course highly undesirable for such an issue to be raised at this late stage.  I have already mentioned my misgivings about the conduct of these proceedings.

9.  On the other hand, it is trite that the primary consideration is to allow the real issues in controversy to be determined and to dispose of these matters between the parties fairly.

10.  The disputed amendments are confined to two.  Firstly, in respect of the additional plea of estoppel, namely, para 8.22A of the draft Re-amended Defence and Counterclaim, it is an issue of law and despite the lateness of the application I see no real prejudice on the part of Upplan in dealing with it.  It is therefore allowed.

11.  Secondly, in respect of paras 9.15A and 9.15B, these pleas seek to introduce a contention that Upplan’s business could not have continued beyond 30 May 2012 in any event.  Whilst I accept that they raise a new issue which is not found in the List of Agreed Issues, it is true that they are based on the witness statements filed by the Defendants in August 2012 and April 2018.  It is a difficult balance whether to allow these amendments at such a late stage.  However, on their face, the pleas involve relatively simple factual matters and I see no adequate reason to believe that Upplan will not be able to address them by way of supplemental evidence.  I therefore also allowed this amendment.

12.  I shall hear the parties on the consequential directions and costs of this application.

HCA 1915/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1915 OF 2009

________________________

________________________

____________________

J U D G M E N T

____________________

Introduction

1.  This is about the summons taken out on 4 November 2016 by Upplan Company Limited (“Upplan”) that the hearing of the Discovery Summons dated 11 January 2012 taken out by the Joint and Several Receivers (“the Receivers”) be adjourned to after the trial of the claim and counterclaim and the determination of the issue of liabilities between the parties (“the main action”).

2.  I note that the main action has not been set down for trial.  However, both Mr Chong, counsel for Upplan, and Mr Lin, counsel for Li Hon Ming (“Virginia”),[1] confirm that their respective clients are willing and ready to proceed with the trial.

3.  That said, Mr Chong perceives a difficulty in that there has been a court order[2] directing that the second case management conference of the main action be fixed “immediately after” the disposal of the Discovery Summons.  Mr Chong takes this to mean that unless the aforesaid direction/timetable is varied, the trial of the main action cannot proceed further until after the disposal of the Discovery Summons.  It is fair to say that at the time when the previous direction/timetable was made, everybody thought that the Discovery Summons would be disposed of shortly.

4.  Now that the Discovery Summons has been outstanding for five years, Upplan’s present application, it is submitted, is to remove that perceived obstacle so that the trial can be proceeded with without further delay.  All counsel before me, namely Mr Chong, Mr Lin and Ms Seto, counsel for the Receivers, agree that the trial of main action would not depend on the result of the Discovery Summons.  As such, there is in fact no necessity for the hearing of the Discovery Summons to be adjourned pending the outcome of the main action.  In my view, it will serve the purpose if an order is made that the trial of the main action be proceeded with without regard to the Discovery Summons.  All parties agree that the court has the power to make that order which is a case‑management decision: see Order 25, rule 1B, Rules of the High Court, Cap 4A. 

5.  The remaining issue is the costs of the present application.  Before I deal with that, it would be pertinent for me to recount how the Discovery Summons came about.

The discovery summons

6.  By way of background, the case in brief is about a money changing business of Upplan conducted in the name of “Florida Money Exchange” in respect of which the Receivers were appointed by the court by consent.

7.  The Receivers took out the Discovery Summons asking that an order be made against Virginia for production of documents and provision of information to them so that they could carry out the duty that the court had asked them to perform, namely, to ensure the continual operation of Upplan’s business as a money exchanger pending the final determination of the main action or until further order.

8.  The Discovery Summons was last heard before Au J on 20 June 2012.  After that, it was adjourned part‑heard for the Receivers to file a further affirmation.  However, that was not done and the matter has since become “dormant”.  The reason given by the Receivers is financial.  Although the Consent Order provides that the costs of the Receivers be paid out of the assets of Upplan, the latter simply does not have sufficient assets and the Receivers have already run out of funds.

The nature of the hearing before the court

9.  Now, the court is told that the money changing business has long ceased.  As a result, the Receivers are no longer interested in obtaining the order they sought.  In fact, there is an affirmation from the Receivers saying that they are prepared to withdraw the Discovery Summons on the condition that their fees are provided for.  However, there is no formal application from the Receivers that the Discovery Summons be either resumed or withdrawn.  As regards Upplan’s present application that the hearing of the Discovery Summons be adjourned until after the trial of the main action, Ms Seto informs that the Receivers take a neutral stand.

10.  On the other hand, although Virginia queries whether the Receivers had the standing to take out the Discovery Summons in the first place, there is in fact no application either from her or her company Rainbow (the 2^nd defendant by Original Action) that the Discovery Summons be dismissed.

11.  Therefore, the hearing before me is not a continuation of the part‑heard hearing before Au J back in June 2012.  The only application before me is the one from Upplan that the hearing of the Discovery Summons be adjourned.  However, technically speaking Upplan is not even a party to the Discovery Summons, save and except, perhaps, as to the question of the Receivers’ costs thereof.

Order

12.  In any event, as aforesaid all parties now agree that the trial be proceeded with as soon as possible.  In the circumstances, I order that the trial of the main action be proceeded with whether or not the Discovery Summons has been disposed of.  The direction/timetable given at paragraph 1 of the Court Order made on 27 June 2012 is hereby varied to this extent.  I note that the Consent Order made on 5 May 2010 has already provided for a speedy trial.

Costs

13.  The court has heard extensive submissions from counsel on the issue of costs. 

14.  Given the present common stance of the parties that the main action should move forward, the matter about variation of its timetable is just a case management issue.  I note also that no milestone dates have been set.  Therefore, had Upplan simply asked for the variation of the timetable instead of seeking adjournment of the hearing of the Receivers’ Discovery Summons, it is likely that the matter could have been dealt with by solicitors before a master.  In which case, the Receivers would not even have to be involved.

15.  On the other hand, the solicitors acting for Upplan had as early as 13 September 2016 written to the Receivers and the solicitors acting for the defendants (by Original Action) sounding out their proposal for expediting the trial and asked for the defendants’ comments.  However, Upplan did not have the courtesy of a reply from the defendants.  Had the solicitors acting for the defendants responded to the proposal and sorted out the differences, the present hearing might not have been necessary.  As regards Mr Lin’s written submission filed for the present hearing, much was said criticising the Receivers and its aim was to ask for the dismissal of the Receivers’ Discovery Summons.  However, as I have mentioned earlier, the hearing before me is just not an adjourned hearing of that summons.  Very little was said in Mr Lin’s written submission about Upplan’s present application save that it is “misconceived and should be dismissed”.  No proposal was put forward by Mr Lin in his written submission as to how the main action should be proceeded with.

16.  In all the circumstances, I exercise my discretion and make no order as to costs between the plaintiff and the defence as regards the present application.

17.  Turning to the Receivers’ costs for the present application, Mr Chong accepts that it should be borne by Upplan.  Contrary to Mr Chong’s assertion, based on the material before me neither Virginia nor her company Rainbow had agreed to pay the Receivers’ costs themselves.  Moreover, I can see no reasons why the defendants should be asked to share the Receivers’ costs in the present application.    

18.  Therefore, I order that Upplan pay the Receivers’ costs (with counsel certificate), to be taxed, if not agreed.

HCA 1915 / 2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1915 OF 2009

------------------------------

______________________________

REASONS FOR DECISION

______________________________

A. Introduction

1.  On 30 July 2010, I made an Order that Mr Roderick Sutton and Mr Fok Hei Yu of the Hong Kong Office of FS Asia Advisory Ltd (formerly know as Ferrier Hodgson Ltd) be appointed as Receivers over the Plaintiff company pursuant to the Order of Deputy High Court Judge Mayo dated 5 May 2010 and a Consent Order dated 12 July 2010.

2.  I indicated that I would give my reasons later. This is what I do now.

B.      Brief background

3.  This action concerns a dispute between two camps of family members over a money exchange business, which was established by the mother some 20 odd years ago.  The business has been vested in and held by the Plaintiff company. 

4.  Essentially, now the mother through the Plaintiff claims against her daughter Virginia (the 1^stDefendant by Original Action) and the 2^ndDefendant company (said to be set up by Virginia) for various wrongdoings against the Plaintiff’s money exchange business, including passing off, conversion of the company’s assets and breach of fiduciary duties. 

5.  Virginia denies any wrongdoings and in return counterclaims against the Plaintiff, the mother, and her other siblings (Alan and Anita) for various reliefs, including a declaration that she is a 50% beneficial shareholder in the Plaintiff, damages for conspiracy and an injunction to restrain them from excluding her from the Plaintiff’s management.

6.  By an Amended Summons dated 4 December 2009, the Plaintiff sought various injunctive reliefs against Virginia and the 2^nd Defendant for, inter alia, deliver up of the books and records and documents of the Plaintiff and restraining her from representing to the outside world as the director of the Plaintiff and interfering the business of the Plaintiff.

7.  The parties appeared before Deputy High Court Judge Mayo for the Amended Summons, and after hearing counsel, by consent, His Lordship made an Order which includes at paragraph 2 the following:

“2. Anita and Virginia shall, on or before 2:30 p.m. on 12^thMay 2010, each propose at most 3 candidates for the aforesaid appointment. In the event that no one candidate can be agreed between Anita and Virginia, the receiver shall be selected and appointed by the Court out of all the proposed candidates and for this purpose, the parties have leave to apply.”

8.  The parties eventually could not agree on the candidate of the Receivers.  They then took out a consent summons which I made into a consent order on 12 July as follows:

“1. The selection and appointment of the Receivers [is to be made] by the Court out of the following candidates proposed by Anita and Virginia:-

(i) Mr. Roderick John Sutton and Mr. Fok Hei Yu of Ferrier Hodgson Limited;

(ii) Mr. Jim Wardell and Mr. Jackson Ip of Horwath Corporate Advisory Services Limited;

(iii) Mr. John Lees and Mr. Mat Ng of John Lees & Associates Limited;

(iv) Mr. Alan C W Tang and Mr. Wong Kwok Man of Grant Thorton Specialist Services Limited.

2. The remuneration of the Receivers shall be fixed by reference to the scales and rates of professional charges as quoted by the receivers in their quotations already provided.

3. To facilitate the Court to make the selection, the parties shall submit their grounds in support of their own recommendations and in oppose to the other side's recommendations on or before 16th July 2010.

4. The Court may make the selection without or with a hearing, subject to the direction of the Court.

5. The Court may make any further directions together with the appointment as the Court thinks fit.

6. The Receivers are at liberty to seek further directions of the Court after appointment.

7. Costs of the Plaintiff's Solicitors in this application be paid out of the assets of the Plaintiff without prejudice to each party's subsequent costs application upon the final determination of this action.”

9.  The Parties put in their respective written submissions^[1] as to the choice of the Receivers.

C.      The Decision

10.  After reading the parties’ respective submissions together with the respective CVs and fees proposals set out by the candidates, as I mentioned above, I made an order without any hearing that Mr Sutton and Mr Fok be appointed as the Receivers.  My reasons for the decision are as follows.

11.  All the proposed candidates are experienced insolvency and receivership practitioners.  However, from what have been provided to the Court, I agree with the submissions of the Plaintiff’s Solicitors that Mr Sutton and Mr Fok appear to be having relatively more relevant experience in acting as Receivers over companies which are intended to continue to do business pending the resolution of shareholders’ disputes (as in the present case) other than in insolvency scenarios.

12.  Although Mr Sutton and Mr Fok’s fee proposal appears to be slightly higher than the candidates proposed by Virginia, I also agree with the Plaintiff’s submissions that the difference is not substantial or significant, in particular in light of the uncertainty as to how much work would eventually and factually be involved in the Receivership. 

13.  In the circumstances, in relation to the present case, I do not think the difference in the proposed fees amongst these candidates outweighs the advantage of the relatively more relevant experience that Mr Sutton and Mr Fok possess.   It may further be noted that this more relevant experience may save some time and thus costs in the Receivership itself. 

14.  I therefore conclude that Mr Sutton and Mr Fok are relatively (albeit marginally) more suitable to be appointed as Receivers over the Plaintiff.  I thus made the Order as I did.

HCA1915/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1915 OF 2009

_________________________

BETWEEN

BETWEEN

_________________________

_________________________________

REASONS FOR DECISION

_________________________________

Introduction

1.  This is a joint application from both parties to this court pursuant to paragraph 13(1) of Practice Direction – 31 for mediation (the Practice Direction), asking this court to decide the choice of mediator for the parties, which is the only issue for them to conduct mediation for the resolution of the disputes.

2.  Following the directions of this court, the parties have prepared the points of difference between the parties and the qualifications and experience of the nominated mediators, all set out in tabular form, which is very useful for the present purpose.

3.  The parties have also submitted their written submissions as well. This illustrates the costs involved for the present application.

The nature of the matter

4.  The disputes among the parties involve two companies and two real properties, which involve approximately HK$21,000,000.00. As stated in the respondent’s written submissions, the emotional elements have certain role to play in the disputes. Both parties agree that it is desirable to resort to mediation to resolve their disputes as the parties are having an on-going relationship as a family.

The nominated mediators

5.  As pointed out in the table prepared by the parties containing the grounds in support and in opposition of choice of mediator, the costs of all the 4 mediators nominated by the parties are more or less the same, viz: Mr. Yeung : $19,000, Miss Yuen: $17,500 (nominees of the applicant); Mr. Au-Yeung: $15,000 and Mr. Wong: $14,000 (nominees of the respondents) on a daily basis of 7 hours. The biggest difference of the costs is $5,000per day. The costs for this application, including the hearing before this court today, as according to the solicitors acting the parties, are totally $12,000.It can be seen that the reason for the parties to have the difference in their choice of the mediator is one of passion on the part of the parties rather than anything else.

6.  The applicant has, by the letter dated 5 July 2010, proposed to have the matter disposed of on paper by the court picking a mediator for the parties, a simple exercise of its discretion. However, the respondents had not endorsed on the letter. For the reasons that follow, this court has decided to hear the arguments in court and delivers its decision accordingly. Hence, today’s hearing.

7.  This court considers that if it just picks the mediator for the parties without hearing the arguments and giving its reasons for the choice, the parties may not be able to appreciate the reasons of the court making the choice, which is not conducive to the mediation.

8.  The court also likes to let the parties and their solicitors understand the approach this court is going to adopt in deciding the choice of the mediator, so that in future, if they come across the similar situations, they may be able to resolve their disputes by adopting the similar approach without coming to court, thereby saving time and costs.

9.  This court would also like to record this decision for the reference of other parties, who may have the similar issues for the court’s determination.

10.  Because of those reasons, I have decided to call upon the parties for today’s hearing.

11.  In future, this court will expect the parties making the similar applications to show that they have adopted the similar approach in solving their disputes before taking out the application, giving the reasons why the disputes remain unable to be solved. The court will, on application, consider making adverse costs order against any party who is unable to give the explanation or has behaved unreasonably.

12.  This court will adopt the following approach in deciding the choice of the mediator in case of a dispute between the parties.

The approach

13.  First, the court will consider all the relevant objective data, in the following priority:

(a)   the nature of the matter and the issues for mediation;

(b)   the amount involved and the importance of the matter to the parties;

(c)   the mediators’ knowledge and experience in respect of the issues in order to determine whether the mediators are the appropriate persons to deal with the issues concerned;

(d)   the experience of the mediators in mediation;

(e)   the other relevant experiences such as that of legal practice, arbitration or social experience;

(f)   the fees and expenses for the mediation;

(g)   the availability of the mediators, bearing in mind that mediation will be taking place near the trial;

(h)   other relevant factors.

14.  Second, the court will, on the materials and information before it, make an assessment of the nominated mediators to determine, on the balance of probabilities, who will most likely be able to conduct the mediation smoothly, successfully and economically.

15.  Third, the court will make its rational and dispassionate decision accordingly.

Application of the approach

16.  I shall now apply the above approach to this application.

17.  There is no dispute that all nominated mediators are capable of understanding and dealing with the issues for mediation.

18.  In terms of experience in mediation, Mr. Yeung has 10 years’ experience, Miss Yuen 12 years’, Mr. Au-Yeung 2 years’ and Mr. Wong 3 years’.

19.  As Mr. Poon and Mr. Leung, solicitors of the applicant and the respondents agree, the other experiences of the nominated mediators are less relevant as they agree that all of them are capable of grasping the issues in dispute.

20.  The fees charged by the nominated mediators are: Mr. Yeung: $19,000. Miss Yuen: $17,500, Mr. Au-Yeung: $15,000 and Mr. Wong: $14,000per day.

21.  There is no issue on the availability of the nominated mediators.

22.  I have also considered the argument put forth by Mr. Poon that the mediators nominated by the respondents are tend to be more evaluative. However, Mr. Poon accepts that he has no evidence to support his comments. I do not accept such allegation without evidence to support. Mr. Poon further says that a female mediator will be more appropriate for this matter as there are female parties involved. Again, Mr. Poon accepts that he has no evidence or material to support his argument. I refuse to take this factor into consideration.

23.  Having considered those factors above, nevertheless, I consider Miss Yuen to be the most appropriate mediator for this matter.

Other issues

24.  This is the third application pursuant to paragraph 13(1) of the Practice Direction before me. In Resource Development Limited v. Swanbridge Limited HCA 1873/2009, the only issue between the parties was on the choice of mediator. In that case, I had decided that other things being equal, the mediator’s fee would be a significant factor for consideration. In this case, I consider other factors than the fees are more important for my consideration.

25.  In the case of Hak Tung Alfred Tang v. Bloomberg L.P. (a firm) and Another HCA 198/2010, in which I had decided the minimum level of participation of mediation and I said that after this court had made the decision, the parties were still at liberty to determine whether they might have mediation to resolve their disputes. Whether or not such decision amounted to reasonable explanation for not engaging in mediation when the court determined any adverse costs order against a party under paragraph 5 of the Practice Direction was for the trial judge to consider. All these apply equally in this matter.

26.  I reiterate that the solicitors acting for the parties should co-operate with one another and be flexible in their approach, bearing in mind the spirit of Order 1A of the RHC, saving time and costs for their respective clients and also saving time for the court as well.

The order

27.  Accordingly, I now make an order that the choice of the mediator shall be Miss Yuen as nominated by the applicant.

28.  As agreed by the parties, the costs of this application, including the costs of today’s hearing, be in the cause.