HCA 183/2014
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF FIRST INSTANCE
ACTION NO 183 OF 2014
________________________
| BETWEEN | | |
| | KOMAL PATEL | 1st Plaintiff |
| | JASON MARK COHEN | 2nd Plaintiff |
| | HARILAOS APOSTOLIDES | 3rd Plaintiff |
| | ROCKY CAPE INTERNATIONAL LIMITED | 4th Plaintiff |
| and | |
| | CHRIS AU | 1st Defendant |
| | HO CHING YI ELSA | 2nd Defendant |
| | RETRIBUTION LIMITED | 3rd Defendant |
(By Original Action)
| BETWEEN | | |
| | CHRIS AU | Plaintiff |
| | and | |
| | KOMAL PATEL | 1st Defendant |
| | JASON MARK COHEN | 2nd Defendant |
| | HARILAOS APOSTOLIDES | 3rd Defendant |
| | ROCKY CAPE INTERNATIONAL LIMITED | 4th Defendant |
| | ESSENCE INVESTMENTS LIMITED | 5th Defendant |
| | YEW KUAN CHEONG | 6th Defendant |
| | RETRIBUTION LIMITED | 7th Defendant |
(By Counterclaim)
________________________
| Before: Hon Zervos J in Chambers |
| Date of Hearing: 9 September 2015 |
| Date of Judgment: 10 November 2015 |
____________________
JUDGMENT
____________________
Introduction
1. By summons dated 14 August 2015, the 1st defendant makes application for an order that I recuse myself from these proceedings with the consequential order that the 17 day trial of this case fixed to commence on 9 September 2015 be adjourned to a date to be fixed before another Judge of the High Court.
2. On 20 August 2015, by joint application of the parties, the trial dates were vacated and the trial was adjourned to a date to be fixed and accordingly the consequential order for an adjournment is no longer sought.
3. This application raises for consideration the important principles of the independence and impartiality of judicial officers. It is deeply rooted in the common law that the appearance of impartiality is essential for public confidence in the administration of justice. This is founded on the principle that justice should not only be done, but should manifestly and undoubtedly be seen to be done.[1] At the same token, it is equally important that judicial officers discharge their duty to hear and adjudicate cases and resist unjustified applications for their recusal by tactical or manipulative considerations.
4. The Appeal Committee of the Court of Final Appeal in Falcon Private Bank Ltd v Borry Bernard Edouard Charles Ltd (2014) 17 HKCFAR 281 addressed the issue by noting at paragraph 38:
“Judges must be wary of unjustified applications for their recusal motivated by tactical or forum-shopping considerations. By its very nature, it is generally in quite exceptional cases that recusal is called for. As Kwan JA noted, judges can generally be expected to exercise proper judicial standard even after they have found it necessary to criticize wayward legal representatives. Judges should accordingly feel confident of appellate support if they continue with the case where there are no reasonable grounds for apprehending a risk of bias. On the other hand, if there is a real possibility that a risk of bias might objectively be apprehended, this should be recognized and they should prudently arrange for a colleague take over the proceedings. To press on with hearing the matter in such cases poses a risk of costs being thrown away if, on appeal, it is held (as in the present case) that the judge should not have continued to hear the case. Even if there is a suspicion that forum shopping motivates an application, the fact and appearance of judicial impartiality must have priority and the prudent course should be followed where a real risk of apprehended bias exists.”
5. The present application is supported by two affirmations from the 1st defendant (dated 13 and 26 August 2015).[2] Both the 2nd and 3rd defendant confirmed that they would remain neutral in this application. The plaintiffs and the 5th and 6th defendants (by counterclaim) oppose the application and support their opposition by an affidavit from the 3rd plaintiff[3] and an affirmation from the 6th defendant[4] (both dated 31 August 2015).
Summary of legal principles
6. It is a fundamental rule of natural justice and an abiding value of our legal system that every litigant is entitled to an impartial and independent tribunal, free from bias. The rule against bias is directed to prejudgment incapable of being altered by evidence or argument.
7. When an application for recusal of a judge is made, it is a matter of whether the judge might not bring an impartial and independent mind to the resolution of the question that he or she is required to decide. A recusal application can be found on either actual bias or apparent bias.
8. The application in the present case is based on apparent bias. Where a recusal application is made on the grounds of apparent bias, the test to be applied is one of a “reasonable apprehension of bias”. The test has been expressed by the Appeal Committee of the Court of Final Appeal as follows:
“The court must first ascertain all the circumstances which have a bearing on the suggestion that the judge was biased. It must then ask whether those circumstances would lead a fair-minded and informed observer to conclude that there was a real possibility that the tribunal was biased.”[5]
9. The reasonable apprehension of bias test underwent some adjustment upon concern that the “reasonable likelihood” and “real danger” tests in R v Gough [1993] AC 646 which tended to emphasise the court’s view of the facts and to place inadequate emphasis on the public perception of the irregular incident. Lord Hope of Craighead in Porter v Magill [2002] 2 AC 357 articulated the test in the following way which emphasises the need to consider the relevant established facts. He said at 494H:
“The question is whether the fair-minded and informed observer, having considered the facts, would conclude that there was a real possibility that the tribunal was biased.”
10. Kwan JA in Falcon Private Bank Ltd v Borry Bernard Edouard Charles Ltd [2014] 3 HKLRD 375, at paragraph 51, articulated the test in terms of “…whether a reasonable, objective and informed person would on the correct facts reasonably apprehend that the judge had not brought or will not bring an impartial mind to bear on the adjudication of the case, that is, a mind open to persuasion by the evidence and the submissions of counsel…”.
11. The test looks at bias from the point of view of a fair-minded and well informed observer. The courts have provided guidance on how the fair-minded and informed observer should be conceived and it has been best explained by Lord Hope of Craighead in Helow v Secretary of State for the Home Department [2008] 1 WLR 2416 where he said:
“2. The observer who is fair-minded is the sort of person who always reserves judgment on every point until she has seen and fully understood both sides of the argument. She is not unduly sensitive or suspicious, as Kirby J observed in Johnson v Johnson (2000) 201 CLR 488, 509, para 53. The approach must not be confused with that of the person who has brought the complaint. The ‘real possibility’ test ensures that there is this measure of detachment. The assumptions that the complainer makes are not to be attributed to the observer unless they can be justified objectively. But she is not complacent either. She knows that fairness requires that a judge must be, and must be seen to be, unbiased. She knows that judges, like anybody else, have their weaknesses. She will not shrink from the conclusion, if it can be justified objectively, that things that they have said or done or associations that they have formed may make it difficult for them to judge the case before them impartially.
3. Then there is the attribute that the observer is ‘informed’. It makes the point that, before she takes a balanced approach to any information she is given, she will take the trouble to inform herself on all matters that are relevant. She is the sort of person who takes the trouble to read the text of an article as well as the headlines. She is able to put whatever she has read or seen into its overall social, political or geographical context. She is fair-minded, so she will appreciate that the context forms an important part of the material which she must consider before passing judgment.”
12. From this comprehensive description, we can glean that the fair-minded observer always reserves judgment on every point until she has seen and fully understood both sides of the argument. She is not unduly sensitive or suspicious, and her approach must not be confused with that of the person who has brought the complaint. The assumptions that the complainer makes are not to be attributed to the observer unless they can be justified objectively.[6]
13. On how a fair-minded observer would assess a situation, Kirby J in Johnson v Johnson (2000) 201 CLR 488 said at paragraph 53:
“… Such a person is not a lawyer (118). Yet neither is he or she a person wholly uninformed and uninstructed about the law in general or the issue to be decided (119). Being reasonable and fair-minded, the bystander, before making a decision important to the parties and the community, would ordinarily be taken to have sought to be informed on at least the most basic considerations relevant to arriving at a conclusion founded on a fair understanding of all the relevant circumstances. The bystander would be taken to know commonplace things, such as the fact that adjudicators sometimes say, or do, things that they might later wish they had not, without necessarily disqualifying themselves from continuing to exercise their powers (120). The bystander must also now be taken to have, at least in a very general way, some knowledge of the fact that an adjudicator may properly adopt reasonable efforts to confine proceedings within appropriate limits and to ensure that time is not wasted (121). The fictitious bystander will also be aware of the strong professional pressures on adjudicators (reinforced by the facilities of appeal and review) to uphold traditions of integrity and impartiality (122). Acting reasonably, the fictitious bystander would not reach a hasty conclusion based on the appearance evoked by an isolated episode of temper or remarks to the parties or their representatives, which was taken out of context (123). Finally, a reasonable member of the public is neither complacent nor unduly sensitive or suspicious (124).”
14. The fair-minded and well informed observer, as conceptualised by the courts and as employed in the reasonable apprehension of bias test, will have regard to all the relevant circumstances pertaining to the recusal application, as a statement or act exhibiting apparent bias may be displaced when considered in its full and proper context.
15. In deciding a recusal application, the court must first ascertain all the circumstances which have a bearing on the suggestion that the judge was biased, but this should cover more broadly all relevant circumstances, and then to ask whether the circumstances would lead a fair-minded and informed observer to conclude that there was a real possibility that the judge was biased. A recusal application is therefore to be objectively considered through the prism of an observer who is “fair-minded” and “informed”.[7]
16. It is incumbent upon judicial officers to be true to their oath of office to decide cases without fear, favour or self-interest or deceit.[8] To this end, judicial officers are required to discharge their professional duties unless disqualified by law.
17. Fairness dictates that a court should be actively involved in the management or control of proceedings in order to secure the just resolution of a dispute in accordance with the substantive rights of the parties.[9] To this end, a court is required to make decisions or give directions that may impact on the issues of the case and on the rights of the parties before the case is finally resolved but this will be done on the evidence and arguments then presented and will invariably involve the court making tentative or preliminary comments or findings about the case. However, this is understood to be necessary for the good management and just disposal of the proceedings and subject to final determination of the case when all the evidence and arguments have been presented. If this did not take place, the wheels of justice would come to a grinding halt.
18. In Helow,Lord Mance explained that the judicial oath was one factor to be taken into account when objectively assessing the risk of bias. He said:
“57. … In R v S (RD) [1997] 3SCR 484, L'Heureux-Dubé and McLachlin JJ identified the taking of the judicial oath as often the most significant occasion in the career of a judge (para 116), and said (para 117) that
“Courts have rightly recognised that there is a presumption that judges will carry out their oath of office … This is one of the reasons why the threshold for a successful allegation of perceived judicial bias is high. However, despite this high threshold, the presumption can be displaced with ‘cogent evidence’ that demonstrates that something the judge has done gives rise to a reasonable apprehension of bias.”
They went on to say, at para 119, that
“The requirement for neutrality does not require judges to discount the very life experiences that may so well qualify them to preside over disputes. It has been observed that the duty to be impartial ‘does not mean that a judge does not, or cannot bring to the bench many existing sympathies, antipathies or attitudes. There is no human being who is not the product of every social experience, every process of education, and every human contact with those with whom we share the planet. Indeed, even if it were possible, a judge free of this heritage of past experience would probably lack the very qualities of humanity required of a judge. Rather, the wisdom required of a judge is to recognise, consciously allow for, and perhaps to question, all the baggage of past attitudes and sympathies that fellow citizens are free to carry, untested, to the grave. True impartiality does not require that the judge have no sympathies or opinions; it requires that the judge nevertheless be free to entertain and act upon different points of view with an open mind’.”
So viewed, the judicial oath appears to me more a symbol than of itself a guarantee of the impartiality that any professional judge is by training and experience expected to practise and display. But on no view can it or a judge’s professional status and experience be more than one factor which a fair-minded observer would have in mind when forming his or her objective judgment as to the risk of bias.”
19. The Court of Appeal in Locobail (UK) v Bayfield Properties Ltd [2000] QB 451 discussed how a court should approach a recusal application by reference to various quoted comments from decisions of other jurisdictions. The Court explained that a judicial officer:
“21. … would be as wrong to yield to a tenuous or frivolous objection as he would to ignore an objection of substance. We find force in observations of the Constitutional Court of South Africa in President of the Republic of South Africa v. South African Rugby Football Union, 1999 (4) S.A. 147, 177, even though these observations were directed to the reasonable suspicion test:
“It follows from the foregoing that the correct approach to this application for the recusal of members of this court is objective and the onus of establishing it rests upon the applicant. The question is whether a reasonable, objective and informed person would on the correct facts reasonably apprehend that the judge has not or will not bring an impartial mind to bear on the adjudication of the case, that is a mind open to persuasion by the evidence and the submissions of counsel. The reasonableness of the apprehension must be assessed in the light of the oath of office taken by the judges to administer justice without fear or favour; and their ability to carry out that oath by reason of their training and experience. It must be assumed that they can disabuse their minds of any irrelevant personal beliefs or predispositions. They must take into account the fact that they have a duty to sit in any case in which they are not obliged to recuse themselves. At the same time, it must never be forgotten that an impartial judge is a fundamental prerequisite for a fair trial and a judicial officer should not hesitate to recuse herself or himself if there are reasonable grounds on the part of a litigant for apprehending that the judicial officer, for whatever reasons, was not or will not be impartial.”
22. We also find great persuasive force in three extracts from Australian authority. Mason J., sitting in the High Court of Australia, said in Inre J.R.L, Ex parte C.J.L. (1986) 161 C.L.R. 342, 352:
“Although it is important that justice must be seen to be done, it is equally important that judicial officers discharge their duty to sit and do not, by acceding too readily to suggestions of appearance of bias, encourage parties to believe that by seeking the disqualification of a judge, they will have their case tried by someone thought to be more likely to decide the case in their favour.”
23. In In re Ebner (1999) 161 A.L.R. 557, 568, para. 37, the Federal Court asked:
“Why is it to be assumed that the confidence of fair-minded people in the administration of justice would be shaken by the existence of a direct pecuniary interest of no tangible value, but not by the waste of resources and the delays brought about by setting aside a judgment on the ground that the judge is disqualified for having such an interest?”
24. In the Clenae case [1999] V.S.C.A. 35 Callaway J.A. observed, at paragraph 89(e):
“As a general rule, it is the duty of a judicial officer to hear and determine the cases allocated to him or her by his or her head of jurisdiction. Subject to certain limited exceptions, a judge or magistrate should not accede to an unfounded disqualification application.” ”
20. The importance of the appearance of justice being seen to be done cannot be overstated, but there is a strong need for courts to apply realistic criteria in considering whether a reasonable apprehension of bias has been established.
21. In the present case, in addressing this application, it will be necessary to take into account the history of the proceedings and what has been said and done in the course of the proceedings and any other matter relevant to the grounds for recusal when answering the question from the perspective of a fair-minded and informed observer.
Waiver
22. A relevant legal principle in this case is the issue of waiver of a possible objection on grounds of bias. As explained by Lord Browne-Wilkinson in R v Bow Street Magistrate, ex parte Pinochet (No 2) [2000] 1 AC 119, at 137, the basic principle is that a waiver can only run on the basis that the party has acted freely and in full knowledge of the facts.
23. Lord Bingham of Cornhill in Millar v Dickson [2002] 1 WLR 1615 explained that for a waiver to be valid, it must be a voluntary, informed and unequivocal election by a party not to raise an objection which it is open to that party to claim or raise. He observed:
“31. In most litigious situations the expression “waiver” is used to describe a voluntary, informed and unequivocal election by a party not to claim a right or raise an objection which it is open to that party to claim or raise. In the context of entitlement to a fair hearing by an independent and impartial tribunal, such is in my opinion the meaning to be given to the expression. …”
24. A waiver may be implied. Leaving a recusal application to the last minute after a decision has gone against a party or for some tactical considerations have been strongly deprecated by the courts. In Amjad v Steadman-Byrne [2007] 1 WLR 2484, Sedley LJ said:
“17. … We would, however, stress that the time to draw the attention of a tribunal to a clear manifestation of bias on its part is ordinarily when it occurs. There is no reason why a judge to whom it is courteously pointed out that he or she may have overstepped the mark should not accept that it may be so and stand down. Equally, however, it is only in a clear case that an advocate can responsibly take this course and a judge accede to it, both because such applications have been known to be made opportunistically and because of the expense that a recusal will inevitably throw upon one or both parties, neither of whom will ordinarily be to blame for what has happened. The law of waiver is not simple, but appellate and reviewing courts tend not to look favourably on complaints of vitiating bias made only after the complainant has taken his chance on the outcome and found it unwelcome. …”
25. In JSC BTA Bank v Ablyazov [2013] 1 WLR 1845 an applicant objected to the judge conducting the trial on the grounds that the judge had earlier found him guilty of contempt arising from a freezing order in the same proceedings. The judge found him guilty of contempt in February 2012 and the application for the judge’s recusal was made in October 2012 at the eve of the trial. The Court of Appeal found that the applicant had waived his objection on grounds of apparent bias because of the delay in making the application until the eve of the trial. Rix LJ concluded:
“89. … In the present case, there was no mere silence, but participation in proceedings before a judge whom it was known, on Mr Ablyazov’s own case, had conducted himself in such a way as to give rise to the appearance of bias. Moreover, there was a duty to speak, arising out of Mr Ablyazov’s duty to help the court to further the overriding objective in CPR r 1.3. It was contrary to that duty to allow the court and the other parties to waste time and resources in preparing for a trial which, if the judge of trial had to be replaced, could not start on the fixed date, but would have to be adjourned, in all probability into the following year with uncertainty as to when it could be re-fixed. …”
26. The lateness of the application and the absence of any explanation for the delay were found conclusive in view of the fact that the applicant was aware of all the material facts, including that the judge was the designated trial judge when he found him guilty of contempt. Where a judge declares some connection with the case or with the parties which he considers not to be a bar to him trying the case, a failure to raise an objection at that time may amount to a waiver unless further material facts emerge later on.
27. The vital requirements for a waiver as stated by Lord Phillips CJ in Smith v Kvaerner Cementation Foundations Ltd [2007] 1 WLR 370 at paragraph 29 are “that the party waivering should be aware of all the material facts, of the consequences of the choice open to them, and given a fair opportunity to reach an unpressured decision.”
Case summary
28. This case concerns a dispute between a group of investors of a highly successful restaurant and bar operating in Singapore. The controlling company of the business is Kudeta Limited which is a company incorporated in the British Virgin Islands. I will refer to it as KDT BVI.
29. Put briefly, the plaintiffs allege that the 1st defendant through his nominee, the 2nd defendant (the sole shareholder and director of the 3rd defendant which holds an interest in KDT BVI), has misappropriated and misapplied funds belonging to the business and has sought to prejudice the contractual relations with L Capital, the new majority investor of 51% of the controlling company of the business. The plaintiffs claim that they beneficially own a 75.3% stake in the 3rd defendant and the 1st and 3rd plaintiffs are entitled to a two-thirds share of the monies held by the 3rd defendant.
30. The L Capital acquisition took place on 30 January 2014 and it was intended that at the time the 1st defendant would relinquish managerial or corporate responsibilities in the business. L Capital paid on that day a total consideration of SGD38,100,537.89 for a 40.1% stake in KDT BVI in two tranches of SGD11,984,782.89 (which was transferred to the bank account of the 3rd defendant to the original claim) and SGD26,115,755 (which was transferred to the bank account of the 5th defendant to the counterclaim).
31. What is uncertain and in issue in this case is the percentage interest held by the various investors in the business (through the 3rd defendant to the original claim or 5th defendant to the counterclaim) and whether there was an agreement to buy out the 1st defendant as he has claimed.
32. A part payment for the acquisition from L Capital of SGD 16,675,880 was arranged to be transferred to a Hong Kong bank account of the 3rd defendant. The plaintiffs claim that they learnt of the misappropriation and misapplication of funds as a result of a due diligence appraisal of the accounts for the L Capital acquisition and on 29 January 2014 they made an urgent ex parte application for a freezing injunction on the amount of the funds to be transferred against the 1st, 2nd and 3rd defendants. I granted the injunction.
33. There followed a series of applications relating to the injunction order and related matters. Over this period of nearly a year and a half, I have heard 14 applications including the present application and have delivered 11 written judgments or decisions. At no time during this period, has the 1st defendant appealed any of my decisions to the Court of Appeal or made an application for my recusal.
34. The 1st defendant also issued in early 2015 a counterclaim against the plaintiffs and the rest of the investors on the grounds that at the time of the L Capital acquisition he held 35.5% of KDT BVI and it was agreed that he would be paid SGD33,732,539.50 for his stake.
35. At the commencement of the proceedings in March 2014, I found out that my brother, who is a solicitor in Australia, acted for the 3rd plaintiff, or so I believed. It turned out he acted for the 3rd plaintiff’s brother. In any event, I immediately notified the parties of the matter and invited them to raise any objection to me hearing various applications that had been made by that stage.
36. At a later date in March, 2015, the case was assigned to me as the trial judge. When the matter came before me later that month, I inquired if there was any application concerning my handling the trial and none was made, in particular by the 1st defendant.
37. In the lead up to the trial, I dealt with various applications for discovery of certain documents and materials as well as a renewed application for a mandatory injunction which included removing the 1st defendant from the board of directors of the controlling company, KDT BVI. It had been the subject of previous applications which I had refused but I granted the application on the information and material then presented which included representations from L Capital supporting the complaints made by the plaintiffs about the 1st defendant’s conduct.
38. Just prior to the trial that was fixed for 9 September 2015, the 1st defendant terminated the services of his lawyers and indicated he would represent himself. At a case management conference for the trial on Saturday, 8 August 2015, he claimed he was impecunious and that was why he had not commissioned the services of a forensic accountant which he wanted to do. In consequence, I granted him time to address a number of matters for the trial including the commissioning of a forensic accountant.
39. The very next day on Sunday, 9 August 2015, he commissioned Howse Williams Bowers to make the recusal application. No notice had been given to the Court or to the parties of the application. On 14 August 2015, the relevant papers were filed for the recusal application together with a detailed affirmation from the 1st defendant dated 13 August 2015. I note that Howse Williams had previously acted for the 1st defendant from 4 to 22 May 2015 when the 1st defendant filed his 11th affirmation.
40. The grounds for recusal can be broadly described as follows: my brother’s professional relationship with the 3rd plaintiff’s brother and his personal relationship with the 3rd plaintiff; most of my decisions in these proceedings had been against the defendants and I have made my mind up upon issues to be tried in favour of the plaintiffs; and I have made subjective, unfair and disparaging comments about the 1st defendant.
Case history
41. There is a long history to this case which I need to go into in some detail in order to address the 1st defendant’s recusal application.
42. This case came before me on 29 January 2014 when the plaintiffs made an urgent ex parte application for an injunction to freeze funds that were in the process of being transferred from Singapore into a bank account in Hong Kong in the name of the 3rd defendant. The amount of money claimed to be involved was then SGD 16,075,880. It was alleged at that stage that the 1st defendant had misappropriated and misapplied funds belonging to the corporate business that the plaintiffs together with the 1st defendant operated in Singapore.
43. After a lengthy hearing, I granted the injunction to freeze a sum equivalent to the claimed amount of the transferred funds against the 1st, 2nd and 3rd defendant respectively with a return date fixed for 14 February 2014. I also ordered that the plaintiffs provide a bank guarantee in favour of the defendants in the sum of USD1,000,000.
44. On the return date of the injunction, the defendants were legally represented at a hearing before Mr Justice L Chan who, without objection by the defendants, ordered that the injunction continued until further order.
45. By summons dated 13 March 2014 the defendants made application to discharge the injunction and the plaintiffs made various applications by way of summons, one of which was fixed to be heard by Mr Justice Suffiad. At the request of the parties, the various applications were agreed to be heard together and before me. The hearing of the various applications was fixed for 25 March 2014.
46. After the hearing, I learnt and believed at the time that my brother, who is a solicitor in Melbourne, Australia, acted for one of the plaintiffs, the 3rd plaintiff. I was wrong in that impression because I was later informed that my brother acted for the brother of the 3rd plaintiff.
47. When I learnt this, I immediately on 17 March 2014, through my clerk, informed the legal representatives of the parties of what I believed to be the situation in relation to my brother and the 3rd plaintiff. The letter from my clerk read:
“I am directed by the Hon. Mr Justice Zervos to inform the parties that it has come to His Lordship’s attention that his brother, Mr. Nicolas Zervos, a solicitor, practising in Melbourne, Australia, has acted for the 3rd plaintiff. His Lordship is unaware of any other details.
His Lordship is bringing this matter to the parties’ attention in the event they may wish to raise objection to His Lordship continuing to deal with this matter.”[10]
48. It was in response to this letter that the solicitors for the plaintiffs informed the Court and the parties that my brother in fact acted for the brother of the 3rd plaintiff.[11]
49. At the hearing on 18 March 2013, both the plaintiffs and the defendants were represented by senior counsel. The contents of the solicitors’ letter were raised at the hearing. As I indicated, I did not know any details of the dealings between my brother and the 3rd plaintiff’s brother as seen by my misunderstanding that my brother acted for the 3rd plaintiff. As I had also indicated, I had made no inquiry about the matter.
50. At the hearing, I asked if any of the parties had objection to me continuing to deal with the matter. No objection was raised. In fact, senior counsel for the 1st defendant expressly declined to raise an objection in my continuing to deal with the matter.
51. Bearing in mind I brought this matter to the attention of the parties at the outset of these proceedings, it is worth noting the remarks of Lord Hope of Craighead in Davidson v Scottish Ministers (No 2) [2005] 1 SC (HL) 7 where he said at paragraph 54:
“But the best safeguard against a challenge after the event, when the decision is known to be adverse to the litigant, lies in the opportunity of making a disclosure before the hearing starts. That is the proper time for testing the tribunal’s impartiality. Fairness requires that quality of impartiality is there from the beginning, and a proper disclosure at the beginning is in itself a badge of impartiality.”
52. I heard an urgent application for further injunctive relief on 25 and 26 March 2014 where at the conclusion I granted the order sought by the plaintiffs. I handed down lengthy reasons for my judgment on 1 April 2014.[12] There was no appeal against my judgment.
53. On 30 April and 2, 7 and 9 May 2014, I dealt with various applications from the parties, which included the defendants’ application to discharge the injunction order, and the plaintiffs’ applications for summary judgment against the 2nd defendant and for further injunction orders. I handed down my judgment on 11 July 2014.[13] I discharged the injunction order of 29 January 2014 but regranted it on a limited basis freezing only the funds and the property of the 3rd defendant but lifting the previous freezing orders against the 1st and 2nd defendant. I also ordered that the injunction order of 26 March 2014 remained and continued until further order. The application by the plaintiffs for further injunctive relief was refused as was an application for summary judgment.
54. I indicated in the body of my judgment that there was a serious matter concerning the 1st defendant’s evidence before the Singapore High Court on 10 and 12 August 2013 and that I was minded to refer the papers to the Attorney General of Singapore. I said that I would allow the 1st defendant to make any written submission on this matter within 7 days from the date of the judgment. I also observed that the 2nd defendant, as far as I could ascertain, was acting on the instructions of the 1st defendant and that consideration should be given to her obtaining separate legal representation to avoid any potential conflict of interest.
55. This is what I said in my judgment in the section entitled “The issues in these proceedings”:[14]
“45. The issues between the parties boil down to whether Au has misappropriated and misused funds of the business and failed to account or distribute the profits or entitlements to the relevant persons or entities as claimed by the plaintiffs and whether the plaintiffs have breached an agreement to buy out Au’s interest and have used these proceedings to cheat him out of his actual interest in Kudeta BVI as claimed by the defendants. This acrimonious dispute could have serious consequences to the interests of the parties in this very successful business and to the business itself and the controlling interest of L Capital. This is a feature of the case I have kept firmly in mind when deciding the appropriateness of invoking protective measures and the nature of them during the course of this litigation.
46. When this matter first came before me for the injunction order, the concern of the plaintiffs, in particular Patel were the revelations from a report prepared by Price Waterhouse Coopers (PwC), which had only been received by him on 20 January 2014 of unpaid dividends and of the entitlements of the plaintiffs in accordance with their beneficial interests in the Kudeta business. A sum of SGD 16,075,880 was claimed to be involved. The plaintiffs were concerned about the payment of SGD 11,800,000 which was due to be paid by L Capital to Retribution in a bank account held in Hong Kong.
47. The freezing order was sought in relation to each of the defendants in the sum of SGD 16,075,880 and with particular reference to the funds to be transferred into Retribution’s Hong Kong bank account. Patel in his affirmation describes the difficulty that he and other shareholders and investors had in getting Au to account as to the financial affairs and situation of the business and the PwC report confirmed their concerns. The writ of summons claimed that the defendants, in particular Au, had misappropriated or misapplied monies or property of the plaintiffs and had received secret profits while acting as an agent and/or constructive trustee of the plaintiffs. The plaintiffs sought, amongst other things, a declaration to enable them to trace their property with the defendants and that the defendants restore to them the value of the property they had received. The plaintiffs in their written and oral submissions sought ancillary disclosure orders together with the freezing order.
48. Mr Sussex for the defendants argues that the plaintiffs did not fulfil their duty of full and frank disclosure in various respects and that is the subject, which I will address later, of the defendants’ application to discharge the injunction order. I should point out that from the material before me, it was evident that the plaintiffs were concerned about Au’s lack of accountability to them about the affairs and financial situation of the business. There were frequent emails between the partners and Au that reflected tension between them and concern over Au’s running of the business. It seems Au was not enthusiastic about the L Capital acquisition, and he had indicated as early as the first proposed transaction that he would resign his position as the CEO of the Kudeta SG. It was argued by Mr Chua, for the plaintiffs, that Au was on his way out and the interest to be held by the parties in the business was reflected by the L Capital acquisition agreements and related documents. The partners had a 49% stake in Kudeta BVI held by Retribution to be apportioned on the basis of 2% to Chondros, 10.1% to Au and Todd, 5.7% to Cohen and 31.2% to Patel, Apostolides and YKC. The issue from Au’s point of view is that his interest had been reduced and that he was to be paid for his interest from the proceeds of the L Capital acquisition. I note that there is an inconsistency with the defendants’ case in that it is claimed that the e-mail of 26 December 2013 evidenced an agreement to buy out Au’s 35.5% share, but the L Capital agreements have him retain a 10.1% interest with Todd. The plaintiffs argue that this reflected Au’s actual interest in Kudeta BVI and this was confirmed by him in the execution of the L Capital agreements and related documents.
49. I am of the view that the plaintiffs were concerned about the financial situation with their investment in Kudeta BVI and the conduct of Au who seems to have unhindered control of the corporate structure and business. Even though Ho was the director and shareholder of Retribution and a nominee for the beneficial interests of Patel, Apostolides and Au, she was as far as I can ascertain the alter ego of Au and did whatever she was instructed to do by him. The plaintiffs have a legitimate complaint in this regard.
50. I can understand the degree of frustration the plaintiffs were experiencing in their dealings with Au who was controlling the affairs of the business through his manipulation of Ho. I also note that Au is claimed to be a qualified lawyer and yet in proceedings before the Singapore High Court on 14 and 15 August 2012, he gave evidence on oath that was false by claiming he had no interest in Retribution and the Kudeta business. I will address this matter later in my judgment. It was a matter that was highlighted before me when the injunction order was sought. It was also a matter that I specifically addressed in my judgment of 1 April 2014 but I have received no response to it. As far as I am concerned, it is a very serious matter and on the material before me he gave false evidence to a court and on the very issue that is the subject of these proceedings.
51. A matter I have borne in mind when considering the applications is that the plaintiffs by these proceedings were responding to a report that had just been brought to their attention which confirmed their concerns about the financial affairs of the business. This was later further addressed in more detail in a report from Deloitte in which questionable transactions and transfers were identified. It seems to me that the plaintiffs were responding to issues as they were unfolding and this was taking place during the course of the proceedings. Where appropriately, I have taken this into account, when considering the criticisms levelled against them by the defendants for their conduct of these proceedings.
52. Mr Sussex points out that there has been material non-disclosure and misrepresentation of matters by the plaintiffs in the application for the injunction order. He points to the incorrect quantification of the unpaid dividends, which he says were exaggerated, the lack of entitlement by the plaintiffs of dividends as a matter of law and the interests held by parties in Kudeta BVI and the cashing out agreement with Au. I should note that the defendants’ arguments as to the legal status of the dividends are extraordinary, given that the failure to adhere to the legal requirements was entirely due to Au and Ho. In any event, the plaintiffs understood that the payments were dividends because that is how Au referred to them. The plaintiffs are also claiming their entitlements from the profits of the business. I should also note that the plaintiffs claim was mounted on allegations of misappropriation and misapplication of the funds of the business and the unfettered control Au had, through the compliance of Ho, over those funds. The injunction order froze the funds that had been transferred into Retribution’s bank account in Hong Kong. On the one hand, Au claims that these funds were payment to him for cashing out his interest in the business, and on the other hand, the plaintiffs claim there was no such agreement and the funds remain the property of the business. That in essence is the impasse between the parties which will be ultimately resolved after full trial. This in my view is a strong reason why the funds received by Retribution should remain frozen.
53. After the grant of the injunction order there were a series of inter partes hearings where on 18 March 2014 the plaintiffs sought an additional injunctive order which I refused as Ho had given an undertaking to the court not to do anything to deal with or diminish the value of the shares in Kudeta BVI held by Retribution, and on 26 March 2014 where I granted the additional injunctive order for the reasons I set out in my judgment of 1 April 2014.
54. Mr Sussex took issue with the court on granting the injunction as he argued that it was a mandatory injunction which required the defendants to do specified acts and therefore the court had to be satisfied that there was a high degree of assurance of the plaintiffs’ chances of establishing their claim. The authorities in addition provide that the court should take a practical and realistic view of the situation to which the injunction will apply and ensure that the protective measures it contains are both necessary and appropriate to meet the ends of justice. The concern I have is that this litigation has inflamed an acrimonious dispute between the parties which could have a damaging effect on the interests of the current investors and the business. I find on the material before me that there is a good arguable case for the claim by the plaintiffs against the defendants in relation to the misappropriation and misapplication of funds of the business and Ho’s breach of fiduciary duties as trustee. I note that Au has ceased his operational involvement in the business. I also find, from my assessment of the material before me, that Au is a person of low commercial morality as evidenced by his false evidence on oath before the Singapore High Court and the use he made of others for his own ends, as evidenced by his control over Ho, in his commercial dealings and conduct.
55. It is acknowledged by the defendants that the court plainly cannot resolve the issues between the parties at this stage on the basis of affidavits but that is not the only limitation. The court has been inundated with numerous applications and voluminous material coupled with allegations and counter-allegations between the parties at pre-trial stage in order to deal with interlocutory relief. I should add that the submissions before me were inordinately lengthy dealing with a range of matters and issues most of which did not appropriately focus on the main issues and some of which were irrelevant or unnecessary.”
56. I have set out a substantial part of my judgment because the 1st defendant complains about the decision and that I made disparaging comments about him where I made a finding that he was a person of low commercial morality and that the 2nd defendant was his alter ego. It is important to consider these matters in the context of my judgment.
57. At this stage of the proceedings, I had before me numerous affidavits or affirmations and a large quantity of materials, and the parties had over many days of hearing canvassed and carefully scrutinised many issues and matters pertaining to the case. So extensive were the materials and arguments that it was acknowledged the case had been comprehensively examined and should proceed to a speedy trial. I accordingly made such an order on 15 July 2014.
58. As a result of discharging the original injunction, there was an application by the defendants to seek an inquiry as to damages. It was set down for hearing for 1 August 2014 as directed by me on 23 July 2014. It was in the course of that hearing that it is claimed I made disparaging remarks about the 1st defendant in relation to fabricating evidence. This was not the case as seen by the following material.
59. A fundamental requirement for an inquiry as to damages is that relevant evidence be filed with the Court to support the claim. No such evidence was filed with the Court and on the hearing day attempts were made to adjourn the proceedings. This brought about the exchange with counsel that has been relied upon by the 1st defendant. The extract that has been quoted does not reflect a full picture as to what happened and reading of the transcript and the judgment reveals that I was concerned that no evidence had been filed to support the application as required by the law and that the application was without merit. The following extract of the transcript may provide a fuller picture as to what took place:
“COURT: All right, but it doesn’t change the fact that the 1st and 2nd defendants initiated this application, and today we were going to deal with it. And you filed a skeleton argument, obviously having instructions and in preparation of today’s hearing, and what is obvious about that skeleton, what is clearly apparent is that it’s totally deficient in relation to any credible evidence, or any evidence at all, to support a claim of loss on the part of the 1st and 2nd defendants. And given the knowledge I have of this case, I’d be curious to know what that loss is.
MS LAU: Can I just have one moment to take instructions. I just wanted to check that I could disclose it to your Lordship. We were actually -- those instructing me were taking instructions on the specific instances of loss and they were preparing an affidavit. And so I was actually...
COURT: And when were they going to file that, what, next week sometime after the hearing?
MS LAU: Well, certainly, I have been given to understand that that would have been filed before this morning, but then that was rather derailed, I’m afraid.
COURT: Well, it’s going to be filed today, not prior to but filed on the day. You made this application, you’ve had plenty of time. I handed down my judgment on 11 July. Almost immediately those instructing you sought to pursue an issue in relation to damages or loss arising from the discharge of the injunction order.
MS LAU: I can’t sort of bring in any more new points, I’m sorry.
COURT: No, I know you can’t, I know you can’t and I know why you can’t. I seems to me, and it’s quite apparent, that there’s very little information or material that you have to support this. Otherwise it would be in front of me, it would be here, I’d have it.
MS LAU: Which is why we ask for your Lordship for this indulgence to have opportunity to put it in.
COURT: Why, what, to create it?
MS LAU: No, certainly not.
COURT: Well, where is it?
MS LAU: Certainly not.
COURT: Where is it? You can’t even articulate it today.
MS LAU: I don’t have complete instructions on it, I apologise. But I am asking for your Lordship’s indulgence to have that chance to put that in properly for your Lordship to determine based on the evidence. If there really is none, as your Lordship suspects, if there really is none then obviously there will be that.
COURT: Well, I mean, I’ve got no alternative but to think that at the moment because nothing’s been put before me, and that’s quite clear. ...
…
COURT: … and it’s quite apparent that an application of this type needs to be supported by credible evidence as to loss.
MS LAU: And we are endeavouring to put that here. I’m taking instructions. And those will be my submissions, my Lord.
COURT: All right, let me take some time to read the correspondence and I’ll come back. I’ll inform you very shortly.
MS LAU: I’m very grateful.[15]
(Short break)
COURT: … I’m just going to indicate to you what I want to do about this matter. I just want to set out some facts in relation to it, and we’ll see where we go from there.
But as you all know, I handed down judgment in this case on 11 July this year, and in it I made the decision to discharge the original injunction that was granted on 29 January this year. But at the same time, I re-granted the injunction in a restrictive form against the 3rd defendant, but it also imposed restrictions on the 1st and 2nd defendants.
It should be borne in mind that in the meantime I had granted a second injunction order on 26 March of this year, and in it were a list of restrictions in relation to 1st and 2nd defendants with respect to the 3rd defendant and also the interest that the 3rd defendant held in Kudeta BVI.
Now, when I handed down my judgment I immediately received from Herbert Smith Freehills a draft re-grant injunction order which set out as one of the orders an inquiry as to damages. The date of that document was 11 July of this year, so it was clearly in contemplation.
As of that date that the 1st and 2nd defendants would pursue an application, or were contemplating to do so, for an inquiry as to damages as a result of the discharge order with regards to the original injunction order.
Now, as a result of that I then issued directions by way of a letter to the parties on 23 July of this year addressing specifically the application of the 1st and 2nd defendants for an inquiry as to damages. I set down today at 10 am, 1 August this year, to be the hearing of that application. I also gave further directions as to the filing and serving of written submissions. The 1st and 2nd defendants were to file and serve written submissions by 12 pm on 28 July 2014, and the plaintiffs were to file and serve written submissions by 12 pm on 30 July 2014.
It was then on 30 July 2014 that I note that there were appropriate documents filed for change of solicitors with respect to the 2nd defendant, and the new firm of solicitors, Smyth & Co have probably filed the necessary papers with the court to reflect the fact that the 2nd defendant had new solicitors acting for her.
However, in the meantime, there was a written submission received on behalf of the 1st and 2nd defendants in accordance with the directions that I had given setting out the basis of the application for an inquiry as to damages.
So it is clear, in my mind, at that stage the legal representatives for the 1st and 2nd defendant had appropriately taken instructions and prepared a case in response to the application that they were making. However, as is apparent from the discussion that has taken place today, that submission was deficient in a critical matter.
It did not provide or set out credible evidence as to any loss that may have been sustained by the 1st or the 2nd defendants. This was a point that was made in the written submissions of the plaintiff - and I must say well made. So there is at the moment a concern on my part that the application lacks substance.
I received a copy of correspondence that had been exchanged yesterday between the parties. It commenced with a letter from Herbert Smith Freehills dated 31 July 2014 in which they seek from the solicitors for the plaintiffs, Robertsons, their consent to adjourn today’s hearing. They list a number of proposed orders in relation to conduct of the application, and the orders that they list go into some detail and also seem to be prolonging these proceedings and creating what I would consider satellite proceedings to the main issue by the extent and depth of the orders that they are seeking.
The response by Robertsons was that they did not think the proposed orders as suggested were appropriate, and quite rightly make the point of the impact that this would have on the trial that is hopefully going to come on soon given the order that I have made for a speedy hearing.
At the end of all of this I am left with concern, as I have expressed, as to whether there is any substance to this application. So what I propose to do, and before I decide whether to adjourn the matter or whether to proceed with the matter, or whatever other manner in which it can be dealt with, I am going to allow the 1st and 2nd defendants to obtain necessary instructions and come back to me today, or work out an appropriate time, so as to be able to present some justification or substance to a claim as being asserted on behalf of the 1st and 2nd defendants.
And I must say, so far from what I have been told, is alarming and worrying, because it seems that the legal representatives for the 1st and 2nd defendants have not either bothered to get instructions, or do not have instructions to support this application with credible evidence.
So, I want to be convinced that there is some credible evidence that can be put before the court before I decide what to do next, and I will give you that opportunity. But I want to put on the record, as I am sure the transcript will show, that in response to queries that I have made with both counsel with respect to the 1st and 2nd defendants, I have been struck by the fact that they have very little information or material to support a claim of loss having been incurred by the two defendants.
The suggestion that the 2nd defendant’s claim is in terms of mental loss is not only novel but extraordinary, especially given the history of this case and also the role and function that she has performed in this case.
So, that is where we are at. Now, I am going to give you some reasonable time to get instructions and come back to me and make a submission.
MS LAU: I’m grateful.”[16]
60. I handed down my decision on an inquiry as to damages on 4 August 2014 where I made no order for an inquiry.[17]
61. I had also received written submissions on 18 July 2014 in relation to the possible referral to the Attorney General in Singapore of the 1st defendant’s evidence. On 5 August 2014, I handed down my written decision to refer the matter to the Attorney General in Singapore.[18] I set out the relevant material and gave reasons for the referral.
62. There was a question of costs in relation to the previous applications which was addressed by written submissions dated 25 July and 1 August 2014. I handed down my written decision on 6 August 2014 where I made an order that costs be in the cause.[19]
63. This was in effect the last involvement I had in the case until it was later assigned to me as the trial judge.
64. Previously on 15 July 2014, upon a joint application of the solicitors for the plaintiffs and the defendants, I made a consent order in relation to a range of matters including a speedy trial of the action with a time estimate of 15 days and a case management conference hearing fixed before 31 March 2015.
65. A case management conference summons for this action was fixed before Registrar KW Lung on 2 March 2015. The parties completed and filed the Listing Questionnaire and the Certificate giving time estimate for trial. From the papers, it appears that at the hearing Registrar KW Lung observed that I would be the most appropriate judge to deal with the trial and further carriage of the proceedings pursuant to the docket system in accordance with Practice Direction 5.7.
66. Both the solicitors for the plaintiffs to the original claim, Robertsons, and the solicitors for the 5th and 6th defendants to the counterclaim, Reed Smith Richards Butler, by letters dated 3 and 4 March 2015 respectively to the Registrar agreed with his observation that I be assigned as the trial judge because of my familiarity with and involvement in the case.[20] The then solicitors for the 1st defendant, Eversheds, also submitted two letters dated 2 and 4 March 2015 to the Registrar.[21] The first letter set out a number of matters and requested that various summonses be heard by a judge who was able to accommodate a speedy trial of 15 days duration. In the second letter, the solicitors for the 1st defendant referred to the letters of the other parties and asked that any decision by, Mr Justice Poon, the Listing Judge (Civil), be withheld until they submitted a reply to them.
67. The clerk to Mr Justice Poon informed the parties by letter dated 5 March 2015 that His Lordship had on 3 March 2015 approved the application made under Practice Direction 5.7 for the assignment of a trial judge to the action.[22] It was also noted that pursuant to the direction of the Chief Judge of the High Court made on 4 March 2015, I was assigned as the trial judge of the action.
68. Eversheds then submitted a further letter dated 6 March 2015 to the Registrar and to the clerk of Mr Justice Poon which contained the following:
“…
4. On the proposal by Messrs. Robertsons and Messrs. Reed Smith Richards Butler in assigning Mr. Justice Zervos as Trial Judge, our client has the following observations:
a) On 17 March 2014, one day before the injunction (directions) hearing on 18 March 2014, Mr. Justice Zervos (who made the original ex parte injunction order on 29 January 2014) raised a possible conflict issue to the parties that his Lordship's brother has acted for the 3rd Plaintiff and his Lordship was unaware of other details by issuing a letter (attached) to the parties. At the injunction hearing on 18 March 2014, the parties were asked to confirm if they had any objection to his Lordship in hearing the case. Due to (a) the fact that the application was an interlocutory in nature; and (b) the urgency of the matter, namely the injunction freezing S$16 million (being most of our client's assets), our client did not wish to incur any delays in attempting to discharge the injunction, our client felt that he had no choice but to proceed with the discharge application as soon as possible. We are instructed that our client on hindsight considers that he was given very little time (attached letter received at around 5pm on 17 March 2014, when the hearing took place the following morning) to consider this Issue and did not know (and still does not know) the full extent of the relationship between his Lordship's brother and the 3rd Plaintiff and when his Lordship became aware of the potential conflict.
b) Our client does not know the extent of the relationship between his Lordship's brother and the 3rd Plaintiff after 18 March 2014 or at present but is concerned if there are any potential conflicts.
5. We submit that it would be prudent and desirable to avoid any potential conflicts.
6. Kindly pass this letter before The Honourable Mr. Justice Poon (Listing Judge) and The Honourable Mr. Justice Cheung (Chief Judge) for their consideration.”[23]
69. It is appropriate to note that there was no complaint about my decisions prior to this date or about the findings or comments I had made in them. However, the grounds in support of the recusal application rely predominantly on such matters. The solicitors for the 1st defendant only raised the issue that my brother had acted for the 3rd plaintiff, which was not the case as it had been explained that he had acted for the 3rd plaintiff’s brother, and to which the 1st defendant through his leading counsel on 18 March 2014 raised no objection to my hearing of the applications then before me.
70. The solicitors to the plaintiffs made a reply to this letter dated 9 March 2015.
71. The letters were placed before the Chief Judge of the High Court and Mr Justice Poon in his capacity as Listing Judge (Civil) for consideration. On 10 March 2015, Mr Justice Poon made the following direction:
“If there is any recusal application, it should be made before the Hon. Mr Justice Zervos.”[24]
72. I was not aware of this matter or the correspondence in relation to it. All I knew was that I was assigned as the trial judge.
73. The case management conference that had been previously fixed for 31 March 2015, came before me with Mr William Leung of Eversheds appearing for the 1st defendant. It appears that Mr William Leung later joined the 1st defendant’s present solicitors firm, Howse Williams Bowers.[25] In the course of addressing the pre-trial issues, I queried whether there would be any application in relation to me being the trial judge. No application was made. The follow exchange took place:
“MR LEUNG: … Now, my Lord, this hearing was fixed prior to this matter being assigned back to your Lordship and that’s why it was before a master.
Obviously, now with your Lordship on board we are more than happy to have you hear this application and I believe that the plaintiffs would have no objection to this. But I think the next issue is whether when your Lordship will be available. I think from some enquiries made by our side which was reported to all parties, that your Lordship might be available on 20 or 23 April to hear this matter, which is reserved for three hours. I would invite your Lordship to direct that this matter be heard before your good self.
COURT: Yes. Well, I’ve already indicated that I’ll be dealing with all these matters seeing I’m going to be the trial judge, and I take it there will be no application in relation to me being the trial judge?
MR LEUNG: My Lord, I have no instructions to make any application.
COURT: I want to get that cleared and confirmed as soon as possible. I mean, if there is going to be an application I need to know about it and it needs to be made now rather than later.
MR LEUNG: Yes, my Lord. No application ‑‑ I have no instructions to make any application at present, my Lord. If your Lordship would want…
COURT: It’s just that I have given decisions and I have addressed matters and it would not surprise if an application was made. Whether or not it would be granted is another issue. But I can understand an application being made.
MR LEUNG: Yes. Thank you for that indication.
COURT: So it’s an issue as to whether or not that’s going to take place from whichever party that feels that they need to make such an application, given what’s transpired and given the decisions that I’ve made.
MR LEUNG: Yes. That’s well noted, my Lord. …”[26]
74. On 23 and 24 April 2015, I heard two applications for specific discovery as well as directions for an application for an injunction order. I handed down a written decision on 27 April 2015 in relation to these matters.[27] I also handed down a written decision on 6 July 2015 in relation to the question of costs for the discovery applications.[28]
75. There followed an application on 27 June 2015 by the 3rd defendant to the original action to vary the injunction order dated 11 July 2014 for the release of funds, which appeared to be for the payment of legal fees. I refused the application by written decision dated 7 July 2015.[29]
76. There was a subsequent application for leave to appeal against my decision which was heard on 31 July 2015 and I refused application in a written decision on 6 August 2015. The 3rd defendant took the matter on appeal to the Court of Appeal. On 19 August 2015, the Court of Appeal dismissed the 3rd defendant’s application for leave to appeal on reasons the same or similar to the reasons I had given in refusing the application. In fact, the Court of Appeal’s comments were far more strident in concluding the application was “wholly without merit”, “not made in good faith” and “smacks of a collateral strategy to derail the trial” and awarded costs against the 3rd defendant on an indemnity basis.[30]
77. On 15 June 2015, the plaintiffs made an application for an order that the 1st, 2nd and 3rd defendants: (1) procure the removal of the 1st defendant as a director of KDT BVI; (2) procure the reinstatement of the 1st plaintiff to the KDT BVI Board; and (3) procure the appointment of the 1st and 3rd plaintiffs being beneficial shareholders of the 3rd defendant to the 3rd defendant’s Board. I handed down a written decision on 28 July 2015 and as I explained the decision was to be read in conjunction with the judgments that I handed down on 1 April 2014 and 11 July 2014, which dealt with previous applications for an injunction order.[31] I granted the application.
78. The 1st defendant made application for leave to appeal against the decision to grant the injunction order and for a stay of execution of the order. This was heard on 3 August 2015 and I handed down a written decision on 4 August 2015 refusing the application. The 1st defendant did not appeal the decision.
79. It is worthwhile setting out my findings and conclusion in my written judgment in order to properly appreciate the nature and context of my decision.[32] This decision is the subject of one of the grounds in support of the recusal application and therefore I have set out the following passages.
“Findings
50. I am satisfied on the material presently before me that there has been a material change of circumstances to warrant my reconsideration of the application for a mandatory interlocutory injunction against the defendants. As previously noted in judgments that I have handed down, I have found that there is a serious question to be tried and given the dispute between the parties, and what is at stake, damages awarded at trial would not provide an adequate remedy to the plaintiffs if they were successful. There is a bitter dispute taking place between the polarised interests of the investors in KDT BVI through Retribution. In the current circumstances, Au is in control of Retribution and the representative director of Retribution in KDT BVI. This is to the exclusion of the plaintiffs and to the interests that they claim they have in the two companies which at this stage appears to be substantial. I note however at this stage of the proceedings there is a conflict in the evidence that cannot be resolved on this interlocutory application, and clearly this will ultimately depend on a consideration of all the evidence that is presented at trial. On the material currently before me, I am satisfied that the plaintiffs have a substantial interest through Retribution in KDT BVI. I note in particular that the Bare Trust agreement which is pivotal to the plaintiffs’ claim is implicitly acknowledged in Clause 20.1 of the ARCLA.
51. I am also satisfied that there has been non-compliance of the injunctive order by the defendants, in particular Au, and that the situation is deteriorating to the point that the plaintiffs’ interests are at serious risk. In this regard, it is not without significance that I have previously found that Ho acts on the instructions of Au and there is nothing before me to indicate that the situation has changed. There was an obligation on both of them in their respective corporate capacities to keep the plaintiffs informed of any material developments in relation to their interests in KDT BVI. Whilst information has come to the plaintiffs about the debt extinguishment shares, it was not from or through them. It seems that since the injunction order there has been little if any communication from Au or Ho to the plaintiffs about the affairs of KDT BVI.
52. I feel a high degree of assurance that the plaintiffs will establish, at the very least, that they have a significant beneficial interest in KDT BVI by or through Retribution which entitles them to the order they seek.
53. In my view there would be very significant prejudice to the plaintiffs if the mandatory interlocutory injunction was not granted. I should add that in contrast, the prejudice to the defendants is limited and can be confined. In all the circumstances, I consider that there would be a greater risk of injustice if the injunction was refused.
Conclusion
54. I will now turn to address each of the three matters the plaintiffs seek by way of interlocutory mandatory relief in this application. I will address the first two matters together. This requires that the defendants to procure the removal of Au and the reinstatement of Patel as a director of KDT BVI. Part of the agreement with L Capital, is that Retribution is entitled to have two seats on the board of directors of KDT BVI. They are currently occupied by Au and Teeka. In light of the foregoing matters, I see the force in the plaintiffs’ argument that a representative of their interests should occupy one of the seats set aside for Retribution on the board KDT BVI. I accordingly grant the order in terms of the second matter and as to the first matter requiring the removal of Au as a director, I will leave it up to Au and Teeka to determine which one of them will relinquish his seat on the board, failing any agreement between them within seven days of the date of this judgment as to who it should be, then I order that the defendants procure the removal of Au as a director of KDT BVI. I make such an order in these terms because on the material before me it would appear that (1) Au had agreed to relinquish his role and interest (although the percentage of the interest and any buyout agreement in relation to it with the other investors is the subject of dispute) in KDT BVI prior to this dispute arising; (2) Au has interests in other entities or businesses which compete or conflict with the interests of KDT BVI (I note that the plaintiffs also have interests in other businesses but appear not to have created the sort of issues that are claimed to exist with Au); (3) Au appears not to have a good working relationship with his fellow directors on the Board of KDT BVI which could cause irreparable harm to the interests of KDT business. At this stage I am unable to ascertain whether this is as a result of this dispute and the acrimony between himself and his fellow investors or his intended departure from the operations of KDT BVI and the development by him of other business interests.
55. The third matter seeks the appointment of Patel and Apostolides as directors on the board of Retribution. According to Clause 20.1, it is stated that Au, Patel and Apostolides are the beneficial holders of all the issued shares of Retribution or at least as at 31 December 2013. I am therefore prepared to make an order in these terms but subject to Au also being appointed to the board if he should so wish. I note that Ho is currently the sole director of Retribution.”
Grounds for recusal
80. The 1st defendant advances six grounds in support of the recusal application. Mr Kevin Bowers, solicitor advocate for the 1st defendant, asks that the grounds be considered individually and cumulatively in support of the application. What is required to be done as stated in the reasonable apprehension of bias test, is that the court ascertain and consider the relevant facts. The grounds as stated by the 1st defendant can be summarised as follows.
1. The Judge’s brother’s professional and personal relationship with the 3rd plaintiff and/or his brother (Ground 1).
2. In 12 out of 13 interlocutory applications heard to date by the Judge, the Judge has found against the 1st defendant and the 3rd defendant which is the 1st defendant’s corporate vehicle (Ground 2).
3. The Judge referred the issue of the 1st defendant’s conflicting testimonies in the respective courts of Hong Kong and Singapore to the Attorney General of Singapore before trial and the filing of witness statements, but took no action against the 3rd plaintiff in the same or similar situation (Ground 3).
4. The Judge has made subjective and/or unfair and/or disparaging comments and findings in his judgments in the proceedings (Ground 4).
5. The Judge has already made his mind up upon issues to be tried during the trial in favour of the plaintiffs (Ground 5).
6. The Judge removed the 1st defendant from the Board of KDT BVI and appointed the 1st plaintiff to that company and the 1st and 3rd plaintiffs to the Board of the 3rd defendant (Ground 6).
81. It would appear that the 1st defendant’s application is based on the allegation of a reasonable apprehension of bias as well as actual bias in that I have predetermined issues in favour of the plaintiffs. The allegation of actual bias was disavowed by Mr Kevin Bowers, solicitor advocate for the 1st defendant, but sometimes the language used is clumsily couched in terms of actual bias.
82. In opposition to the 1st defendant’s application, Mr John Bleach, SC, appeared for the plaintiffs, and Mr Victor Dawes, SC, and Mr Justin Ho, appeared for the 5th and 6th defendants (by counterclaim).
Ground 1
83. Under the first ground, the 1st defendant contends that my brother has a professional and personal relationship with the 3rd plaintiff giving an appearance of bias warranting my recusal from these proceedings.
84. I first got involved in this case on 29 January 2014 when I heard an ex parte application by the plaintiffs for an injunction order. I granted the order and a return date was fixed for 14 February 2014. It had come to my attention, incorrectly it appears, that my brother, who is a practicing solicitor in Australia, had acted for the 3rd plaintiff. I was wrong in that impression as I was told that he had acted for the 3rd plaintiff’s brother. In any event, I immediately issued a letter through my clerk to inform the parties of this matter and asked if they wished to raise any objection to my continuing to deal with the applications taken out by the parties. There was no objection raised by the parties and it was corrected by Robertsons, the solicitors for the plaintiffs that my brother had not acted for the 3rd plaintiff but had acted for his brother.
85. The 1st defendant in his affirmation states that he had been expressly informed by a third party in Melbourne who he does not identify that my brother and the 3rd plaintiff not only have a solicitor-client relationship but are also good friends and that when my brother visits Singapore, he spends time with the 3rd plaintiff socially and has been known to stay with the 3rd plaintiff at his home in Singapore.[33] Notwithstanding this was from an unnamed source and without details as to when and how this information was obtained and recorded, it was filed as evidence. It was not substantiated at the hearing and on the application of Mr Bleach this part of the 1st defendant’s affirmation was struck out without opposition by Mr Bowers.
86. It is well established that hearsay evidence is admissible in interlocutory proceedings, provided that the affidavit containing such hearsay evidence also contains “the sources and grounds thereof”: Order 41 rule 5(2) of the Rules of the High Court. Where objection is likely to be taken to the hearsay statement there is an obligation to strictly comply with the requirements of the rule, and an affidavit of information and belief which does not state with reasonable particularity the sources of the information or belief is irregular and therefore inadmissible as evidence. See Dr Yeung Sau Shing Albert v Google Inc [2014] 4 HKLRD 493 at paragraphs 161 and 162.
87. The 3rd plaintiff has in an affidavit stated that he first knew my brother when they were students and are mere acquaintances. He said he has never had a solicitor-client relationship with him, nor does he have a close friendship or relationship with him. He has met him by chance in Singapore in 2012 and in June 2015 when attending a luncheon with a close friend where my brother was also in attendance. He was unaware that my brother was invited and when my brother saw him, he said that they can’t talk about Hong Kong. He said my brother has never visited him or stayed with him in Singapore, and he has never been to my brother’s home.[34]
88. Mr Bowers submits that there is a relevant relationship between the 3rd plaintiff and my brother and that consequently there is a real risk that this relationship could or would lead to some form of subconscious bias. Mr Bowers goes further under Ground 5 where he submits that there is apparent bias by me against the 1st defendant and in favour of the plaintiffs when I granted the mandatory injunction on 28 July 2015, which he emphasises, came soon after the 3rd plaintiff’s meeting with my brother in Melbourne during June 2015.
89. Mr Bowers makes considerable play of my brother and the 3rd plaintiff being in one another’s orbit and relies on the fact that they were at the same function in Melbourne during June 2015 which was the same month during which I heard three interlocutory applications in this action and just one month before I granted the mandatory injunction decision to remove the 1st defendant from the Board of KDT BVI and to appoint the 1st plaintiff and the 3rd plaintiff to the Board of the 3rd defendant. The terms of the mandatory injunctions were nothing new and had been previously applied for but refused by me. There was a change of circumstances which I addressed in my decision and the application was also supported by representations from L Capital, the majority shareholder. The 3rd defendant was entitled to two seats on the board of KDT BVI, one of which was occupied by the 1st defendant and the other by another investor. During the hearing, counsel for the 1st defendant said that the 1st defendant agreed to replace the other investor with the 1st plaintiff but he wished to remain. It seems what is being submitted by Mr Bowers by grouping these events, is that there is some improper connection between the applications that I have dealt with and the 3rd plaintiff’s meeting with my brother. It is a submission that I soundly reject.
90. Notwithstanding the affidavit that has been filed by the 3rd plaintiff and the 1st defendant’s related part of his affirmation struck out, Mr Bowers questions the relationship between the 3rd plaintiff and my brother and relies on the 1st defendant having been expressly informed by an unnamed third party in Melbourne that my brother and the 3rd plaintiff have a close friendship. Mr Bowers submits that this can also be inferred from the 3rd plaintiff’s affidavit in which he provides information about the relationship between my brother and the 3rd plaintiff which came to light for the first time. It had not come to light for the first time in the 3rd plaintiff’s affidavit for I had raised the matter with the parties on 17 March 2014.
91. From an objective assessment of what is contained in the affidavit of the 3rd plaintiff, it does not disclose a close friendship as submitted by Mr Bowers. Mr Bowers makes a number of implied, if not, explicit allegations without any sound or proper basis.
92. Whatever relationship exists between the 3rd plaintiff and my brother, it is one between them. A relationship which I initially misunderstood to be a solicitor-client relationship but as it turned out later it was a solicitor-client relationship with the 3rd plaintiff’s brother.
93. Mr Bleach counters that these assertions made by the 1st defendant are not only untrue as contradicted by the affidavit of the 3rd plaintiff but stand to be struck out as the 1st defendant declines to identify the source of his information. Not only that but what the 1st defendant stated had been contradicted by the 3rd plaintiff’s sworn evidence. He submits that the fact that I have a brother in Australia who knows the 3rd plaintiff and had acted for the 3rd plaintiff’s brother is not the type of personal connection that can warrant a recusal. He puts forward examples of where there is a personal friendship or animosity between a party and the judge where there is a real possibility, if not, a danger of bias. He submits however that this is most certainly not the situation here. It is noted by Mr Bleach that the entirety of Mr Bowers’ submissions on this ground simply ignore the hard fact that while there may well be a personal connection between the 3rd plaintiff and my brother, there is no personal connection between myself and the 3rd plaintiff and it is that connection that both common sense and the authorities identify as being relevant.
94. Whilst this point is well made, I do not entirely agree with it, as there may be a personal connection through others that could be relevant but obviously it would depend on the particular facts and circumstances of the case. In this case there is no connection at all between myself and the 3rd plaintiff.
95. Mr Bleach rejects the 1st defendant’s allegations on the basis that they are not accepted and that he is not being truthful either as to his expressed concern or why he did not raise this concern before. He submits that a chronology of relevant events demonstrates that this recusal application which was mounted by the summons dated 14 August 2015 and just days before the trial date was vacated was an opportunistic and tactical ploy to put off the trial then due to start on 9 September 2015.
96. It has not escaped my attention that on 8 August 2015 there was a case management conference with the parties where the 1st defendant appeared in person having terminated the services of a third set of lawyers. There was detailed discussion for the preparation of the trial and arrangements were made to accommodate the 1st defendant in filing necessary evidence and attending to matters for the purpose of the trial. The 1st defendant was at pains to stress that he was in financial difficulties and was unable to pay for legal services and would be representing himself. This was also the reason that he advanced as to why he had not commissioned a forensic accountant which he wanted time to do. I was led to believe that he was a legally qualified and trained lawyer. I was also led to believe he was in a serious dispute with the firm of solicitors that first acted for him over outstanding fees, running into millions of dollars. There was no suggestion from him of a recusal application, even though we discussed whether there were any preliminary issues and matters that needed to be dealt with before the trial.
97. I agree with the submissions of Mr Bleach and Mr Dawes on this ground. A fair-minded and informed observer would consider there is no personal connection between myself and the 3rd plaintiff and the connection between my brother and the 3rd plaintiff is such that would not lead a fair-minded and informed observer to apprehend that I was biased.
98. It would appear in any event that the 1st defendant has waived his objection on grounds of bias in relation to this matter. Both in March 2014 and March 2015, the 1st defendant made a voluntary, informed and unequivocal election not to raise an objection which was open to him to make in relation to the connection between my brother and the 3rd plaintiff. On this point, there is an obligation on a party to make the application expeditiously and lateness of an application and absent any explanation for the delay will be conclusive that there has been a waiver. See Millar v Dickson [2002] 1 WLR 1615 at paragraphs 33(1) and 34.
99. As rightly pointed out by Mr Bleach, no plausible or rational explanation has been given by the 1st defendant for the delay other than he had been advised in early March 2015 to push for a speedy trial rather than to delay the trial of the matter by making a formal recusal application and that since then subjective, unfair and biased comments and findings against him had been made by me, in particular my decision of 28 July 2015. None of these matters, as I have already mentioned, have been the subject of appeal, and the connection between my brother and the 3rd plaintiff has been known to him since March 2014.[35]
Ground 2
100. Under the second ground, it is complained that 12 out of 13 of the interlocutory applications which have been determined by me, I have found in favour of the plaintiffs and/or against the 1st defendant or his associate corporate vehicle the 3rd defendant. This seems to imply that there has been actual bias on my part in relation to these decisions. This broad claim that 12 out of 13 decisions are in favour of the plaintiffs is simply not the case. It is not accurate to say that “all but one” of the interlocutory applications was held against the 1st defendant. As Mr Dawes points out there were 4 applications in favour of the 1st defendant, but in some instances, given the nature of the application, the complexity of the issues and the reasons for the decision, it cannot simply be described as a decision in favour of one party as against another.
101. In any event, it is accepted in the 1st defendant’s written submissions that the fact that a judge has dealt with a litigant previously and found against him is not a ground for apparent bias. See Incorporated Owners of Finance Building v Bright Hill Management Consultants Co Ltd [2010] 3 HKEC 541 at paragraph 60, JSC BTA Bank v Ablyazov and Ors (No9) [2013] 1 WLR 1845 at paragraphs 65 to 70.
102. However, the 1st defendant submits that my decisions showed a pattern of, or at least, apparent partiality towards the plaintiffs and against the 1st defendant and/or the 3rd defendant and that my partiality is evidenced from my (a) subjective, unfair and disparaging comments and findings and (b) predetermination of issues which should be tried at trial.
103. It is submitted in particular, that in my judgment of 11 July 2014 although I found the plaintiffs had made a misrepresentation and there was a material non-disclosure on their part, I still regranted the injunction and expressly found the 1st defendant, and not the plaintiffs, to be of low commercial morality at the same hearing. I should say that this is not a fair and accurate presentation of the matter. In my judgment I explained that from my assessment of the material before me I found the 1st defendant to be a person of low commercial morality as evidenced by his false evidence on oath before the Singapore High Court and the use he made of others for his own ends, as evidenced by his control over the 2nd defendant, in his commercial dealings in conduct. The 1st defendant also complains about my finding in this judgment that the 2nd defendant was his alter ego. His position was that the 2nd defendant was his nominee.
104. These findings were made in order to address matters pertinent to the injunctive relief that I was asked to consider. There was no appeal against my judgment. In the proper context of these matters, I am of the view that a fair-minded and informed observer would not conclude a real possibility of bias on my part.
105. The 1st defendant further submits that “the inherent dangers” of my ruling upon numerous pre-trial applications and also being assigned as the trial judge in these proceedings should be apparent to me particularly in light of my previous findings with respect to the 1st defendant’s credibility and probity.
106. In response to this ground, Mr Bleach points out that to make a challenge to the objectivity of the Court, the 1st defendant must make a properly arguable objection based on apparent bias. He submits that the fact that a judge who is seized of a matter which involves multiple interlocutory applications, finds on the majority or indeed on all of such applications against a party is a fact that is entirely neutral. He makes the obvious observation that common sense and logic dictates that it is the practice in complex cases for there to be continuity of a designated judge for both interlocutory matters and final trial and it is well established that a fair-minded and informed observer would be aware that there is not only convenience but justice to be found in the efficient conduct of complex trial claims with the help of a designated judge.
107. Mr Dawes makes the further important point that this enshrined in our rules of procedure and practice and has been spelt out in various Practice Directions.
108. Mr Bleach submits that in respect of each interlocutory application it is also well established that provided that the judge deals with each application fairly and judicially, no fair-minded and informed observer would consider that there was any possibility of bias.
109. The decisions of this Court span a period of about one and a half years since the first decision granting a freezing injunction was made in January 2014. The first time that the 1st defendant raised any concern as to bias was by way of his solicitors’ letter dated 3 March 2015 which only referred to my brother having acted for the 3rd plaintiff which was in any event incorrect. There was no complaint made about my findings and decisions up to that date, which are the bulk of the matters, relied upon under the various grounds of complaint.
110. On 3 August 2015 the 1st defendant in person applied for leave to appeal against the injunction order made on 28 July 2015 which was refused on the basis that the appeal had no reasonable prospect of success. I handed down a written decision on 4 August 2015.[36] The 1st defendant did not apply to the Court of Appeal for leave to appeal.
111. The 1st defendant has also raised the application by the 3rd defendant to vary the freezing injunction order. This was done it would appear to enable the 3rd defendant to have access to funds to finance his legal representation in these proceedings. The application was dismissed by me. The 3rd defendant applied to the Court of Appeal for leave to appeal which by its judgment on 19 August 2015 dismissed the application on the grounds that, amongst other things, the application was not made in good faith and the intended appeal was wholly devoid of merit. It is suggested by Mr Bleach that this was done at the behest of the 1st defendant as instructions would have come from the 2nd defendant who is under his control.
112. Notwithstanding this ground of complaint, the 1st defendant does not seek to argue that any of the decisions that I handed down were wrong. He has not appealed any of the decisions either on the basis of an error of law or on the basis that the decision could not be supported by the evidence that was before me at each application.
113. A fair-minded and informed observer having considered the nature of the decisions and the reasoning of them would not, in my view, conclude a real possibility of bias.
Ground 3
114. Under the third ground, it is complained that the referral by me of the conflicting testimonies of the 1st defendant in the Hong Kong High Court and the Singapore Supreme Court to the Singaporean Attorney General displayed bias on my part. In summary, the complaints made by the 1st defendant are as follows. First, I formed the opinion that the 1st defendant had given false evidence before I had seen his witness statement and heard his oral evidence. Secondly, I did not report the 3rd plaintiff despite the fact that there were allegations that he also had given false evidence.
115. In response, Mr Bleach said the reporting of the 1st defendant to the relevant authorities in Singapore has to be considered against the following matters.
116. First, there is no doubt that when the 1st defendant gave evidence in the Singaporean proceedings on 14 August 2012 he committed perjury, it being his sworn evidence, including his answers to questions asked by the trial judge, that as at August 2012 he had no interest in the 3rd defendant, and in about January 2010, he had given the 3rd defendant to the 1st plaintiff and was not an owner “in any way” of KDT BVI.
117. Secondly, in the proceedings in Hong Kong it was common ground, and this was asserted by the 1st defendant in his pleadings and in each of his affirmations, that the 3rd defendant was throughout the 1st defendant’s corporate vehicle which he controlled through his nominee, the 2nd defendant, and he had through the 3rd defendant an interest in KDT BVI which he also controlled via his nominee, the 2nd defendant and hence in the KDT Singaporean business. The two accounts are in stark contradiction with each other and irreconcilable.
118. Thirdly, at the hearing on 30 April 2014, it was accepted by the 1st defendant’s then leading counsel that the evidence given by the 1st defendant in Singapore was not true. The 1st defendant’s own counsel acknowledged the falseness of his evidence on oath in the Supreme Court of Singapore.
119. The hearing on 30 April 2014 was the return date for the 1st defendant’s application to discharge the freezing injunction granted on 29 January 2014 on the basis of, amongst other things, a failure by the plaintiffs to make full and frank disclosure on the ex parte application that resulted in the grant of the injunction. The plaintiffs asked for a regrant of the injunction in the event that it was discharged. Fundamental to the grant or the regrant of the injunction was the issue of risk of dissipation which invariably involves a consideration of the commercial morality of the person to be injuncted. Mr Bleach stresses that a person who lies on oath is morally suspect and hence a matter of relevance to the issues before me on 30 April 2014.
120. The decision taken by me to report the 1st defendant was made after the 1st defendant was given every opportunity to address the matter and after full consideration of the submissions and evidence. The matter was first raised at the hearing on 25 and 26 March 2014 and it was indicated to the 1st defendant by me that I would await his response about the evidence he gave before the Supreme Court of Singapore. By the hearing in April and May 2014 for the discharge or the regrant of the freezing injunction, the 1st defendant had provided no response to this matter which was noted in my judgment of 5 August 2014. I had given the 1st defendant in my judgment of 11 July 2014, 7 days to make submissions as to why there should be no report to the authorities in Singapore. By the written submissions put on behalf of the 1st defendant, it was asserted that a report was premature as this should only be done after the Court had determined the facts underlying the dispute, including the ownership of KDT BVI which would then put the Court in a better position to assess the parties’ various assertions as to ownership and consider whether any reference to the authorities in Singapore should be made. I handed down a written decision for the referral which was not appealed.
121. It is submitted by Mr Bleach that this fudged the issue and that no trial was needed to ascertain whether there was a case of perjury. He submits that the evidence conclusively showed that the defendant had lied which had been accepted by leading counsel then representing him. He submits that a fair-minded and informed observer would not conclude that the reporting of the 1st defendant gave rise to real possibility of bias when that observer would know that the 1st defendant had in fact committed perjury, that he does not deny that he had, and that the judge not only had a right but a duty to report the matter to the relevant prosecuting authority. I agree with his submissions.
122. The second aspect of this ground of complaint is that I did not also report the 3rd plaintiff. The transcript of the 3rd plaintiff’s evidence in the Singaporean proceedings was before me at the hearing which commenced on 30 April 2014 and it is correct that at that hearing and subsequently the 1st defendant alleged that the 3rd plaintiff lied in the Singaporean proceedings. The case of the 3rd plaintiff was entirely different from that of the 1st defendant. Mr Bleach submits that the fact that one party alleges that another party has lied is simply not to the point. No reasonable court would refer a matter to the prosecuting authorities unless at the time that such a decision is contemplated, the court is satisfied on the material then before him that perjury has been committed.
123. But more importantly as submitted by Mr Bleach it is clear from the transcript of the hearing on 30 April 2015 that I was well aware of the allegations against the 3rd plaintiff but was also well aware that the circumstances as to the 1st defendant’s evidence and the 3rd plaintiff’s evidence were entirely different as the 1st defendant’s evidence related directly to himself, his own knowledge and his own interests, while the evidence of the 3rd plaintiff related to his own knowledge of the 1st plaintiff’s interests in KDTs and KDT BVI and his awareness of Rocky Cape. He submits that whatever suspicions the 1st defendant may have about the evidence given in Singapore by the 3rd plaintiff, there was simply no basis upon which any properly informed judge could conclude that the 3rd plaintiff had also given false evidence and this was specifically so as it was made quite clear to me that it was not accepted that the evidence of the 3rd plaintiff was untrue.
124. Mr Bleach argues that the 1st defendant is seeking to compare two cases which are entirely different, and that I was well aware of the difference. He submits that no fair-minded and properly informed observer of the different circumstances and on what basis a report should be made could conclude that the fact that the judge did not report the 3rd plaintiffs was indicative of bias or of a risk of the appearance of bias.
125. Mr Dawes make similar submissions to Mr Bleach and I agree with them.
126. The two cases are entirely different and I took the view that on the material then before me no action was warranted by me about the matter at that stage. On the question of the referral, what had taken place would not lead a fair-minded and informed observer to conclude that there is a real possibility I was biased.
Ground 4
127. Under the fourth ground, it is complained that I made subjective or unfair or disparaging comments about and findings against the 1st defendant about his credibility in decisions I made in these proceedings.
128. It is appropriate to bear in mind the comments of the Court of Appeal in Locabail where they said:
“25. … The mere fact that a judge, earlier in the same case or in a previous case, had commented adversely on a party or witness, or found the evidence of a party or witness to be unreliable, would not without more found a sustainable objection. In most cases, we think, the answer, one way or the other, will be obvious. …”
129. The comments and findings complained about seem to mainly relate to my reference to the 2nd defendant being the nominee of 1st defendant and my finding that the 1st defendant was a person of low commercial morality. These matters have already been commented upon by me, but I will readdress them under this ground. These comments and findings were made in my judgment of 11 July 2014. They were made in the context of the application and material before me, and in order to address relevant principles and matters in determining whether or not to grant the injunctive relief that was sought.
130. As submitted by Mr Bleach, the simple but hard fact is that the 2nd defendant was the nominee of the 1st defendant and this has never been challenged by the 1st defendant and that it is absolutely clear on the undisputed facts and expressly admitted by the 2nd defendant herself. He submits it is simply not understood on what basis that it is suggested that any fair-minded and informed observer could conclude that any of the passages referred to were subjective, unfair or disparaging.
131. In my judgment of 11 July 2014, I concluded that the 1st defendant on the material that was before me at that stage was of low commercial morality because of his use of nominees in the circumstances as revealed on the material before me and his false evidence in a court of law as acknowledged by his own counsel. It is well established that where a defendant has “exhibited an unacceptably low standard of commercial morality in its dealings with the plaintiff”, this is relevant to showing a risk of dissipation for the purpose of a freezing injunction. See Honsaico Trading Ltd v Hong Yiah Seng Co Ltd [1990] 1 HKLR 235 at 240H.
132. As to the complaint concerning the re-grant of the injunction. I found that the nondisclosure was not deliberate and the decision to re-grant the injunction took into account the necessity for protective measures and the fact that it would cause the least prejudice to the parties and would do justice to the case once it was decided on its merits. The relevant extract of my reasonings are set out in this judgment. If there was a legal or factual error it was open to the 1st defendant to appeal. He did not do so.
133. Initially it was claimed by the 1st defendant that at the inquiry into damages hearing on 1 August 2014, I said something along the lines of “why give you more time so you can fabricate more evidence”. I did not say that and I have set out the transcript in its proper context to address this complaint. As seen from the extract of the transcript the 1st defendant had from at least 23 July 2014 to provide evidence of any loss cause by the freezing injunction. Notwithstanding this was the 1st defendant’s application, he did not identify in his written submissions any item of loss. This was a critical requirement for the application. On the morning of the hearing attempts were made to adjourn the application. After an exchange with counsel for the 1st defendant, time was given to take instructions as to loss in order to determine the adjournment application. I gave written reasons for my decision refusing the application and again there was no appeal against my decision.
134. I agree with the submissions of Mr Bleach and Mr Dawes, and the matters that the 1st defendant is relying upon do not amount to subjective or unfair or disparaging comments against him. I am not persuaded that a fair-minded and informed observer in relation to these matters in the context of the relevant circumstances would come to the conclusion that there is a real possibility that I was biased.
Ground 5
135. Under the fifth ground, it is complained that I had already made up my mind upon issues to be tried during the trial in favour of the plaintiffs.
136. In the course of litigation and preliminary to the trial of a case, there will invariably be interlocutory or pre-trial applications that the court is required to adjudicate upon. The parties will file their evidence with the court which is generally in the form of an affidavit or affirmation together with exhibits, and after hearing submissions the court will need to make findings of fact based on the material then before it and therefore necessarily come to a decision in relation to the matter it is required to decide upon. Depending on the nature of the application there will be legal principles that need to be applied and satisfied by the court in coming to a decision. This happens in all forms of proceedings before the courts where a preliminary or tentative view or decision is made on the material then available to the court and before the case is finally determined. It is well understood that this is without the benefit of having seen and heard the witnesses under the full glare of a trial.
137. The instances given of my predetermining issues in the interlocutory applications fall into two categories. The first relates to my comments or findings that the 2nd defendant is the alter ego of the 1st defendant and that through the 2nd defendant the 1st defendant controlled and manipulated the business of KDT BVI. This matter seemed to be incontrovertible and at no stage did the 1st defendant either take issue with this view or seek to take the matter on appeal.
138. The second category relates to findings that I was required to make in accordance with the relevant legal principles in addressing the various applications. Again, the 1st defendant did not seek to further challenge my findings on appeal. It is complained that I made these findings without the benefit of the parties’ respective witness statements or oral testimonies at trial, but I did have numerous affidavits or affirmations and a large quantity of material that had been exhibited before me in relation to the applications by the parties I was required to address.
139. Mr Bleach in response argues that the illustrations identified by the 1st defendant are not only without merit but failed to recognise that in interlocutory applications the court has to make preliminary or tentative findings.
140. It is well established that the mere fact that a judge has made factual findings in an interim application in the same proceedings would not normally give rise to a reasonable apprehension that the judge had prejudged the issues. A recusal would be justified where a judge has expressed himself in vituperative or intemperate terms but otherwise it would be assumed that a judge would consider the issues on their merits whatever earlier conclusions he may have reached. See JSC paras 29 and 49.
141. Mr Bowers relies on the Australian cases of Southern EquitiesCorporation Limited (In Liquidation) v Bond [2000] SASC 450 and Kwan v Kang& Ors [2003] NSWCA 336 to support this ground. Mr Bleach points out that reading of these two cases it is apparent that both decisions were not based on the fact of the judge having made findings but because in both cases the manner of the words used in the findings show that the judge in each case had come to a final conclusion on fundamental matters that were in dispute. I do not believe these cases are making any statement of principle but simply deciding the issue on the particular facts and circumstances of the case under consideration.
142. In the various decisions or judgments that I have given in relation to these proceedings, I have always made it clear that they were based on the material and submissions presented in order to address the issue that had to be decided upon. I have always made it a point that such findings were preliminary or tentative and subject to the evidence and arguments presented a trial.
143. Mr Bleach points out that in the various findings complained about are classic examples of what a judge has to do on an interlocutory application for an injunction, that is, to weigh up the legal and factual arguments and come to a view for the purpose of the application while recognising that the issue would be ultimately a matter to be resolved at trial.
144. The 1st defendant complains that I have made findings in “quite absolute and unqualified terms” in my decision of 28 July 2015 which would lead a fair-minded observer to conclude a real risk of apparent bias against the 1st defendant. Where I stated that “I feel a high degree of assurance that the plaintiffs will establish…” is an instance of simply applying the test for mandatory injunctions which I had previously addressed in my judgment. See Music Advance Ltd v Incorporated Owners of Argyle Centre Phase I [2010] 2 HKLRD 1041 at paragraphs 11 and 12. Similar complaint is made by the 1st defendant of my decision of 11 July 2014. But again I was addressing the requirements for the injunctive relief sought which necessitated a higher degree of inquiry by me into the merits of the case.
145. Mr Bleach submits that I found the necessary high degree of assurance upon the consideration of relevant facts, materials and law, but made it clear that I was considering the matter in the context of the application and that final resolution of the documentation in question was a matter for trial. Mr Bleach complains that the 1st defendant has cherry picked a part of the sentence when the whole sentence and indeed the whole judgment has to be read, and that it is clear on a reading of judgment in its entirety, I was dealing with the issue on the material then before me.
146. This ground of complaint fails to present a complete picture of the matters relied on and left out of the equation are the comments and findings I have made in favour of the 1st defendant in relation to his case. I should also add that throughout the proceedings, from time to time, I had noted the acrimony between the parties and tried to encourage them to settle the dispute.
Ground 6
147. Under the sixth ground, it is complained that I made an order removing the 1st defendant from the Board of KDT BVI and appointed the 1st plaintiff to that company and the 1st and 3rd plaintiffs to the Board of the 3rd defendant and that this was illustrative of my bias against the 1st defendant.
148. Mr Bleach in response strongly asserts that this complaint is unfounded. He submitted that a fair-minded and informed observer would be aware that KDT BVI was not founded by the 1st defendant in the manner he wishes to represent as it was founded by the 1st defendant and the 1st plaintiff as a joint venture in which they had equal shares pursuant to a joint venture agreement of 20 July 2009; that there is a real issue as supported by expert evidence in the plaintiffs’ case that the 1st defendant treated KDT BVI and its operating subsidiaries “as his personal piggy bank”, as to what contribution the 1st defendant actually made to the business; and that the Court of Appeal has stated that 3rd defendant has no interest in these proceedings as the nominal corporate entity, and would be interested to hear precisely why the 3rd defendant can no longer operate. It should be added that the majority shareholder had made representations of problems it had and was experiencing with the 1st defendant, and while the 1st defendant resisted his recusal from the board he put forward a proposal that the 1st plaintiff be appointed on the board.
149. As pointed out by Mr Bleach in assessing this matter in the eyes of a fair-minded and informed observer, one has to go to the judgment dated 28 July 2015 and see that I identified and applied the relevant law, considered the material available to me and noted that the existing injunction had been ineffective to preserve the status quo, not least because the 1st defendant had not complied with the existing injunction order, and would conclude that the injunction was correctly granted and that the position that the 1st defendant now claims to be in is one entirely of his own making.
150. Mr Dawes submits that the 1st defendant’s contention really amounts to a complaint that the injunction was wrongly granted and that he has failed to avail himself of the avenue of appeal. He submits that the 1st defendant is now seeking to disguise what is in effect an appeal against the injunction as a ground for recusal.
151. I am of the view that a fair-minded and informed observer having regard to the relevant circumstances would conclude that the grant of the injunction would not lead to a real possibility that I was biased.
Conclusion
152. I have considered the materials and submissions and have concluded that it is not the case that a fair-minded and informed observer would conclude that there is a real possibility that I would not bring an impartial mind to these proceedings and the application is dismissed. I have considered each of the grounds individually and cumulatively in the context of the relevant circumstances in arriving at this conclusion.
153. I would also dismiss the application for my recusal in relation to the grounds and matters I have identified where the 1st defendant had waived his right to make such an application. I should point out that the 1st defendant was aware of my brother’s connection to the 3rd plaintiff in March 2014 and raised no objection. He raised this issue in March 2015 when the listing judge was deciding to whom the trial should be assigned. When the case was assigned to me as the trial judge he was specifically directed that if he wished to make a recusal application he should do so before me. He did not make an application even when asked in hearing whether any application would be made.
154. Prior to the present recusal application no notice was given of it to the parties and no appropriate request or application was made to obtain any relevant information. I have however, considered the recusal application in relation to the additional information in the 3rd plaintiff’s affidavit of his contact with my brother but as I have explained I am not persuaded that a fair-minded and informed observer would conclude that there was a real possibility that I would be biased. As to the findings and decisions that I made before the case was assigned to me as the trial judge, the 1st defendant has had full knowledge of these matters and has not raised any objection in relation to them as soon as he became aware of the matters, nor did he raise these previous matters when he applied to the listing judge not to have me assigned as the trial judge or when asked by me in hearing whether any recusal application would be made.
155. I should make it abundantly clear that notwithstanding I have found that there had been a waiver of any right to apply for my recusal in relation to the specific matters I have mentioned, I have nevertheless considered them as relevant circumstances when applying the reasonable apprehension of bias test. Quite apart from the question of waiver, it would seem to me that the failure to raise an objection as soon as the party became aware of the matter suggesting the possibility of bias and the lateness of an objection (and the absence of any explanation for the delay) is a matter that a fair-minded and informed observer would take into account, together with all the circumstances when determining whether the reasonable apprehension of bias test has been satisfied.
156. I make an order nisi that the 1st defendant pays the costs of the other parties in relation to the recusal application, to be taxed if not agreed.
Postscript
157. The written submissions presented to the Court in support of the recusal application were unfortunately at times couched in extreme and inappropriate language where in some instances submissions were made based on material that was not sourced or verified, or without substantiation. The role and function of a solicitor advocate is a new and important initiative in our legal system. It gives a solicitor higher rights of audience pursuant to section 39R of the Legal Practitioner Ordinance, Cap 159. It is therefore incumbent on a solicitor advocate to ensure that he or she adheres to the high standards of professional conduct expected of an advocate before the courts. The solicitor advocate has the added responsibility of being an officer of the court in his or her capacity as a solicitor. With this responsibility, come ethical and professional duties promoting justice and the effective operation of the judicial system.
158. The Law Society of Hong Kong has issued a Code of Advocacy for Solicitor Advocates which requires that they adhere to the same standards of professionalism and competency of a barrister appearing in the higher courts.
Epilogue
159. Just prior to hearing the recusal application the parties jointly applied to vacate the trial dates. The main reason was because the parties needed more time to prepare for the trial in light of the volume and staggered production of materials.
160. It means that notwithstanding my decision dismissing the recusal application the case will have to go back before the listing judge to assign a trial judge. It may or may not include me, depending upon my availability and any other relevant consideration.
161. On 15 July 2014, I made an order for a speedy trial. The basis of the order was that by then the case had been comprehensively argued and most of the relevant evidence and material had been filed. This order was made in accordance with the parties’ wishes. It seems clear to me that the longer these proceedings run the greater the likelihood that this dispute will intensify leading to further interlocutory applications in the meantime. For the avoidance of any doubt, I therefore make an order for a speedy trial.
| | (Kevin Zervos) |
| | Judge of the Court of First Instance |
| | High Court |
Mr John Bleach SC, instructed by Robertsons, for the plaintiffs (by
Mr Kevin Bowers, Solicitor Advocate, Howse Williams Bowers, for the 1st defendant (by original action) and the plaintiff (by counterclaim)
Mr Martin Ho, instructed by Au & Vrijmoed, for the 2nd and 3rd defendants (by original action)
Mr Victor Dawes SC, and Mr Justin Ho, instructed by Reed Smith Richards Butler, for the 5th and 6th defendants (by counterclaim)
[1]R v Sussex Justices ex parte McCarthy [1924] 1 KB 256, 259 per Lord Hewart, CJ
[2] The 17th and 18th Affirmation of Chris Au at Bundle A/4/13 and Bundle A/5/34
[3] The 8th Affidavit of Harilaos Apostolides at Bundle A/10/63
[4] The 3rd Affirmation of Yew Kuan Cheong at Bundle A/7/50
[5]Deacons v White & Case Ltd Liability Partnership & Ors (2003) 6 HKCFAR 322, at paras 20 to 24; Falcon Private Bank Ltd v Borry Bernard Edouard Charles Ltd (2014) 17 HKCFAR 281, at para 11
[6] See Chau Siu Woon v Cheung Shek Kong [2010] 3 HKLRD 49 at paragraphs 13 and 42 per Cheung JA.
[7]Deacons v White & Case Ltd Liability Partnership & Ors (2003) 6 HKCFAR 322 at para 21 per Ribeiro PJ
[8] Oaths and Declarations Ordinance, Cap 11, s 17 and Schedules 2, Part V and 3
[9] Rules of the High Court, Order 1A
[10] Bundle B & C/26/345
[11] Bundle B & C/27/346
[12] Bundle A/11/69-101
[13] Bundle A/12/102-157
[14] Bundle A/12/122-128
[15] Bundle of Transcript/5/359L-361D
[16] Bundle of Transcript/5/361H-363S
[17] Bundle A/13/158-174
[18] Bundle A/14/175-182
[19] Bundle A/15/183-189
[20] Bundle B & C/28/347-349 and /29/350-352
[21] These two letters were not included in the hearing bundle.
[22] Bundle B & C/30/353
[23] Bundle B & C/31/354-355
[24] This letter was not included in the hearing bundle.
[25] 3rd Affirmation of Yew Kuan Cheong at para 7
[26] Bundle of Transcript/6/399-400
[27] Bundle A/16/109-215
[28] Bundle A/17/216-219
[29] Bundle A/18/220-224
[30]Patel and Ors v Au and Ors, HCMP 1959/2015, unreported, 19 August 2015, at para 9
[31] Bundle A/19/225-250
[32] Bundle A/19/247-250
[33] The 17th Affirmation of Chris Au at paras 13(1), 15 and 16 at Bundle A/4/16-17; the 18th Affirmation of Chris Au at para 8 at Bundle A/5/37
[34] The 8th Affidavit of Harilaos Apostolides at para 6 at Bundle A/10/64-66
[35] The 18th Affirmation of Chris Au at para 35 at Bundle A/5/34
[36] Bundle A/20/251-261