Kensington International Ltd v Ics Secretaries Ltd

CourtCourt of Appeal (Hong Kong)
Judgment Date20 May 2008
Citation[2008] 4 HKLRD 589
Judgement NumberCACV297/2007
Subject MatterCivil Appeal
CACV000296/2007 KENSINGTON INTERNATIONAL LTD v. ICS SECRETARIES LTD

cacv 296/2007 AND CACV 297/2007

CACV 296/2007

in the high court of the

hong kong special administrative region

court of appeal

civil appeal no. 296 of 2007

(on appeal from HCMP NO. 2261 of 2006)

________________________

BETWEEN

KENSINGTON INTERNATIONAL LIMITED Applicant
and
ICS SECRETARIES LIMITED Respondent
and
LONG BEACH LIMITED 1st Intervener
DENIS CHRISTEL SASSOU-NGUESSO 2nd Intervener
E. INVESTMENTS LIMITED 3rd Intervener
BLAISE ELENGA 4th Intervener

________________________

CACV 297/2007

in the high court of the

hong kong special administrative region

court of appeal

civil appeal no. 297 of 2007

(on appeal from HCMP NO. 2696 of 2006)

________________________

BETWEEN

KENSINGTON INTERNATIONAL LIMITED Applicant
and
ICS SECRETARIES LIMITED Respondent
and
LONG BEACH LIMITED 1st Intervener
COTRADE ASIA LIMITED 2nd Intervener
HEMISPHERE VENTURES LIMITED 3rd Intervener
E. INVESTMENTS LIMITED
(formerly known as ELENGA INVESTMENTS LIMITED)
4th Intervener
PAN AFRICA CONSULTANCY LIMITED 5th Intervener
JEAN-YVES OLLIVIER 6th Intervener
DENIS CHRISTEL SASSOU-NGUESSO 7th Intervener
BLAISE ELENGA 8th Intervener

________________________

Before: Hon Rogers VP, Le Pichon JA and Barma J in Court

Date of Hearing: 9 May 2008

Date of Judgment: 9 May 2008

Date of Handing Down Reasons for Judgment: 20 May 2008

________________________

REASONS FOR JUDGMENT

________________________

Hon Rogers VP:

1. These were appeals from orders made by Deputy High Court Judge Carlson on 30 June and 8 August 2007. The orders were made in two actions both of which had been commenced by originating summons. On the first occasion the judge held that the applicant had been in breach of an order of the court of 16 November 2006. On the second occasion the judge made orders dismissing both actions, ordering that the respondent should not be required to comply with the judge’s own order of 31 May 2007, made in the second of the two actions. He further made an order that “The Applicant be prohibited from making any fresh Norwich Pharmacal applications against the Respondent or the Interveners”. There was also an order for costs.

2. On this appeal the applicant was represented but there was no representation from any of the other parties because of agreements which had been reached. This appeal was, nonetheless, not a purely academic matter, if for no other reason, the applicant had an order outstanding against it preventing it making any new applications. At the conclusion of the hearing of these appeals it was indicated that they would be allowed with reasons to be given in writing, which we now do.

Background

3. The background to this matter was set out in the judgment of the judge below dated 31 May 2007. At the time of the issue of the first originating summons the applicant was a judgment creditor of the Republic of Congo (hereinafter referred to as “the Congo”) for amounts, with interest, in the order of between US$95 and 100 million. There were 4 judgments that had been obtained between December 2002 and January 2003 in the Commercial Court in London. There had been no less than 11 separate sets of proceedings brought by the applicant in New York, London, Brussels, Geneva and Bermuda in order to enforce those judgments. These had taken different forms, appropriate to the particular jurisdictions, against a variety of respondents said to be involved in assisting the Congo to avoid the consequences of the judgments against it. Those proceedings included asset freezing orders and proceedings in the nature of garnishee proceedings in London, Brussels and Bermuda and a “Rico” action in the United States.

4. In one such case after a trial in London, Cooke J said in the course of his judgment that the Congo had engaged in a complex scheme to sell its oil with the deliberate object of evading enforcement of its existing liabilities by hiding its assets from view and that those involved on behalf of the Congo in creating and masterminding the scheme had acted dishonestly, creating and using sham companies and transactions which were mere ‘facades’ to avoid enforcement of existing liabilities.

5. As the judge recorded, Morison and Tomlinson JJs, also in the Commercial Court in London, made similar findings against the Congo, as did Graham J in the Grand Court of the Cayman Islands, as did the Court of Appeal in Paris.

6. The applicant came to know that there were companies being operated in Hong Kong in respect of which there were strong grounds to believe that they too were part of the web of companies which was being used to hide the assets which should have been used to discharge the judgment debts. It was in those circumstances that the first originating summons came to be issued. The day prior to the issue of that summons the applicant applied ex parte for an order for disclosure. It is unnecessary to set out the full terms of that order. It suffices to say that it required the respondent to reveal documents the nature of which had been demonstrated by the applicant’s evidence as being likely to exist and being relevant to their pursuit of the unpaid judgment debts. The orders included a provision that the respondent should have its costs paid on an indemnity basis. It is necessary to set out one paragraph in the order because its import has been misunderstood thereafter. Paragraph 4 of the order of 2 November read:

“ The Applicant do have leave to use information and documents obtained as a result of this order for the purpose of :-

(a) actual or contemplated proceedings against Cotrade Asia, HVL, OIL, PIL or any other connected to Congo in Hong Kong, England and Wales and elsewhere;

(b) enforcement in Hong Kong, England and Wales and elsewhere of the balance of the judgment debts due under the English Commercial Court Judgments entered against Congo on 20th December 2002 in claim number 1088, 21st January 2003 in claim number 1281, 21st January 2003 in claim number 1282 and 28th January 2003 in claim number 1357; and

(c) investigating, commencing and or pursuing proceedings whether in Hong Kong, England and Wales or elsewhere against persons or entities implicated in any wrongdoing by such information or documents.”

7. Objection was then taken by the respondent after service of the proceedings that two of its companies which were not connected with the Congo had been included in the order. There was an application to vary the order of the 2 November 2006 which was heard on 16 November 2006. Apart from the exclusion of the two companies which were referred to in the order of 16 November 2006 as “A company” and “B company” and there was a change in the wording of paragraph 4(a) to exclude reference to those two companies and to change the wording to “…any other entity the Applicant contends is an emanation of the Congolese state”, the order for disclosure remained the same. The respondent was given its costs again on an indemnity basis. In my view that change of wording was undesirable in that it made the order less precise and, to an extent, it rendered the meaning obscure. The new wording introduced an element of subjective intent on the part of the applicant whereas the original wording was at least not ambivalent. In addition, paragraph 4(c) of the order of 2 November was deleted. It is not possible at this stage to discern any rational reason why paragraph 4(c) was deleted. It would seem that the wording of paragraph 4(c) of the original order reflected precisely the reason for making it.

8. I would simply mention that the order of 2 November is not in the court file but a photocopy of the sealed order is in the correspondence bundle. The original order together with court copy of the originating summons was in a sealed envelope. There are various typed notices on the court file indicating that the file should not be inspected by third parties. Orders may be set aside or varied but history cannot be rewritten and one of the facets of open justice must be that a proper record of court proceedings must remain. Furthermore, until varied, set aside or spent, an order remains effective. There can be no justification for sealing up the originating summons.

9. I would add that although the application made on 16 November was an application to vary the original order it was unlikely that there would or could be any further proceedings in that action since the court had made an order for disclosure of documents and had made orders for payment of costs which could not conceivably be any more favourable to the respondent. There was no further relief sought on the originating summons that was not finally granted by the order of 16 November other than that relating to the 2 companies, which seemingly have not featured in these proceeding since then. In those circumstances, those proceedings were at an end. That is exemplified by the fact that no further steps were taken, no pleadings were filed and no directions were given until the events in June 2007 detailed below.

10. As a result of the disclosure consequent upon the orders made in November the applicant considered it necessary to ask for further disclosure. It was for that reason that a further originating summons was issued on 22 December 2006. Then on 27 December 2006 an order was made on the application of the respondent and various parties named in the originating summons. Leave was granted for those named parties to intervene in the proceedings. A further order was made on that occasion that any affidavits in opposition to the originating summons should be filed within 21 days...

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