CATHAY PACIFIC AIRWAYS LTD v. LUK SHU KEUNG AND OTHERS

HCA2895/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2895 OF 2001

BETWEEN

CATHAY PACIFIC AIRWAYS LIMITED Plaintiff
and
LUK SHU KEUNG 1st Defendant
CHAN CHI KEUNG 2nd Defendant
CHAN SAU FONG 3rd Defendant
FUNG KIT CHUNG 4th Defendant
CHAN SAU YU 5th Defendant
TOP REGENT INVESTMENTS LIMITED 6th Defendant
MACWORLD INVESTMENTS LIMITED 7th Defendant
MACWORLD MOTORS 8th Defendant
DIAWIN DEVELOPMENT LIMITED trading as MACWORLD MOTORS 9th Defendant
CHINA-HK INDUSTRIAL LIMITED 10th Defendant

Coram: Deputy High Court Judge Carlson in Chambers

Date of Hearing: 27 August 2008

Date of Ruling: 27 August 2008

R U L I N G

1. I have no doubt this is a bona fide application made by Mr Lintern-Smith on behalf of the 1st defendant, who is undoubtedly themain character in these proceedings.

2. The plaintiff, so far as this matter is concerned, is acting perfectly reasonably. In correspondence it has indicated that it wouldbe prepared to consent to any reasonable order relating to the release of funds provided the 1st defendant would indicate to it,either by himself or through the other defendants, what their assets are. That is a reasonable stance to take because Mr Lintern-Smithis representing all of them.

3. At the moment, one does not have any indication, other than from Mr Lintern-Smith, to the effect that although he is representingthe other defendants as well he has not had very much contact with them, and although the amended-defence has been filed on behalfof all of them, most of the costs which had been expended and which are going to be expended in defending this action are going tobe on behalf of the 1st defendant.

4. It seems to me that this is a perfectly logical answer to the problem, but it is only a partial one, because there is no doubt thatof these individuals, a number of them are close relatives of the 1st defendant, the 3rd Defendant being his wife, and the 5th ishis sister-in-law. One of the matters that can be legitimately raised on an occasion such as this is whether the 1st Defendant couldturn to them for financial assistance in what is always, of course, a difficult and delicate balancing exercise where one needs toprotect the legitimate interests of the plaintiff whilst, on the other hand, not leaving the defendant in a position where he simplycannot afford to pay his lawyers and therefore is perhaps left unrepresented in what is obviously going to be a difficult and fairlylong action if it were to come to trial.

5. The way I have approached this matter is by being reasonably generous to the 1st defendant, but to I wish make it absolutely clearto him that on the next occasion he is going to need to be more forthcoming than he has on this occasion. I am going to direct therelease of $900,000 from the proceeds of sale of this particular property against which the plaintiff has no proprietary claim andso one can afford to be more generous in relation to these funds than would be the case in respect of other properties against whichthe Plaintiff is asserting a proprietary claim. But on the next occasion it strikes me that – and Mr Lintern-Smith has said thatinevitably there is going to have to be a next occasion where more moneys are going to be needed and applied for release – if the1st defendant is going to have any decent chance at obtaining the release of more funds, he is going to need to be more forthcomingas to what attempts he has made to obtain money from other sources, particularly from the other defendants, two of which are hisclose relatives. It would help him immeasurably, if he were to come to court on the next occasion, providing full disclosure oftheir assets.

6. Nevertheless, today I am going to release this substantial amount of money simply because I have no doubt, based on the skeletonbill, that most of this, if not all of it, has been spoken for. There has obviously been a great deal of time and effort that hasbeen gone into preparing the amended defence, and further instructions have had to be obtained. It is, therefore, only right thatthis amount should be released today. But in future I do not really think the court could legitimately be persuaded to release moreunless there is far more disclosure of the assets of the other defendants, and also of the efforts that the 1st defendant, as theprincipal defendant in this action, has made to obtain other funds.

(Discussion re costs in the cause)

7. Well, I have considered it, and I think costs in the cause is the right order. In a real sense, this matter had to come to court. You now have had a substantial amount of money released, but it is some way down on what you were asking for, and you have obtainedthis “advice” from me as to how any future application would need to be mounted. Thank you very much.

(Ian Carlson)
Deputy High Court Judge

Jacky Yeung of Messrs JSM, for the Plaintiff

Michael Lintern-Smith of Messrs Robertsons, for all Defendants