CHINA BAOLI TECHNOLOGIES HOLDINGS LTD (formerly known as REX GLOBAL ENTERTAINMENT HOLDINGS LTD) v. ORIENT EQUAL INTERNATIONAL GROUP LTD AND OTHERS

HCA 1399/2016

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1399 OF 2016

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R U L I N G

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Introduction

1.  On 24 November 2016, I gave a ruling in the present case that:

(1) the defendants’ summons dated 24 August 2016 (“the Authority Summons”) be adjourned; and

(2) in respect of the summons dated 24 October 2016 (“the Joinder Summons”):

  (a) Squadron Holdings SPV0164HK Ltd. incorporated in the Commonwealth of the Bahamas on 17 August 2016 (“New Squadron”) have leave to appear and to take part in the hearing of the applications by way of summonses filed herein in the name of Squadron Holdings SPV0164HK Ltd on 2 June 2016, 4 July 2016 and 11 August 2016 (“the 2^nd Third Party Summonses”) for the purpose of seeking the same relief, and that they have leave to rely on the evidence already filed by or on behalf of Squadron Holdings SPV0164HK Ltd.

(b) Mr D Sean Nottage and Squadron Holdings Ltd have leave to appear and to take part in the hearing of the applications by way of summonses filed herein in the name of Squadron Holdings SPV0164HK Ltd. on 2 June 2016, 4 July 2016 and 11 August 2016; (“the 2^nd Third Party Summonses”) for the purpose of seeking the like relief alternative to the relief sought by Squadron Holdings SPV0164HK Ltd, and that they each have leave to rely on the evidence already filed by or on behalf of Squadron Holdings SPV0164HK Ltd.

2.  The defendants apply for leave to appeal my ruling, and I am requested to determine this application on the papers.

3.  The background to this matter is set out in my rulings dated 23 August 2016 and 24 November 2016.  I do not intend to repeat the background here.

4.  However, one aspect of the background does need to be emphasized — that the substantive hearing in respect of the dispute is scheduled for a 4 day hearing in May 2017.  That hearing will determine the defendants’ application for injunction, applications for clarification of the extent of the present injunctions which are already granted, and the setting aside of service of Third Party Notices out of the jurisdiction.  To that extent, the present Authority Summons and the Joinder Summons can be said to be ancillary to that hearing.

5.  The test on an application for leave to appeal is well known and has been referred to in the defendants’ written submissions, which is whether there are reasonable prospects of success or some other reason in the interests of justice.

6.  I am mindful that this ruling is not an occasion for me to “perfect” or expand upon my earlier ruling.  Thus, the reasons given here will be as brief as possible consistent with the need to explain the rationale behind the present ruling.

7.  With that in mind, I turn to the proposed grounds of appeal.  The first ground is that I wrongfully considered that the issue of foreign law was one of law rather than one of fact.

8.  On this ground, I consider that the submissions of New Squadron provides a complete answer, viz that at paragraph 27 of my Ruling, I was merely commenting on the utility of cross-examination of the experts on Bahamian Law in the particular circumstances of this case.  I believe I had made it clear at paragraph 28 of my Ruling that the reason I did not proceed to determine the Authority Summons was that I saw no benefit to striking out Squadron’s steps in the present litigation when New Squadron could come back and make the applications again on essentially the same evidence (although fresh affidavits may have to be sworn as to such).

9.  I see no reasonable prospect of success on the first ground.

10.  The second Ground of Appeal is that I held an erroneous understanding of civil procedure rules governing validity of proceedings.  The defendants’ arguments can be encapsulated at paragraph 20 of their written submissions, ie that:

“ It simply was not and is not open to the Court to hold that the applications by Purported Squadron, taken out when there was no such entity in existence, could somehow be cured by invoking the Court’sinherentdiscretionorthereasonsof‘reasonable proportion’, ‘procedural economy’ and/or the ‘underlying objectives’. The authorities cited in Section C of the Defendants’ Skeleton are abundantly clear that the null proceedings, applications, etc. must be set aside. There is no room for discretion or the salvaging of such nullitites by reference to other rules of court or the inherent jurisdiction.”

11.  I do not consider that there is any reasonable prospect of success on this ground.  I did not determine the Authority Summons. This is made clear at paragraph 32 of my Ruling.  The arguments relied on by the defendants are really arguments going to the merits of the Authority Summons which I simply declined to deal with for reasons given.

12.  The third Ground of Appeal is that I wrongfully declined to hear and determine the Authority Summons on the basis that I did not wish to determine an issue of foreign law.

13.  This must be seen in the context first of all of what the Authority Summons sought to determine, ie the application for striking out Squadron on the basis that it was non-existent and had no authority to sue.

14.  Bearing in mind that the substantive argument was scheduled to be heard, that striking out all procedural steps taken by Squadron would not prevent New Squadron from applying to be heard as a party affected by the injunction, and bearing in mind that the very same issues as to Bahamian law were the subject matter of extant proceedings in the Bahamian courts, I adjourned the Authority Summons.

15.  This was a case management decision, and I see no reasonable prospect of success on appeal.  The defendants are free to take up the issue of s 70 of the Bahamian International Business Companies Act 2000 at the substantive hearing, at which time they can deploy whatever arguments they wish against New Squadron.

16.  The fourth Ground of Appeal is that having declined to hear the Authority Summons, I was in no position to determine the Joinder Summons.  This is expanded upon in the defendants’ written submissions that I had erred in that I was in effect substantively determining the issues raised in the Authority Summons, and that there was no authority or procedural rule whereby any party, could in the absence of demonstrating any proper interest, purport to “join”, “adopt” or “rely on” the said prior summonses, evidence or steps taken by Purported Squadron.

17.  The Authority Summons and the Joinder Summons are two different matters.  The orders I made on the Joinder Summons were to ensure that the necessary parties were before the Court at the substantive hearing in May, when it is the expressed intention of the defendants to argue the Authority Summons.  The evidence which New Squadron and/or Squadron Holdings Ltd and/or Mr Nottage would rely on would be the same evidence filed by “Purported” Squadron.  No purpose would be achieved to have the same summonses and evidence filed yet again.

18.  In the circumstances, I consider that there are no reasonable prospects of success on the fourth Ground of Appeal.

19.  I find that there are no reasonable prospects of success on any of the proposed Grounds of Appeal.  I decline to grant leave.  Costs of the application for leave are to New Squadron, with certificate for 2 counsel.