TRANSOCEAN MARITIME GROUP HOLDINGS (HK) CO LTD AND OTHERS v. TRANSOCEAN MARITIME GROUP HOLDINGS CO LTD AND OTHERS

HCMP 1574/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO 1574 OF 2012

(ON AN INTENDED APPEAL FROM HCA 2169/2011)

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BETWEEN

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REASONS FOR JUDGMENT

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Hon Cheung CJHC:

1.  On 5 December 2012, we dismissed the plaintiffs’ application for leave to appeal. These are our reasons.

2.  This is essentially a dispute between three Mainland residents (the 3^rd plaintiff and the 3^rd and 4^th defendants) over the control of a Shanghai company running a Shanghai business, which was held through two BVI companies (the 1^st and 2^nd plaintiffs). On 12 June 2012, Deputy High Court Judge Mimmie Chan (as she then was) ordered, amongst other things, that service of the writ on the 1^st, 3^rd to 6^th defendants be set aside.  The judge was not satisfied by the plaintiffs that Hong Kong is clearly and distinctly the most appropriate forum for the trial of the action.  The judge also ordered that the claim against the 2^nd defendant be stayed.  She was satisfied by the 2^nd defendant that both BVI and Shanghai are clearly more appropriate than Hong Kong as a forum for the trial of the issues.

3.  The facts have been clearly set out in the judgment and there is no need to repeat them here.  Suffice it to say, the factual disputes involve, amongst other things, the questions of whether a share transfer agreement made in Shanghai was conditional only and whether there was a subsequent agreement not to proceed with the transfer, and whether the so‑called “self‑help measures” taken by the defendants, which included changing the authorised signatures for the bank accounts of the 1^st and 2^nd plaintiffs in Hong Kong (they being their only assets in this jurisdiction), transferring monies out of the accounts to bank accounts of the defendants, and transferring the shares in the Shanghai company from the 2^nd plaintiff to a new company (the 2^nd defendant) set up by the defendants, were justified or wrongful.  In the action, the plaintiffs sue for the recovery of the monies so transferred; a declaration that the transfer of shares in the Shanghai company is invalid or void; and injunctive relief against the 1^st and 2^nd defendants regarding disposal of or dealing with the Shanghai company and its assets.

4.  In seeking leave to appeal, the plaintiffs argued that the court had failed to recognize that the starting point or prima facie position is that Hong Kong is the natural forum; the court’s assessment of the practical convenience of the witnesses to attend a trial in BVI was not based on any evidence and had ignored relevant considerations or evidence; the court had not assessed the relevance and significance of BVI law sufficiently or at all; the court had committed the same mistake in relation to the relevance and significance of PRC law; and the court had failed to assess the relevance and significance of some other related BVI proceedings properly. The plaintiffs therefore submitted that in the substantive appeal (if leave was granted), the Court of Appeal would be in a position to exercise the discretion afresh and there was a reasonable prospect that the court would accept that Hong Kong is clearly the more appropriate forum.  As regards the position of the 2^nd defendant, a Hong Kong company, the plaintiffs argued that for the same reasons, the 2^nd defendant could not discharge the burden to show that BVI or Shanghai is clearly the more appropriate forum.

5.  In my view, the intended appeal was not reasonably arguable.  First, it is plain from the judge’s subsequent judgment given on 19 July 2012 refusing leave to appeal that she had been aware that the place where the tort was committed was the starting point of the inquiry, but it was no more than a starting point.  China North Industries Investment Ltd v Chum [2010] 5 HKLRD 1 had been cited to the judge at the substantive hearing and I do not believe that the judge had overlooked it when considering how her discretion should be exercised.

6.  The judge was plainly right in treating the place of commission of the tort as merely a starting point.  The monies in the bank accounts in Hong Kong were the 1^st and 2^nd plaintiffs’ only assets in, and indeed, their only connection with, Hong Kong.  This connection with Hong Kong was most fortuitous.  The bank accounts could have been opened anywhere else.  This would not have affected the parties’ disputes at all.  Plainly, the disputes happened in the Mainland and BVI is closely connected with the disputes because these Mainland residents held their equity interest in the Shanghai company via the two BVI companies.

7.  Secondly, as regards the practical convenience of the witnesses, the judge had considered the evidence on the business activities of the individuals concerned and had obviously thought that this was a minor factor.  It may be that travelling to Hong Kong is slightly more convenient and less expensive than travelling to BVI.  But this can hardly be a significant factor in the overall scale of things.

8.  Thirdly, the relevance and significance of BVI law.  I do not accept that the judge did not seriously assess the relevance and significance of BVI law.  Nor do I accept the submission that because (so it was submitted) BVI law would not be seriously in dispute, the judge has wrongly assessed this factor.  It must be firmly borne in mind that the question is whether Hong Kong is “the most appropriate forum” for the trial, that is, the forum with which the action has the “most real and substantial connection”.  The court looks at relevant factors to show where a trial of the action can most appropriately be conducted.

9.  Whether BVI law will be seriously in dispute and the relative significance of the BVI legal issues involved (such as the authority to sue) are really matters for the judge, not the Court of Appeal. The judge cannot be faulted for thinking that in relation to these BVI legal issues, the Hong Kong court, as compared with the BVI court, is the less appropriate forum to try them.

10.  Fourthly, the relevance and significance of PRC law.  I accept that the Shanghai court as a forum is only relevant to the claim against the 2^nd defendant for reasons that need not be gone into.  However, I do not read paragraph 35 of the judgment as meaning that the judge had taken into account irrelevant factors. All she was saying there was that the real disputes between the parties took place in Shanghai and therefore had really nothing to do with Hong Kong.

11.  Finally, the relevance and significance of the BVI proceedings.  How closely related were the BVI proceedings to the present action was a matter of degree.  This was again a matter for the judge, not the Court of Appeal.  The judge did not say that the issues were identical.  The judge was plainly aware of the nature of the claims in BVI and the stage they were at: paragraphs 16 and 34 of the judgment.

12.  The intended appeal sought to challenge the judge’s exercise of discretion.  I do not accept that the judge had taken into account irrelevant considerations or had failed to take into account relevant considerations.  Nor do I accept that she had failed to assess the relevant considerations adequately or appropriately.  The Court of Appeal has no ground to interfere with her exercise of discretion.  In any event, on the facts I would have reached the same conclusion as the judge did.

13.  For these reasons, the application for leave to appeal has been refused with costs, which are summarily assessed at $175,000.

Hon Kwan JA:

14.  I agree with the Reasons for Judgment of the Chief Judge.