HALLER AG AND ANOTHER v. VESTEY INTERNATIONAL GROUP LTD AND ANOTHER

CACV 454/2022

[2023] HKCA 213

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 454 OF 2022

(ON APPEAL FROM HCA NO 2988 OF 2018)

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DECISION

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Hon G Lam JA (giving the Decision of the Court):

1.  In our judgment dated 21 November 2022,[1] we allowed the 2^nd defendant’s appeal and made an order setting aside leave to serve the writ and service of the writ out of the jurisdiction on the 2^nd defendant, principally on the ground that the case did not come within the “necessary or proper party” gateway in Order 11 rule 1(1)(c) of the Rules of the High Court (Cap 4A). The relevant facts and arguments are set out in our judgment and will not be repeated here.

2.  The plaintiffs now seek leave to appeal to the Court of Final Appeal. The questions said to be of great general or public importance, as set out in the notice of motion, are as follows:

“ Question 1A: In assessing (for the purpose of RHC O.11 r.1(1)(c) and O.11 r.4(1)(d)) whether there is, between the plaintiff and the anchor defendant, a real issue which the plaintiff may reasonably ask the court to try, is there a strict rule that the court must examine the plaintiff’s claim against the anchor defendant ‘in isolation’, i.e. on the assumption that the foreign defendant is not joined (Erste Group Bank AG, London Branch v JSC ‘VMZ Red October’ & others [2015] 1 CLC 706, §§41-43)?

Question 1B: If not, what is the correct approach? Is it:

(1) That the court will, as the circumstances of the case require, look at the action ‘as a whole’ and conduct ‘a consideration of the entire action’ (Mahajan v HCL Technologies (Hong Kong) Ltd & others (CACV 46 & 49/2008, 20 November 2008), at §§8, 12); or

(2) That the court will be astute to safeguard against a specious claim against the anchor defendant being used as a device to found jurisdiction to serve a foreign defendant, and as part of this caution, the court will generally focus on examining the plaintiff’s claim against the anchor defendant. Subject to the aforesaid, the court is entitled to adopt a pragmatic and flexible approach as the circumstances of each case require, which may involve examining other aspects of the proceedings (including the plaintiff’s claim against the foreign defendant); or

(3) Some other approach.

Question 2A: In considering whether a plaintiff is entitled to seek declaratory relief against a certain defendant (‘Defendant A’), is the court confined to examining whether the plaintiff has a real interest in seeking the declaration as against Defendant A and whether Defendant A has a real interest in opposing the declaration?

Question 2B: If not, are there circumstances in which it is appropriate for the court to also take into account the position of another defendant (‘Defendant B’) against whom the plaintiff seeks the same declaratory relief?”

3.  As regards Questions 1A and 1B, as correctly submitted on behalf of the 2^nd defendant, this court did not adopt a “strict rule” that the plaintiff’s claim against the anchor defendant must be examined in isolation. What we stated in our judgment was that the first stage of the analysis asks whether there is a real issue between the plaintiff and the anchor defendant, and whether that issue is one which the plaintiff may reasonably ask the court to try (see paragraph 39). This does not appear to be disputed by the plaintiffs. We also stated that, in this first stage, one must focus on the case against the anchor defendant in itself (see paragraphs 39 and 45). The English authorities offer a useful technique in that analysis, but this court did not take them to mean that consideration of the entire action and all the circumstances is precluded (see paragraph 45). Question 1A does not therefore arise on a proper reading of our judgment. Question 1B poses false alternatives as if (1) and (2) thereunder are mutually exclusive when in fact they are not (see paragraph 45).

4.  The plaintiffs appear to accept that the court should “generally focus on examining the plaintiff’s claim against the anchor defendant”.[2] In the case of Mahajan, heavily relied upon by the plaintiffs, the court specifically stated it was necessary to guard against “a specious claim against the original defendant being used as a device to found jurisdiction to serve another party outside the jurisdiction”. Essentially this is what in our view the plaintiffs had sought to do in the present case. This is a conclusion reached on the facts of this case and not a question of general importance. We do not accept the plaintiffs’ submission that there are now contradictory Court of Appeal authorities in Hong Kong.

5.  This court did examine the circumstances of the entire action including the plaintiffs’ claim against the 2^nd defendant and came to the conclusion that there was no real issue to be tried between the plaintiffs and the 1^st defendant – the anchor defendant (see paragraphs 46 – 59). There are a number of matters that, the plaintiffs submit, this court should have taken into account,[3] but as pointed out by the 2^nd defendant, all those points had been considered by this court (see paragraphs 50 – 58 of our judgment).

6.  There is in our view no question of general importance arising from the application of the principles in this case or from the conclusion reached by this court; nor have the plaintiffs been able to put forward any real answer to this court’s analysis that, on the facts, there was no real issue to be tried between the plaintiffs and the 1^st defendant.

7.  Accordingly, we do not consider that leave to appeal should be given in relation to Questions 1A and 1B.

8.  Questions 2A and 2B relate to declaratory relief. For the purposes of the present application, the plaintiffs have essentially repeated its submissions in the appeal, arguing that there is “practical utility” for the plaintiffs to seek a declaration against both the 1^st and 2^nd defendants. The only utility for the plaintiffs to make a claim against the 1^st defendant seems to be to rely on it as the anchor defendant for the purpose of rule 1(1)(c). We have rejected the plaintiffs’ argument, on the basis of the facts of the present case, for the reasons stated in our judgment (see paragraphs 47– 58).

9.  Whether or not there is a legitimate claim for declaratory relief depends on the facts and circumstances of this case and is not a question of general importance. In referring to the principles on declaratory relief, this court specifically included the phrase “in general” twice (see paragraph 53). We do not consider it reasonably arguable that those principles, thus qualified, are erroneous. Broad and general questions such as Questions 2A and 2B are not apposite. Whether or not there is a proper claim for declaratory relief turns on the application of the principles, with such flexibility as may be appropriate, to the facts. The principal case relied upon by the plaintiffs, Galapagos Bidco SÀRL v Kebekus & others [2021] EWHC 68 (Ch), is a very different case, as explained in paragraphs 54 – 55 of our judgment.

10.  For these reasons, we decline to give leave to appeal. The plaintiffs’ notice of motion is accordingly dismissed.

11.  As an order nisi, we order that the 2^nd defendant’s costs of the application be paid by the plaintiffs, summarily assessed in the sum of $200,000.