GOLDSLAND HOLDINGS CO LTD v. KOH SENG LEE AND ANOTHER

HCA 192/2018

[2022] HKCFI 131

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 192 OF 2018

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BETWEEN

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JUDGMENT

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1.  This is the hearing of the Defendants’ summons dated 3 December 2020 (“Summons”) for a case management stay of this action (“HK Action”) pending the final disposal of the consolidated actions in the Singapore High Court ie HC/S 260/2018 and HC/S 261/2018 (“SG 260 and SG 261” or “Singapore Actions”).

2.  The Plaintiff was and is a private limited company incorporated in Hong Kong. It was and is the majority shareholder of Hong Kong Sin Hua Development Limited (“Sin Hua”), also a private limited company incorporated in Hong Kong.

3.  The 1st and 2nd Defendants are citizens of Singapore.

4.  In SG 260, the Plaintiff is the plaintiff and Vermont UM Bunkering PTE Ltd (“Singapore Vermont”) is the only defendant. In SG 261, Sin Hua is the plaintiff while Singapore Vermont is also the only defendant.

5.  Singapore Vermont was and is a private limited company incorporated in Singapore in 2009. At all material times, Singapore Vermont’s principal business activities were inter alia in ship bunkering.

6.  According to Mr Hui’s skeleton submissions, which do not appear to be seriously disputed in Mr Wong’s skeleton submissions, the essential background and legal issues underlying the HK Action and the Singapore Actions are as follows:

(1) The Plaintiff and the Defendants are respectively indirect and direct shareholders of Singapore Vermont. The Plaintiff indirectly holds 51% of shareholding in Singapore Vermont through Sin Hua and Vermont Groups Limited. Each of the Defendants directly holds 24.5% shareholding in Singapore Vermont. The Defendants were at the material time and are directors of Singapore Vermont.

(2) The Plaintiff has entered into a series of guarantees in favour of banks and suppliers for them to provide banking credit facilities and supplier credit line to Singapore Vermont.

(3) In turn, the Defendants have counter-guaranteed the Plaintiff’s liability to the banks and suppliers in proportion to their shareholdings in Singapore Vermont ie 24.5% each. These counter-guarantees are (1) dated 12 April 2010 between the Plaintiff and the 1st Defendant; (2) dated 12 April 2010 between the Plaintiff and the 2nd Defendant; (3) dated 18 July 2014 among the Plaintiff, the 1st Defendant and Singapore Vermont; and (4) dated 18 July 2014 among the Plaintiff, the 2nd Defendant and Singapore Vermont (“Counter-Guarantees”).

(4) In the Singapore Actions, the Plaintiff alleges that it and Sin Hua have provided financial assistance to Singapore Vermont (i) in the form of loans to Singapore Vermont to pay its suppliers between 2010 to 2016 in the sum of USD22,443,995.61 and (ii) in the form of loans to Singapore Vermont to pay its suppliers between 2010 to 2011 in the sum of USD18,360,759.33 (collectively “SG Claims”). As minority shareholders of Singapore Vermont, the Defendants are now derivatively defending SG 260 and SG 261 in Singapore.

(5) In the HK Action, the Plaintiff avers that it has made payments on behalf of Singapore Vermont to its suppliers in the sum of USD34,002,094.98 and to Bank of China in the sum of USD4.5 million, totalling USD38,502,094.98 (“Underlying Debts”). Hence, each of the Defendants, as counter-guarantor, is alleged to be obliged to contribute 24.5% of the HK Claims ie USD9,433,013.27 to the Plaintiff under the Counter-Guarantees.

7.  To put the essential background of the HK Action beyond doubt, Mr Wong has set out the “broad picture” in his skeleton as follows:

(1) To sustain Singapore Vermont’s operation, the Plaintiff entered into a series of guarantees in favour of banks and suppliers, so that credit facilities would be made available to Singapore Vermont. The Plaintiff has also made various payments to Singapore Vermont, its banks or its suppliers to discharge its financial obligations. The total debt owed by Singapore Vermont to the Plaintiff stands at USD38,502,094.98 ie the Underlying Debts.

(2) The HK Action is premised on the Counter-Guarantees executed by the Defendants in favour of the Plaintiff in 2010 and 2014. Under the Counter-Guarantees, the 1st and 2nd Defendants would each guarantee 24.5% share of any call on the Plaintiff’s and Sin Hua’s guarantees by the banks and suppliers.

(3) It is the Plaintiff’s case that the Defendants are each liable to the Plaintiff in the sum of USD9,433,013.27. The Defendants wrongfully refused to make repayments and hence are in breach of the Counter-Guarantees.

(4) The Singapore Actions were commenced by the Plaintiff and Sin Hua against Singapore Vermont to recover the debts owed to them. As the Defendants’ obligations under the Counter-Guarantees were triggered by Singapore Vermont’s default, the HK Action was commenced by the Plaintiff to enforce the Counter-Guarantees.

8.  Mr Hui submits that the underlying claims of the HK Action and Singapore Actions cover debts of the same nature over a common period of time. This is evident from the pleaded cases of the Plaintiff in the two Actions as follows:

(1) HK Action.

“From April 2010 to 20^th June 2016, Singapore Vermont was indebted to the Plaintiff in the total amount of USD 38,502,094.98 (‘the Overall Debt’) for payments made by the Plaintiff on behalf of Singapore Vermont to its suppliers and payments of debts incurred with the banks which provided banking facilities. ...

a.

Net payments made by the Plaintiff to Singapore Vermont suppliers from 21st April 2010 to 10th December 2013”

USD34,002,094.98

(emphasis added)

(2) SG Action.

“… from time to time between the periods from 2010 to 2016 and 2010 to 2011, the Defendant would request Goldsland and Sin Hua, respectively, to provide financial assistance in the form of parent company or associated company loans to the Defendant, in respect of loans to the Defendant directly, and also for the Defendant’s bunkering transactions with its suppliers. The Defendant would request Goldsland and Sin Hua to make payment directly to the Defendant’s bunkering suppliers, for bunkers which were supplied to the Defendant. …” (emphasis added)

9.  To the credit of Mr Wong, he acknowledges in his skeleton submissions that there is indeed overlap between the HK Action and the Singapore Actions, as far as the Underlying Debts are concerned. Nevertheless, he submits that there remains a number of issues which do not fall within the ambit of the Singapore Actions. These are summarised in paragraphs 13 to 17 of his skeleton submissions.

10.  That may well be correct but it is difficult to see why those remaining issues cannot be resolved in Singapore if the Plaintiff chooses to adopt the sensible course of suing Singapore Vermont, as well as the Defendants, in Singapore in one go. After all, the Defendants are Singapore citizens and Mr Wong frankly accepts there is no impediment for the Plaintiff to also sue the Defendants in Singapore. In that events, all issues regarding Singapore Vermont’s liability and the Defendants’ liability to the Plaintiff will be canvassed by the same Court at the same time.

11.  It is obvious that Singapore Vermont’s liability to the Plaintiff in SG 260 will have to be adjudicated by the High Court of Singapore - there is no evidence that Singapore Vermont seeks to stay the Singapore Actions in favour of the Hong Kong Court. If Singapore Vermont is held liable to the Plaintiff, this, subject to the Defendants’ undertaking below, will be determinative of a significant part of the Defendants’ liability as counter-guarantors of the Plaintiff in the HK Action. On the other hand, as accepted by Mr Hui in his skeleton, if Singapore Vermont is held not liable to the Plaintiff, then the Defendants, as counter-guarantors, will not be liable to the Plaintiff under their Counter-Guarantees.

12.  While the Defendants are not parties to SG 260 and SG 261, their solicitor has given a written undertaking to this court as follows:

“We, Poh Fu Tek and Koh Seng Lee, hereby undertake to the Hong Kong Court that we will be bound by the final decision and judgments made by the Singapore courts in HC/S 260/2018 & HC/S 261/2018, including any findings on liability and quantum on the part of the Defendant therein, and that we will not re-litigate any issues determined by the Singapore courts in the Hong Kong action vis-à-vis the Plaintiff herein.”

13.  In Re Chime Corporation Ltd unrep, HCMP 4146 of 2001, 11 March 2005, Kwan J (as she then was) explained the juridical basis for granting a temporary case management stay of proceedings at [11] - [14] as follows:

“11. The court has an inherent jurisdiction to regulate its own procedures, including jurisdiction to grant a stay in appropriate circumstances. This is preserved and recognised by section 16(3) of the High Court Ordinance, Cap. 4, which provides as follows: ‘Nothing in this Ordinance shall affect the power of the Court of Appeal or the Court of First Instance to stay any proceedings before it, where it thinks fit to do so, either of its own motion or on the application of any person, whether or not a party to the proceedings.’

12. Mr. Brock submitted that a stay constitutes interference with the right of a litigant to conduct his litigation to a trial on the merits, it is not a step to be taken lightly, and the court should not grant a stay unless the action, beyond all reasonable doubt, should not go on. In support of this, he cited Shackleton v. Swift [1913] 2 KB 304 at 312; Goldsmith v. Sperrings Ltd. [1977] 1 WLR 478 at 498H; Ha Francesca v. Tsai Kut Kan (No. 1) [1982] HKC 382 at 392G and 398; Re Ocean Palace Restaurant & Nightclub Ltd. [1999] 3 HKC 665 at 670H; Schreiber v. The Federal Republic of Germany (2001) 57 O.R. (3rd) 316 at paras. 4, 8, 43, 51 to 52; Abraham v. Thompson [1997] 4 All ER 362 at 374e to g; and Halsbury’s Laws of Hong Kong, Vol. 5(2) at para. [90.0938].

13. Mr. Potts, QC, for Mrs. Wang and CAL and Mr. Peter Ng, SC, for Chime and its two subsidiaries submitted that the authorities cited above would have no application here. I agree. In most of these authorities, the general approach referred to by Mr. Brock was adopted in the situation where a permanent stay was sought on various grounds, as when the action was not maintainable (in Shackleton v. Swift), or for abuse of process (in Goldsmith v. Sperrings Ltd. and Abraham v. Thompson), or where the co-extensive power of the court to strike out a claim was invoked (as in Ha Francesa v. Tsai Kut Kan (No. 1) and Re Ocean Palace). As for Schreiber v. The Federal Republic of Germany, this was where there was an overlap of civil proceedings with related criminal proceedings, which is far removed from the situation I am concerned with.

14. The correct approach, as submitted by Mr. Potts and Mr. Ng, in an application for a temporary stay of proceedings is ‘to consider the balance of convenience and fairness as between the parties’ (Alfred McAlpine Construction Ltd. v. Unex Corporation Ltd. (1994) 70 BLR 26 at 45C to D, per Glidewell LJ; applied in Clinton Engineering Ltd. v. B-Tech (Holdings) Ltd. [2001] HKCU 1002 at para. 9 and SWE Ltd. v. Chong Lai Fun, HCA No. 1064 of 2004, 28 October 2004, Reyes J, pages 5 and 6; see also Halsbury’s Laws of Hong Kong, Vol. 5(2), footnote 7 to para. [90.0938]) and the court should exercise its discretion in such a manner ‘to ensure that its procedures are used in a logical, fair and cost-efficient manner’ (SWE Ltd., page 5). The question at hand is not a question of deprivation of the right of a litigant to proceed altogether, but a question of case management.” (emphasis added)

14.  It seems to this court that the present application raises a simple case management issue and that the Court clearly has power to stay the proceedings before it, until a specified date or event pursuant to its case management power under RHC O 1B r 1(2)(e).

15.  Staying the present action has the advantage of ensuring the resources of the Court are distributed fairly and that its procedures are used in a logical, fair and cost-efficient manner. Not staying the present action will mean that both the Singapore Court and the Hong Kong Court will have to decide the same issue ie Singapore Vermont’s liability towards the Plaintiff, which will create an unnecessary duplication of efforts by the two Courts with the potential undesirable result of conflicting findings by them.

16.  According to the agreed procedural chronology of the HK and Singapore Actions prepared by the parties, both the HK Action and the SG 260 and SG 261 were commenced in January and March 2018 respectively.

17.  In the HK Action, the parties have exchanged their lists of documents only in August 2020. Despite an Order by Master Au-Yeung in July 2019 and another Order by Master Hui in November 2020 for the exchange of witness statements, it does not appear that the parties have yet done so. In the Singapore Actions, the parties have filed their lists and supplemental lists of documents between August and December 2021. In other words, neither the HK Action nor the Singapore Actions have proceeded beyond the stage of discovery after more than 3 years. There is thus no difference in terms of the progress of the HK Action and the Singapore Actions. Since the Plaintiff and its subsidiary Sin Hua are the plaintiffs in SG 260 and SG 261, the Plaintiff has substantial control over how quickly the Singapore Actions can progress if the HK Action is stayed.

18.  While, as stated earlier, Mr Wong submits that there are issues in the HK Action which are presently not within the ambit of the Singapore Actions, those issues can be resolved in SG 260 and SG 261 if the Plaintiff and Sin Hua choose to add the Defendants as defendants in the Singapore Actions. As Mr Wong frankly admits at the hearing, it is feasible, and indeed more convenient, for the Plaintiff to pursue its claims against Singapore Vermont and the Defendants in Singapore together, both because of the common issues in the HK Action and the Singapore Actions and also because the Defendants, just like Singapore Vermont, are located in Singapore.

19.  At the end of the day, Mr Wong accepts that the present application involves a balancing exercise. Staying the HK Action has the advantages mentioned above with no or little prejudice to the Plaintiff. As Mr Wong for the Plaintiff seems to be receptive to the idea of joining the Defendants in the Singapore Actions, there does not appear to be any undue advantage to the Defendants if the stay application is granted.

20.  For all the above reasons, this court is of the view that, as a matter of sound case management, the HK Action should be stayed.

Disposition and costs order nisi 

21.  There shall be an Order in terms of paragraph 1 of the Summons with an Order nisi that costs be to the Defendants, to be taxed if not agreed, and paid by the Plaintiff forthwith, certificate for counsel.