Convoy Collateral Ltd v Broad Idea International Ltd
| Jurisdiction | British Virgin Islands |
| Judge | Webster JA |
| Judgment Date | 30 March 2020 |
| Judgment citation (vLex) | [2020] ECSC J0330-2 |
| Docket Number | BVIHCMAP2016/0030 |
| Court | Court of Appeal (British Virgin Islands) |
| Date | 30 March 2020 |
THE EASTERN CARIBBEAN SUPREME COURT
IN THE COURT OF APPEAL
The Hon. Mr. Davidson Kelvin Baptiste Justice of Appeal
The Hon. Mde. Gertel Thom Justice of Appeal
The Hon. Mr. Paul Webster Justice of Appeal [Ag.]
BVIHCMAP2016/0030
Mr. Paul McGrath, QC with him Mr. Jonathan Addo and Ms. Lucy Hannett for the Appellant
Mr. David Mumford, QC with him Mr. Fraser Mitchell for the 2 nd Respondent
Commercial Appeal — Ex parte freezing injunction — Service outside jurisdiction — Absence of substantive claim against foreign defendant within jurisdiction — Presence of assets within jurisdiction — Jurisdiction to serve freestanding injunctions — Rule 7.3(2)(b) Civil Procedure Rules 2000 — Whether the court had jurisdiction to authorise service of an application for freestanding injunctive relief on a person outside jurisdiction pursuant to Rule 7.3(2) and not otherwise subject to the jurisdiction of the Court — Whether reasons given by learned judge in court below sufficient — Interpretation of Rule 7.3(2) — Invitation to Chief Justice to convene a meeting with Rules Committee to amend rule 7.3(2)
The appellant, Convoy Collateral Ltd (“Convoy”) is a company incorporated in Hong Kong. The first respondent, Broad Idea International Limited (“Broad Idea”) is a company incorporated in the Territory of the Virgin Islands (“BVI”). The second respondent, Dr. Cho Kwai Chee Roy (“Dr. Cho”), is a Hong Kong resident who owns 50.1% of the issued shares in Broad Idea. In February 2018, Convoy commenced proceedings against Dr. Cho in the High Court of Hong Kong claiming substantial damages. On 2 nd February 2018, Convoy applied ex parte in the Commercial Court of the BVI, for freezing orders against Dr. Cho and Broad Idea in support of the proceedings in Hong Kong and for permission to serve Dr. Cho outside the jurisdiction. This was done to freeze all dealings with Dr. Cho's shares in Broad Idea so that they would be available to satisfy any money judgment awarded to Convoy in the Hong Kong proceedings. On 9 th February 2018, Chivers J granted the orders sought.
Following adjournments of Convoy's application to continue the freezing order, Dr. Cho applied to set aside the orders made by Chivers J on the 9 th February 2018, and for a declaration that the court should not have exercised jurisdiction over him. The set-aside application was heard by Adderley J. The learned judge found that the court did not have power to grant an order permitting service outside the jurisdiction of a freestanding injunction in support of foreign proceedings on a person who was not subject to the territorial jurisdiction of the court. Accordingly, the learned judge set aside the orders granted on 9 th February 2018.
Convoy appealed against the learned judge's order and filed four grounds of appeal. Essentially, this appeal raised three issues: (i) whether the court had jurisdiction to authorise service of an application for freestanding injunctive relief on a person outside jurisdiction pursuant to rule 7.3(2) of the Civil Procedure Rules, 2000 (“CPR”); (ii) the sufficiency of reasons given by the learned judge to support his findings in the court below; and (iii) the interpretation of rule 7.3(2) of the CPR.
Dr. Cho filed a counter-notice of appeal seeking to uphold the learned judge's decision on grounds not dealt with by Adderley J.
Held: dismissing the appeal, allowing the counter-notice of appeal, affirming the trial judge's findings and awarding the costs of the appeal to Dr. Cho such costs to be assessed by a judge of the Commercial Court at the rate of two-thirds of the amount assessed in the court below, that:
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1. The power to serve a claim form outside the jurisdiction seeking relief is contained in rule 7.3(2)(b) of the CPR. However, rule 7.3(2)(b) does not confer extraterritorial jurisdiction on the court to authorise the service of a document on a foreigner outside of the jurisdiction where there is no substantive claim against the foreigner within the jurisdiction. The presence of assets within the jurisdiction is not a sufficient basis to give the court power under rule 7.3(2)(b) to serve a foreigner outside the jurisdiction. Accordingly, the learned judge did not err in finding that the court did not have jurisdiction to grant free standing injunctive relief in the circumstances of this case
Rule 7.3(2)(b) of the Civil Procedure Rules 2000 applied; Mercedes-Benz AG v Leiduck [1996] 1 AC 284 applied; Siskina (owners of cargo lately laden on board) and others v Distos Compania Naviera SA [1979] AC 210 considered; Black Swan Investment ISA v Harvest View Ltd BVIHCV2009/399 considered; VTB Capital plc v Malofeev [2011] (2) CILR 420 considered.
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2. The learned judge gave ample reasons for his decision to set aside the ex parte freezing injunction and service out order made by Chivers J on 9 th February 2018.
Flannery v Halifax Estate Agencies Ltd [2000] 1 WLR 377 applied; English v Emery Rheimbold & Strict Ltd [2002] 1 WLR 2409 applied.
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3. The learned judge's interpretation of rule 7.3(2) of the CPR is consistent with the decided cases and there was no need for him to resort to a purposive construction of the rule in an attempt to show that it permitted service of an application for freestanding injunctive relief on a person outside the jurisdiction. Further, the Court could not on the basis of “practicality” construe rule 7.3(2) of the CPR to allow service outside the jurisdiction for freestanding injunctions. This is a matter for the lawmakers, not the courts.
Mercedes-Benz AG v Leiduck [1996] 1 AC 284 applied.
The judgment of the court will not take effect until Wednesday, 1 st April, 2020 at 12:00 noon.
Webster JA [AG]: This is an appeal against the order of Adderley J dated 17 th April 2019 discharging an ex parte freezing injunction and service outside the jurisdiction order made by Chivers J on 9 th February 2018.
The appellant, Convoy Collateral Ltd (“Convoy”), is company incorporated in Hong Kong as a part of the Convoy Group of Companies that provides financial planning and asset management services in Hong Kong, Macau and China.
The second respondent, Dr. Cho Kwai Chee Roy (“Dr. Cho”), is a Hong Kong national residing in Hong Kong. He owns 50.1% of the issued shares in the first respondent, Broad Idea International Limited (“Broad Idea”), a British Virgin Islands (“BVI”) company. Broad Idea holds 18.85% of the shares of Town Health International Medical Group, a Cayman Islands company (“Town Health”). The estimated value of Dr. Cho's shareholding in Broad Idea is HK$490,387,802.
In February 2018, Convoy commenced proceedings against Dr. Cho in the High Court of Hong Kong claiming breach of fiduciary and other duties owed by Dr. Cho to Convoy resulting in losses of US$92,267,194.10.
On 2 nd February 2018, Convoy applied ex parte in the Commercial Court of the BVI for freezing orders against Broad Idea and Dr. Cho in support of the proceedings in Hong Kong, and for permission to serve Dr. Cho outside the jurisdiction. The application was heard by Chivers J on 9 th February 2018 and he made the following orders:
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(i) that Broad Idea be restrained until the return date from dealing with or diminishing the value of its shareholding in Town Health or registering any dealings whatsoever with the said shares up to a value of US$75,583,490.03;
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(ii) that Dr. Cho be restrained until the return date from taking any steps to dispose of or diminish the value of his assets within the BVI, including his shareholding in Broad Idea, up to a value of US$75,583,490.03;
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(iii) that Dr. Cho disclose his BVI assets to the legal representatives of the Appellant; and
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(iv) that Convoy is permitted to serve Dr. Cho outside the jurisdiction at his address in Hong Kong or failing that at Broad Idea's registered agent in the BVI.
Following adjournments of Convoy's application to continue the freezing order, Dr. Cho applied on 4 th December 2018 to set aside the order granting leave to serve the BVI proceedings on him, for a declaration that the court does not have jurisdiction or should not exercise jurisdiction over him, and that the freezing order and other relief granted against him on 9 th February 2018 be set aside. The set-aside application was heard by Adderley J on 2 nd and 3 rd April 2019.
On 17 th April 2019, Adderley J delivered a written judgment by which he found that the BVI court did not have power to grant an order permitting service outside the jurisdiction of a freestanding injunction in support of foreign proceedings on a person (Dr. Cho) who is not subject to the territorial or personal jurisdiction of the court. Accordingly, he set aside the order permitting service on Dr. Cho and discharged the freezing order against him.
Convoy appealed against the judge's order. The notice of appeal lists four grounds of appeal which can be summarised as follows:
I will deal with these grounds in the order listed above.
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(i) Ground 1: The judge erred in finding that he was bound by the decision of the Privy Council in Mercedes-Benz A.G. v Leiduck and therefore the court did not have jurisdiction to grant free standing relief against a person who was not subject to the jurisdiction of the BVI court.
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(ii) Ground 2: This ground combines allegations that the judge misinterpreted the gateway provision in rule 7.3 (2) of the Civil Procedure Rules 2000 (“CPR”) and did not give reasons for finding that rule 7.3(2) does not provide a gateway for service of a free standing injunction on a person who was not subject to the jurisdiction of the BVI court.
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(iii) Ground 3 challenges the judge's interpretation of rule 7.3(2) on various...
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