David Hague Price Waterhousecoopers Appellants/applicants v Nam Tai Electronics, Inc. Respondent
| Jurisdiction | British Virgin Islands |
| Judge | Gordon, J.A. |
| Judgment Date | 16 January 2006 |
| Neutral Citation | VG 2006 CA 2 |
| Judgment citation (vLex) | [2006] ECSC J0116-2 |
| Court | Court of Appeal (British Virgin Islands) |
| Docket Number | CIVIL APPEAL NO. 20 OF 2004/10 OF 2005 |
| Date | 16 January 2006 |
IN THE COURT OF APPEAL
The Hon. Mr. Michael Gordon, QC Justice of Appeal
The Hon. Mr. Denys Barrow, SC Justice of Appeal
The Hon. Mr. Hugh Rawlins Justice of Appeal
CIVIL APPEAL NO. 20 OF 2004/10 OF 2005
CIVIL APPEAL NO. 25 OF 2004
Mr. Richard Hacker Q.C. with Mr. Michael Fay and Ms. Claire-Louise Wiley for the Applicants/Appellants
Mr. David Chivers Q.C. with Mr. John Carrington and Mr. Terrence Neale for the Respondent.
Civil Appeal No. 10 of 2005 is an appeal by the appellants against a decision of the trial Judge dated 29 th October 2004 refusing to set aside leave to serve proceedings out of the jurisdiction on the appellants and further refusing to stay the proceedings on the ground of forum non conveniens. This appeal will be referred to as 'the service out appeal'.
Civil Appeal No. 25 of 2004 is a separate appeal against a decision of the trial Judge dated 14 th December 2004 dismissing the application by the first appellant (hereafter referred to as 'Mr. Hague') to strike out a claim by the respondent (hereafter referred to as 'Nam Tai) to enforce a cross undertaking in damages given by Mr. Hague. This latter appeal will be referred to as 'the damages appeal'. The two appeals were heard separately as discrete appeals, even though one immediately followed the other in argument. This judgment will address both appeals.
Nam Tai is a company incorporated in the British Virgin Islands (hereafter "BVI") under the International Business Companies Act, Cap 291 of the laws of the BVI whose shares were traded firstly on NASDAQ and subsequently on the New York Stock Exchange.
Tele Art Inc (hereafter Tele Art) is a company, also incorporated under the International Business Companies Act of the BVI. Tele Art was ordered to be wound up by an Order of the High Court of the BVI dated 17th July 1998 on the petition of Nam Tai presented on the 27 th June 1997. Mr. Hague was appointed the liquidator. The proposal for the appointment of Mr. Hague as liquidator was made by Nam Tai. At the time of the presentation of the petition for the winding up of Tele Art Mr. Hague was employed by PricewaterhouseCoopers (hereafter PWC) in Hong Kong. It is the contention of the appellants that this appointment reflected the reality that all of the functions that the liquidator would have to perform in relation to Tele Art would have to be performed in Hong Kong.
Tele Art was found to be insolvent. Claims by creditors of Tele Art (including claims by Nam Tai and Bank of China) amounted to many millions of dollars and the only substantial asset in its liquidation was its holding of a significant number of shares in Nam Tai. Nam Tai sought to redeem the Nam Tai shares held by Tele Art which redemption was resisted by Tele Art; indeed, the liquidator sought and received an order from this court enjoining Nam Tai from proceeding to redeem and cancel the Nam Tai shares held by Tele Art. The liquidator, Mr. Hague, as is usual, gave an undertaking in damages as a condition to receiving the injunction against Nam Tai. The damages appeal arises from the attempt of Nam Tai to determine what damages should be awarded against Mr. Hague resulting from the granting of the injunction pursuant to his undertaking. 1
Independently of the claimed damages alleged to flow from the granting of the injunction, Nam Tai, in September 2002, commenced a separate suit against Mr. Hague and PWC. In that suit Nam Tai claimed against Mr. Hague as liquidator and PWC as his agent in relation to matters relevant to the liquidation up to 31 st July 2002 for breach of statutory duties and or negligence in the carrying out of his duties as the liquidator of Tele Art.
On 4 th October 2002 pursuant to a 'without notice' application, Nam Tai was granted leave to serve the Claim Form, the Statement of Claim and all other documents required to be served by personal service on Mr. Hague and PWC in Hong Kong. By application filed on December 24, 2002, the appellants applied to set aside the order for service out and the subsequent service made pursuant thereto on the grounds that the order for service out was given in breach of the CPR, Part 7, and also applied for all subsequent proceedings in the action to be stayed as against the appellants on the grounds of forum non conveniens.
On 29 th October 2004 the High Court dismissed the application to set aside the order to serve out dated 4 th October 2002 and refused the stay on forum grounds.
The appellants are dissatisfied with both aspects of the order of 29 th October 2004 and have appealed from that order. The actual service out aspect will be considered first and then the forum issue will be considered.
The appellants' principal argument centered on the lack of jurisdiction of the court to make the service out order. Reliance was placed on the language of CPR Part 7.3, the relevant parts of which are herewith reproduced for ease of reference
"Service of claim form out of jurisdiction in specified proceedings
7.3 (1) The court may permit a claim form to be served out of the jurisdiction if the proceedings are listed in this rule.
Features which may arise in any type of claim
(2) A claim form may be served out of the jurisdiction if a claim is made -
(a) against someone on whom the claim form has been or will be served, and -
(i) there is between the claimant and that person a real issue which it is reasonable for the court to try; and
(ii) the claimant now wishes to serve the claim form on another person who is outside the jurisdiction and who is a necessary and proper party to that claim;
(b) for an injunction ordering the defendant to do or refrain from doing some act within the jurisdiction; or
(c)for a remedy against a person domiciled or ordinarily resident within the jurisdiction.
…
Claims in tort
(4) A claim form may be served out of the jurisdiction if a claim in tort is made and the act causing the damage was committed within the jurisdiction or the damage was sustained within the jurisdiction.
…
Claims about trusts, etc.
(7)A claim form may be served out of the jurisdiction if -
(a)a claim is made for a remedy against the defendant as constructive trustee and the
defendant's alleged liability arises out of acts committed within the jurisdiction;…
Miscellaneous statutory proceedings
(9)A claim form may be served out of the jurisdiction if the claim is brought under the -
(i)Carriage by Air Act, 1961(U.K.);
(ii)Schedule to the Carriage by Air (Supplementary Provisions) Act, 1962 (UK);
(iii) Schedule to the Carriage of Goods by Road Act, 1965 (UK);
(iv) Nuclear Installations Act, 1965 (UK); or
any amendment or substitution for these Acts in so far as they form part of the law of any
Member State or Territory.
Proceedings which include other types of claim
7.4 If the claimant makes a claim which falls within -
(a) rule 7.3(3) (claims about contracts);
(b) rule 7.3(4) (claims in tort); or
(c) rule 7.3(7) (a) (claims against the defendant as a constructive trustee);
the court may grant any claim for a remedy which -
(i) does not fall within rule 7.3; but
(ii) arises out of the same facts or substantially the same facts as
the claim in respect of which the order is made."
From the tenor of the arguments it would appear that both sides concede that if there is jurisdiction to serve out then it can only be based on CPR Part 7.3 (4). In brief the argument of the appellants is that, notwithstanding that the claim of Nam Tai for breach of a common law duty of care appears, prima facie, to fall within Part 7.3 (4) (claims in tort), any examination of the surrounding circumstances would reveal that, in fact, there is no jurisdiction in the court to order service out because the breach of the duty, if there was a duty and if there was a breach, was not committed within the jurisdiction of the BVI, nor was any damage suffered by Nam Tai within the jurisdiction. The appellants, however, do not in any way concede that there was a breach of a common law duty of care.
The appellants argue that if there was a breach of a common law duty of care, then not only is Mr. Hague not physically present in the BVI (at the time of the filing of the suit he was resident in Hong Kong) but PWC is also based in Hong Kong and has no presence in BVI; Nam Tai also has, at best, a minimal presence in BVI and carry out all their business in Hong Kong. It follows, therefore according to the appellants, that if any act or omission in breach of the appellants' common law duties to Nam Tai were committed, such acts or omissions would have been committed in Hong Kong. Similarly, if any damage flowed from any such breach of the common law duties owed to the respondent, then such damage would have been suffered in Hong Kong.
The response of Nam Tai to the above argument is that Mr. Hague was appointed liquidator of Tele Art by the High Court of the BVI. As such Mr. Hague had a duty to the creditors to get in and distribute the assets of Tele Art to them and any other creditors. Nam Tai further asserted that as the official liquidator of Tele Art Mr. Hague is deemed to be an officer of the BVI High Court as well as being an agent of Tele Art. As liquidator, Mr. Hague is, according to Nam Tai, accountable to the High Court of the BVI for the proper fulfillment of his obligations. Nam Tai's argument runs further that had Mr. Hague collected the assets of Tele Art in accordance with his responsibility, then he would have had the obligation to distribute a dividend to the creditors of Tele Art of whom Nam Tai was one such; the collection of assets and distribution of...
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