Lau Man Sang, James et Al v King Bun Ltd et Al

• Jurisdiction: British Virgin Islands
• Court: Court of Appeal (British Virgin Islands)
• Judge: Ellis JA
• Judgment Date: 15 February 2024
• Judgment citation (vLex): [2024] ECSC J0215-2
• Docket Number: BVIHCMAP2022/0006

[1] Lau Man Sang, James

[2] Lung Hung Cheuk

[3] Cheung Wing Sum, Albert

[4] Ngai Hin Kwan, Albert

[5] Yeung Yiu Chong

[6] Zhang Guo Wei

Defendants/Appellants

and

[1] King Bun Limited

[2] Kency Ltd

[3] Kar Kwong Development Limited (trading as Kai Kwong Trading Company)

[4] Khi Capital Limited

[5] Kentrue Company Limited

[6] Hui Pak Kong (Suing in the name and on behalf of themselves and all other shareholders in Vanway International Group Limited, except the First and Second Defendants)

Claimants/Respondents

[1] Chau Cheuk Wah, Angus

[2] Vanway International Group Limited

Defendants/Respondents

Heard together with:

Between:

[1] Lau Man Sang, James

[2] Lung Hung Cheuk

[3] Cheung Wing Sum, Albert

[4] Ngai Hin Kwan, Albert

[5] Yeung Yiu Chong

[6] Zhang Guo Wei

Appellants

and

[1] King Bun Limited

[2] Kency Ltd

[3] Kar Kwong Development Limited (Trading as Kai Kwong Trading Company)

[4] Khi Capital Limited

[5] Kentrue Company Limited

[6] Hui Pak Kong (suing in the name and on behalf of themselves and all other shareholders in Vanway International Group Limited, except the first and second defendants)

[7] Chau Cheuk Wah, Angus

[8] Vanway International Group Limited

Respondents

Before:

The Hon. Mr. Mario Michel Justice of Appeal

The Hon. Mde. Vicki Ann Ellis Justice of Appeal

The Hon. Mr. Gerard St. C. Farara Justice of Appeal [Ag.]

BVIHCMAP2022/0006

BVIHCMAP2022/0028

THE EASTERN CARIBBEAN SUPREME COURT

IN THE COURT OF APPEAL

Interlocutory appeal — Appellate interference with trial judge's case management orders — Appeal against case management orders made by judge after split trial — Prevention against double-recovery — Election of remedies — Inconsistent and alternative remedies — Whether the trial judge erred by failing to mandate that the respondents elect between an account of profits and damages/compensation — Time of election — Whether the trial judge erred in the exercise of his discretion by making the Consequential Order — Disclosure — Whether the disclosure ordered by the trial judge in the Directions Order exceeded the information that the respondents were entitled to at that stage

The underlying dispute in the lower court concerned a derivative action brought by the 1 ^st – 6 ^th respondents as minority shareholders in Vanway International Group Limited (the “Company”). The 1 ^st – 6 ^th respondents were the claimants in the lower court (“the Claimants”), whilst the 1 ^st – 6 ^th appellants and the 7 ^th respondent were the defendants. The defendants at first instance were also the Company's directors (the “Directors”). The Claimants complained that the Directors took a series of steps in 2015 to cause the Company to dispose of certain subsidiary companies (the “Target Group”) to the 1 ^st appellant (“Mr. Lau”), by wrongful and/or unlawful means and at a gross undervalue, to the detriment of the Company.

During a case management conference (“CMC”) in 2018, the trial judge ordered that the issue of liability was to be determined at a split trial and that the issues of relief and quantum should be stood over for directions by the trial judge. The trial on liability took place over the course of several sittings and eventually, in a written judgment delivered on 20 ^th July 2021, the judge found in favour of the Claimants (the “Liability Judgment”). In October 2021, the court entered an order on judgment (the “Order on Judgment”) which, inter alia, required the Claimants to file and serve a notice of application with evidence in support, in relation to the consequential orders sought in relation to: (a) relief, (b) costs and (c) further directions for determination of quantum.

The Claimants duly filed the requisite notice of application on 21 ^st October 2021. The following month, the appellants appealed against the Liability Judgment and the Order on Judgment in BVIHCMAP2021/0034 (the “Substantive Appeal”). Shortly thereafter, the appellants sought a stay of the proceedings pending the outcome of the Substantive Appeal (the “Stay Application”).

At a hearing on 10 ^th December 2021, the judge dismissed the Stay Application and made two orders. One addressed consequential matters arising from the Liability Judgment (the “Consequential Order”). The Consequential Order is the subject of appeal BVIHCMAP2022/0006 (the “Consequential Appeal”) by the appellants. The other order, which is the subject of its own separate appeal, BVIHCMAP2022/0028 (the “Directions Appeal”), gave directions for the trial on quantum (the “Directions Order”).

At a hearing on 8 ^th February 2023, the Court of Appeal heard the Substantive, Consequential and Directions Appeals together. By written judgment delivered on 7 ^th July 2023, the Court dismissed the Substantive Appeal and affirmed the trial judge's ruling. Consequently, this judgment addresses and disposes of the Consequential and Directions Appeals.

The appellants' overall submission was that the judge erred in making the Consequential and Directions Orders having misinterpreted the relevant authorities. As to the Consequential Order, the appellants argued that, having prayed for various reliefs including an account of profits and damages/compensation, the respondents were mandated to choose one of these remedies. The appellants asserted that as per the decision of Personal Representatives of Tang Man Sit v Capacious Investments Ltd., an account of profits and damages were inconsistent and alternative remedies and therefore, the respondents had to elect between these two remedies before further substantive steps in the relief and quantum trial could take place. The respondents countered that there was no error by the judge since the judge made it clear that the Order was solely concerned with liability. Furthermore, they submitted that paragraphs 1 – 4 of the Order were qualified by paragraphs 5 and 6, which specified that nothing in the Order would entitle the Claimants to double-recovery or to benefit from inconsistent remedies.

As to the Directions order, the appellants argued that the judge erred since the respondents were only entitled to limited disclosure before election. They also contended that the Order was too vague and uncertain. The respondents countered that the judge's approach was appropriate and consistent with the authorities, particularly in light of the appellants' prior disregard for their disclosure obligations.

Held: dismissing the Consequential and Directions Appeals and ordering that the appellants pay the respondents' costs on the appeal and in the court below, to be assessed by a judge of the Commercial Court, if not agreed, within 21 days of the date of this judgment, that:

• 1. In an appeal against a trial judge's case management decision, an appellate court would only interfere with the judge's exercise of his discretion if it can be shown that he exceeded the generous ambit within which reasonable disagreement was possible. An appellate court is therefore not at liberty to substitute its own exercise of discretion for the discretion already exercised by the judge merely because they would have exercised the original discretion in a different way.

  A.E.I. Rediffusion Music Ltd. v Phonographic Performance Ltd. [1999] 1 WLR 1507 applied; Roache v News Group Newspapers Ltd [1998] EMLR 161 applied; Charles Osenton and Company v Johnson [1942] AC 130 applied; Bellenden (formerly Satterthwaite) v Satterthwaite [1948] 1 All ER 343 applied.

• 2. The doctrine of election of remedies compels a claimant to choose his/her remedy between two or more inconsistent remedies when two legal theories with contradictory remedies arise out of the same facts. The doctrine prevents double-recovery for a loss from a single wrong. For the doctrine to apply, there must at least be two remedies; these remedies must, in law, be inconsistent; and they must arise from a single wrong. The doctrine would not apply if the remedies are concurrent, cumulative and consistent.

  Clough v London and North Western Rail Co. [1861–73] All ER Rep 646 applied.

• 3. Built into the doctrine of election, however, is an element of flexibility. It is not rigid and unbending. Like all procedural principles, they are not fixed and unyielding rules. They are a means to an end, not the end in themselves. They are no more than practical applications of a general and overriding principle governing the conduct of legal proceedings, namely that proceedings should be conducted in a manner which strikes a fair and reasonable balance between the interests of the parties and the wider public interest in the conduct of court proceedings.

  Personal Representatives of Tang Man Sit v Capacious Investments Ltd. [1996] A.C. 514 applied.

• 4. As to the timing of election, this must occur at the time when the judgment is entered. Where litigation is bifurcated and liability is determined as a separate question, election may be deferred. A critical factor in determining the appropriate time at which election should be made is fairness. However, considerations of fairness operate in favour of both parties to the litigation. Accordingly, in the absence of conduct which prejudices the defendant, a claimant should not be called upon to elect until the evidence has established the facts upon which the election can fairly be made. Thus, where a claimant must elect between inconsistent and alternative remedies, he ought not to be mandated to elect unless and until he is able to make an informed choice.

  Minnesota Mining and Manufacturing Co v C Jeffries Pty Ltd [1993] FSR 189 applied; Island Records Ltd v Tring International plc [1995] 3 All ER 444 applied; Immer (No. 145) Pty Ltd v Uniting Church in Australia Property Trust (NSW) (1993) 182 CLR 26 applied; Peyman v Lanjani [1985] Ch 457 considered.

• 5. Although Personal Representatives of Tang Man Sit v Capacious Investments Ltd. (and the several cases that follow its reasoning), has generally been referred to as holding...