HKCFI 902
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF FIRST INSTANCE
ACTION NO 34 OF 2019
||BONITA CO. LTD
Before: Hon K Yeung J in Chambers
Date of Hearing: 17 December 2019
Date of Decision: 28 May 2020
1. On 19 July 2019, the plaintiff (“P”) sought and obtained from Deputy Judge Leung on an ex parte basis (the “HK Ex Parte Application”) an injunction (the “HK Injunction”) restraining the defendant (“D”) from dealing with its assets up to the sum of US$1,292,616.64 (the “Restrained Amount”). The HK Injunction was obtained in aid of an arbitration commenced in and conducted before a tribunal seated in the UK (the “UK Arbitration” and the “UK Tribunal”). The inter partes summons (the “Continuation Summons”) first came before Wilson Chan J on 2 August 2019. Continuation of the HK Injunction was opposed by D, and the Continuation Summons was adjourned with directions on the filing of evidence having been given. The HK Injunction was continued in the meantime. The Continuation Summons now comes before this Court for substantive hearing.
2. The issues are whether P has demonstrated a good arguable case, whether there was sufficient urgency in the matter for P to have gone ex parte, and whether there has been any material non‑disclosure on P’s part.
Three preliminary matters
3. Before dealing with the Continuation Summons, I record 3 matters:
(a) on 4 December 2019 D took out a summons for leave to file certain additional evidence. On the morning of the hearing, Mr Wong, leading counsel appearing for D, informed the Court that he would no longer pursue the application. I granted him leave to withdraw that summons, with costs to P;
(b) on 12 December 2019, P took out a summons for an order that “[D] do file and serve an affirmation by an officer of [D] rather than by any legal representative of [D] … providing further and better particulars of [D’s] assets …”. It was supported by the 3rd Affirmation of Joo Hyun Park (the Deputy General Manager of P, “Park”, and “Park/#3”). On the morning of the hearing, Mr Wong informed the Court that D was prepared to ask an officer of D to within 7 days make an affirmation on the matters under §§3(a) and (b) of the HK Injunction. In the light of that, Mr Brown, counsel for P, informed me that he would not take his application further. I made an order accordingly, with costs to P. I will also, for the purpose of the adjudication of the Continuation Summons, ignore Park/#3; and
(c) on the morning of the hearing, Mr Brown produced before this court the “Partial Final Award” dated 16 December 2019 of the UK Tribunal (the “Partial Final Award”). Mr Wong had no objection to that document being placed before this court for the purpose of the Continuation Summons.
The affirmatory evidence
4. Before me there are the following affirmations:
(a) For P:
(i) the affirmation of Park of 19 July 2019 (“Park/#1”) filed in support of the HK Ex Parte Application;
(ii) Park’s 2nd affirmation of 24 October 2019 filed in reply of Leung #2 (see below); and
(b) For D:
(i) the 1st affirmation of Leung King Wai William (“Leung”) of 16 August 2019 (“Leung #1”). Leung is the principal of Messrs William K.W. Leung & Co., solicitors for D (“WLC”). Leung #1 was filed in purported compliance by D of the asset disclosure requirement imposed upon it by the HK Injunction;
(ii) Leung’s 2nd affirmation of 27 September 2019 (“Leung #2”) in opposition of P’s Continuation Summons.
5. The underlying dispute relates to the hire of motor vessel “LDL Carnation” (the “Vessel”).
6. In its capacity as owners of the Vessel, P entered into a bareboat charterparty of 23 December 2010 with D (the “Master C/P”).
7. Under the terms of the Master C/P:
(a) D was to pay hire at US$15,400 per day, payable monthly and in advance;
(b) the Master C/P period was 5 years subject to certain options to extend;
(c) Any dispute arising out of the Master C/P was to be submitted to arbitration in London in accordance with the London Maritime Arbitrators Association (“LMAA”) terms (Clause 30).
8. On the same date when the Master C/P was entered into, D entered into what was in effect a downstream back‑to‑back (save the hire) charterparty (the “BB C/P”) with Easter Media International Corporation (“EMIC”) and Far Eastern Silo & Shipping (Panama) S.A (“FESS”) (together the “Sub‑charterers”). Under the BB C/P, the Sub‑charterers were to pay D daily hire of US$16,500, payable monthly in advance. The BB C/P period was also 5 years, which was again subject to certain options to extend.
9. It is P’s case that also on 23 December 2010, D, pursuant to the terms of the Master C/P, assigned to P absolutely all interest and rights D had under, in or in connection with the BB C/P. It is further P’s case that notice of the assignment had been given to the Sub‑charterers who acknowledged the same by a Form of Sub‑Charterer’s Acknowledgement dated 23 December 2010. The effect of the assignment was disputed by D.
10. Pursuant to the Master C/P, P on 5 September 2014 delivered the Vessel to D. At the same time, D delivered the Vessel to EMIC pursuant to the BB C/P.
11. Both the Master C/P and BB C/P had subsequently been extended to 5 August 2020 (the “Extended Expiry Date”).
12. The 56th hire under the Master C/P related to the hire for the month of April 2019 payable by D. It was in the sum of US$462,000. D has failed to settle the same.
13. The 57th hire under the Master C/P related to the hire for the month of May 2019 payable by D. It was in the sum of US$477,400. D has also failed to settle the same.
14. Correspondence ensued between P and D as a result of the non‑payment of the Unpaid Hire. In particular, between 9 April 2019 and 17 June 2019, Ms Jenny Tsai representing D in 5 emails claimed to P that D had in fact paid the Unpaid Hire to its bank (namely HSBC), but that the onward payment by its bank to P had somehow been delayed. There had been no denial that the Unpaid Hire had become payable. As late as 8 July 2019 (by which time, as we shall see, the TSA (as defined below) had been signed), Park on P’s behalf was still issuing emails chasing for the Unpaid Hire. She in an email of that date (the “8 July 19 Email”) said that:
“ We have requested full payment of the hire and/or substantiating document to prove that your bank, HSBC, is holding the payment as per your allegation. However, we have not received any constructive response or evidence to date and we cannot but consider Bonita’s allegation for payment of hire appears to be no more than a fraud. Unless Bonita provide genuine evidence as payment of hire by tomorrow, 9th JUN 2019, we have no other option but to proceed with all necessary actions, including filing criminal charges against Bonita without further notice.”
As things turned out, D failed to pay P the Unpaid Hire.
15. In the meantime, there were negotiations between the parties for early re‑delivery of the Vessel by EMIC before the expiry of the Extended Expiry Date. Those negotiations were primarily between P and EMIC. The extent of D’s involvement therein is in dispute.
16. Consequential upon those negotiations, P, D and EMIC entered into a Termination Settlement Agreement dated 4 June 2019 (the “TSA”). In respect of the TSA and pursuant to its terms:
(a) Early re‑delivery of the Vessel was agreed to be effected on 10 June 2019 (the “Re‑delivery Date”);
(b) Clause 1, that:
“ …EMIC agrees and shall pay, for indemnifying the loss and damages which [P] and [D] may and would suffer respectively under the Master C/P and/or [BB C/P] as a result of such earlier redelivery of the Vessel and closing the accounts thereof,
a) to [P] directly a sum of … [US$5,950,000] … for a total of 422 days as from the [Re‑delivery Date] upto the [Extended Expiry Date]…
b) to [D] directly a sum of … [US$464,200] at a daily rate of US$1,100 and on the same base of a) above …”
(c) Clause 6, that:
“ Once the payments hereunder are paid in full by EMIC to [P] and [D], it reflects and shall be a full and final indemnity and settlement to any and all claims of loss, damage and/or incidental expenses with regard to the charter hire payable at the rate specified in the respective charter party and for the charter period not performed by EMIC and [D]…”
(d) Clause 7, that:
“ In consideration of and against the payments mentioned above, [P] and [D] both agree to and shall:
a) Subject to [Ps’] and [D’s] receipt of the payment hereunder, the charter parties shall be terminated promptly with the Parties’ mutual agreement upon the date and time of signing [protocol of redelivery and acceptance] according to terms of this Agreement.
(e) Clause 11 thereof that:
“ Disputes and Claims if any the parties may have which are arising out of and/or in connection with performance and enforcement of this Agreement shall be submitted to and settled by a single arbitrator appointed by the Hong Kong International Arbitration Centre (‘HKIAC’), to that English law and the rules and practice of HKIAC shall be adopted and apply.”
17. On 17 June 2019, P applied ex parte in London (with notice to EMIC) for an order requiring EMIC to pay the sum of US$474,100 (the “Settlement Sum”) into either a controlled account or into Court and to prevent D from taking steps to demand and/or recover that sum from EMIC. An Order to that effect was granted by Jacobs J on the same day (the “UK Injunction”).
18. On 25 June 2019, P pursuant to Clause 30 of the Master C/P commenced...