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Galsworthy Ltd v Liu Por Appointed To Represent The Estate Of Liu Cheng Chan, Deceased And Others

Judgment Cited authorities 48 Cited in Precedent Map Related
Vincent
Judgment Date30 September 2019
Neutral Citation[2019] HKCFI 2397
Year2019
Judgement NumberHCA560/2017
Subject MatterCivil Action
CourtCourt of First Instance (Hong Kong)
HCA560B/2017 GALSWORTHY LTD v. LIU POR appointed to represent the estate of LIU CHENG CHAN, deceased AND OTHERS

HCA 560/2017

[2019] HKCFI [2397]

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 560 OF 2017

________________________

BETWEEN

GALSWORTHY LIMITED Plaintiff
and
LIU POR appointed to represent the estate of LIU CHENG CHAN, deceased 1st Defendant
CHIK SAU KAM 2nd Defendant
LIU POR 3rd Defendant

________________________

Before: Hon Marlene Ng J in Chambers
Dates of Hearing: 12-13 September 2017 and 22 July 2019
Date of Handing Down Judgment: 30 September 2019

________________________

R U L I N G

________________________


Part Index Paragraph
I INTRODUCTION
Involved parties 1
P’s case: connection to Hong Kong 5
D’s case: connection to Singapore 6
II OVERVIEW OF P’s CLAIM 8
III PROCEDURAL HISTORY 9
IV P’s INJUNCTION SUMMONS 39
V OVERSEAS PROCEEDINGS / JUDGMENTS AND FOREIGN LAW 40
VI P’s CASE 44
Parakou SG 45
Charterparty 47
Challenged Transactions 49
Arbitration: commencement 54
SA Proceedings: PT Arrest 56
SA Proceedings: setting aside PT Arrest 58
SA Proceedings: vessel mortgage 62
South Africa: “associated” ship arrests 64
HK Proceedings 67
Arbitration: awards 70
Parakou SG’s liquidation 72
South Africa: other “associated” vessels 74
SG Proceedings 75
SA Proceedings: PS Arrest and setting it aside 87
SG Proceedings: Chua Judgment 91
Disposal of Parakou TI assets 97
SA Proceedings: D1’s de facto control 99
P’s cause of action 102
Conspiracy 104
Unlawful means 105
Loss and damages 106
Limitation 109
Connection to Hong Kong 111
Summary 112
VII D’s CASE
Overview 113
P’s overview response 118
Asset Stripping Exercise: value 125
Asset Stripping Exercise: security 130
Asset Stripping Exercise: disclosure 136
Asset Thwarting Exercise: South African legal opinion 149
Asset Thwarting Exercise: quantum 150
Asset Thwarting Exercise: unusual arrest provisions 151
Asset Thwarting Exercise: setting aside PT Arrest 156
Asset Thwarting Exercise: de facto control 158
Asset Thwarting Exercise: no funds from sale of mv “Pretty Time” 159
Asset Thwarting Exercise: no loss from subsequent arrests of Pretty Vessels 161
P’s response 164
Asset Thwarting Exercise: PS Arrest 173
Asset Thwarting Exercise: disclosure 179
Disposal of the Pretty Vessels 182
Limitation 187
No conspiracy 191
VIII SHAW 4TH AFF 192
IX DRAFT D3 7TH AFF 198
X DRAFT SHAW 5TH AFF 217
XI DRAFT GEISER 2ND AND 3RD AFFS 227
XII DRAFT KEOY AFF 228
XIII DRAFT GEISER 4TH AFF 229
XIV OVERALL APPROACH 230
XV LEGAL PRINCIPLES
Striking out application: plain and obvious 233
Mareva injunction: good arguable case 238
Striking out vs Mareva relief 240
Mareva injunction: material non-disclosure 242
Forum non conveniens 247
Limitation of actions 252
Double actionability 254
XVI PLEADING / PROVING CONSPIRACY 255
XVII PLEADING / PROVING CAUSATION AND LOSS
Legal principles 258
P’s pleaded case 266
Pleading point 277
Parties’ respective stance 280
Ex parte stage 284
XVIII ASSET THWARTING EXERCISE: CAUSATION AND LOSS
(a) Ds’ contentions 289
(b) P’s contentions 293
(c) General observations 294
(d) “Black hole” argument 299
(e) “Associated” arrest under the AJR Act 301
(f) mv “Pretty Time” 303
(g) Sailing to South Africa 314
(h) Realisable value on sale 347
(i) Putting up security 363
(j) Sale of the fleet 366
(k) Actual vs hypothetical 378
(l) Settlement Sums 387
(m) Dissipation and balance of convenience 396
XIX LIMITATION OF ACTION 397
XX DOUBLE ACTIONABILITY 419
XXI ASSET STRIPPING EXERCISE: CAUSATION AND LOSS 429
XXII 1ST AFF SUMMONS 430
XXIII 2ND AFF SUMMONS AND DRAFT AFFS 436
Legal principles 437
Discussion 444
XXIV FORUM NON CONVENIENS 448
XXV 1ST/2ND ORDERS: MATERIAL DISCLOSURE 474
XXVI JINHUI CONSENT SUMMONS: COSTS 484
XXVII CONCLUSION 490

I. INTRODUCTION

1. Involved parties The plaintiff (“P”) was a Liberian company, and its holding company (through Jinhui Shipping Inc) was Jinhui Shipping and Transportation Limited (“Jinhui”). Both P and Jinhui were part of the Jinhui Group (“Jinhui Group”) of which the ultimate holding company was a Hong Kong listed company Jinhui Holdings Company Ltd (“Jinhui Holdings”).[1] P specialised in chartering-in and letting-out vessels owned or chartered-in by the Jinhui Group. P was the disponent owner of bulker mv “Jin Kang” (formerly mv “Canton Trader”).

2. Parakou Shipping Pte Ltd (“Parakou SG”) was incorporated in Singapore in 1995 and wholly owned by a Hong Kong company Parakou Shipping Limited (“Parakou HK”), and it owned Outer Port Limit (“OPL”) vessels and performed ship-management services. It was part of the ship-owning and ship-operating Parakou group of companies (“Parakou Group”) founded in 1985 by the 1st defendant (“D1”) who was the patriarch of the Liu family. The Parakou Group included inter alia Parakou Shipping SA (“Parakou SA”),[2] Parakou International Ltd (“Parakou IL”),[3] Parakou Shipmanagement Pte Ltd (“Parakou SM”),[4] Parakou Investment Holdings Pte Ltd (“Parakou IH”),[5] and 12 one-ship special purpose vehicle companies each of which (a) owned a vessel[6] under ship management agreement (“SMA”) with Parakou SG (“Pretty Vessels” or “Pretty Fleet”), (b) had Parakou IL (with D1,[7] his wife the 2nd defendant (“D2”), their elder son Lau Hoi and their younger son the 3rd defendant (“D3”) as shareholders, and D1, D2 and Lau Hoi as directors)[8] as its sole shareholder, and (c) had D1/D2 as its directors (collectively, “Pretty Entities”).[9] But in late July 2014 8 Pretty Vessels (all tankers) held under Parakou IL were moved to Parakou Tankers Inc (newly formed in 2014 and wholly owned/controlled by D3, “Parakou TI”),[10] and some Pretty Vessels were renamed to carry the prefix “PTI”, eg mv “Pretty Time” was renamed mv “PTI Phoenix”.

3. The Parakou Group was owned, managed and controlled by the Liu family, ie D1, D2 and D3 (collectively, “Ds”), whom P claimed were all experienced/sophisticated business persons,[11] with the assistance of Lau Hoi and other close aides. D1 was chairman and D2 was deputy managing director / vice-chairman of the Parakou Group. As for Parakou SG:

(a) from 13 October 1995 to 21 December 2008 D1 was a shareholder[12] / director, and on 22 December 2008 he resigned his directorship with effect from 31 December 2008, but P claimed he thereafter remained as de facto / shadow director and key decision-maker;
(b) from 13 October 1995 to 21 December 2008 D2 was a shareholder/ director, but on 22 December 2008 she resigned her directorship with effect from 31 December 2008;
(c) D3 became 11.67% shareholder with effect from 1 January 2005 and 70% shareholder by the end of 2008, held a general management role as vice-president, oversaw day-to-day operations as from 2006, and was appointed as a director on 22 December 2008.

4. On 18 March 2011, Parakou SG was placed under provisional liquidation. On 14 April 2011, it was placed under creditors’ voluntary liquidation (Chua Judgment (referred to in paragraph 41(a)(iii) below) §26) with Neo Ban Chuan (“Neo”) and Cameron Lindsay Duncan (“Duncan”) appointed as joint and several liquidators. On 8 July 2013, Neo resigned as liquidator leaving Duncan as sole liquidator. The reference to “Liquidator” below means either Neo/Duncan or Duncan as appropriate.

5. P’s case: connection to Hong Kong P argued the High Court of Hong Kong (“HK Court”) was the most convenient forum to determine P’s claim given the connection to Hong Kong:

(a) P was “headquartered in Hong Kong” (Shaw 1st Aff (referred to in paragraph 9 below) §2), and the main offices and place of business of the Jinhui Group were in Hong Kong (Shaw 1st Aff §31).
(b) Parakou Group was founded by D1/D2 in Hong Kong (Shaw 1st Aff §35), and thereafter operated in Hong Kong and later branching out to Singapore (see paragraphs 2-3 above, paragraph 6 below and footnote 11 above).
(c) D1/D2 were Singaporean citizens who resided in Hong Kong, so P’s present action against them was as of right. D3 was a Singaporean citizen who resided in Singapore, but had ties to and assets in Hong Kong where he previously worked/lived and where it was believed he visited regularly.
(d
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