Liao Chen Toh v Loyal International Enterprises Co Ltd And Others

Judgment Date05 August 2021
Neutral Citation[2021] HKCA 1148
Judgement NumberCACV591/2020
Citation[2021] 4 HKLRD 202
Year2021
Subject MatterCivil Appeal
CourtCourt of Appeal (Hong Kong)
CACV591/2020 LIAO CHEN TOH v. LOYAL INTERNATIONAL ENTERPRISES CO LTD AND OTHERS

CACV 591/2020 & CACV 592/2020
(Heard Together)
[2021] HKCA 1148

CACV 591/2020

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 591 OF 2020 &

(ON APPEAL FROM HCA NO. 2302 OF 2014)

________________________

BETWEEN
LIAO CHEN TOH Plaintiff
and
LOYAL INTERNATIONAL ENTERPRISES CO. LTD. 1st Defendant
SUCCESS HOUSE INDUSTRIES LIMITED 2nd Defendant
NEW SUCCESS HOUSE INDUSTRIES LIMITED 3rd Defendant
LOYAL INVESTMENT LIMITED 4th Defendant

(by original action)

________________________

BETWEEN
SUCCESS HOUSE INDUSTRIES LIMITED 1st Plaintiff
NEW SUCCESS HOUSE INDUSTRIES LIMITED 2nd Plaintiff
LOYAL INVESTMENT LIMITED 3rd Plaintiff
and
LIAO CHEN TOH 1st Defendant
SILVER STATE ENTERPRISE LIMITED 2nd Defendant
LOYAL INTERNATIONAL TRADING CO. LTD.
(見龍國際貿易有限公司)
3rd Defendant
KENLONG (HK) INTERNATIONAL LIMITED
(FORMERLY KNOWN AS LOYAL (HK) INTERNATIONAL LIMITED)
4th Defendant
見龍投資有限公司 5th Defendant
ASTOR GROUP LIMITED
(FORMERLY KNOWN AS LOYAL GROUP TRANDING CO., LTD.)
6th Defendant
TAYISHA INVESTMENT LTD. 7th Defendant
VICEROY INVESTMENT LTD. 8th Defendant

(by counterclaim)

________________________

BETWEEN

LIAO CHEN TOH Plaintiff
and
LOYAL INTERNATIONAL ENTERPRISES CO. LTD 1st Defendant
SUCCESS HOUSE INDUSTRIES LIMITED 2nd Defendant
NEW SUCCESS HOUSE INDUSTRIES LIMITED 3rd Defendant
LOYAL INVESTMENT LIMITED 4th Defendant
JIANGYIN XIN-HE-QIAO CHEMICAL CO., LTD
(江陰新和橋化工有限公司)
5th Defendant
NINGBO XIN QIAO CHEMICAL INDUSTRIAL CO., LTD
(寧波新橋(和橋)化工有限公司)
6th Defendant
NINGBO XIN-LONG-XIN CHEMICAL CO., LTD.
(寧波新龍欣化學有限公司)
7th Defendant
JIANGYIN LONG-CHI PACKING MATERIAL CO., LTD 8th Defendant
(江陰龍奇包裝材料有限公司)
DONGGUAN XIN-CHANG-QIAO PLASTICS CO., LTD 9th Defendant
(東莞新長橋塑料有限公司)
JIANGYIN XIN SHU ENGINEERING PLASTICS CO., LTD 10th Defendant
(江陰新樹工程塑料有限公司)
TIANJIN XIN LONG QIAO ENGINEERING PLASTICS CO., LTD 11th Defendant
(天津新龍橋工程塑料有限公司)
NINGBO CHANG-QIAO ENGINEERING PLASTICS CO., LTD 12th Defendant
(寧波長橋工程塑料有限公司)
XINJIANG LONG-QIAO ENGINEERING PLASTICS CO., LTD 13th Defendant
(新彊龍橋工程塑料有限公司)
PANJIN LONG-GUANG ENGINEERING PLASTICS CO., LTD 14th Defendant
(盤錦龍光工程塑料有限公司)
LOYAL (TIANJIN) INTERNATIONAL TRADING CO., LTD 15th Defendant
(見龍(天津)國際貿易有限公司)

(by counterclaim to counterclaim)

________________________

CACV 592/2020

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 592 OF 2020 &

(ON APPEAL FROM HCMP NO. 1532 OF 2019)

______________________

IN THE MATTER OF an
application on behalf of Success
House Industries Limited, New
Success House Industries Limited
and Loyal Investment Limited
against Liao Chen Toh for an
Order of Committal
and
IN THE MATTER OF Order 52
Rules 1 & 3 of the Rules of the
High Court

______________________

BETWEEN
SUCCESS HOUSE INDUSTRIES LIMITED 1st Plaintiff
NEW SUCCESS HOUSE INDUSTRIES LIMITED 2nd Plaintiff
LOYAL INVESTMENT LIMITED 3rd Plaintiff
and
LIAO CHEN TOH Defendant

______________________

(Heard Together)

______________________

Before : Hon Kwan VP, Cheung and Au JJA in Court

Date of Hearing : 27 July 2021

Date of Judgment : 5 August 2021

______________________

J U D G M E N T

______________________

Hon Cheung JA (giving the Judgment of the Court) :

I. Background

1. The relevant parties for the purpose of this appeal are, first, Liao Chen Toh (‘LCT’) who is the plaintiff in the original claim and the 1st defendant in the counterclaim in HCA 2302/2014. He is also the defendant in the contempt proceedings in HCMP 1532/2019. The other relevant parties are the 2nd, 3rd and 4th defendants in the original claim and the 1st, 2nd and 3rd plaintiffs in the counterclaim in HCA 2302/2014. They are the plaintiffs in the contempt proceedings in HCMP 1532/2019. I will refer them as to the plaintiffs.

2. LCT is a Taiwan businessman. Briefly, LCT’s claim in HCA 2302 of 2014 against the plaintiffs was for, inter alia, a declaration that the shares in the plaintiffs are held on trust for LCT.

3. The plaintiffs issued their defence and raised a counterclaim against LCT for the return of shares in certain Mainland subsidiaries, sums in the amount of US$92,850,000 and corporate documents belonging to the plaintiffs. It is their case that, in anticipation of losing control over the plaintiffs to LCT’s mother and younger brother, LCT effectively pillaged the plaintiffs of all their assets through his corporate vehicles whilst he was effectively the sole director of the plaintiffs.

4. The plaintiffs had not and did not need to apply for leave to serve the counterclaim on LCT out of jurisdiction because LCT, by suing in Hong Kong, had submitted to the jurisdiction in regard to any counterclaim.

5. On 20 April 2016, Deputy High Court Judge Yee pursuant to the plaintiffs’ application, granted injunction orders against LCT. The relevant orders relevant to this appeal are :

‘ 1. [LCT] do within 28 days from the date of this Order return all accounting documents of [Ps] that are within his, his servants or agents’ possession, custody, power or control to [Ps]…

2. [LCT] do within 28 days from the date of this Order return all confidential corporate commercial information of [Ps], whether in hard copy, electronic form or otherwise, that are within his, his servants or agents’ possession, custody, power or control to [Ps]… including but not limited to:-

(a) information on the global investments made by [Ps] as of 12 June 2010 and any updates thereafter, including the investment amount, the shareholding of [Ps] in, the name of other shareholders and their respective shareholding in, and the management teams including the lists of the directors of, the invested companies, which include at least the following companies incorporated in the PRC…

(b) information and/or records received by [Ps] from their global investments, which include at least the companies incorporated in the PRC as set out… above…’

6. LCT did not comply with the injunction order and the plaintiffs on 10 September 2019 applied ex parte and obtained leave from the Deputy High Court Judge M K Liu (‘the Judge’) to commence contempt proceedings against LCT for breach of the injunction orders.

7. The Judge further made orders for substituted service of the originating summons and other documents of the contempt proceedings on LCT’s Hong Kong lawyers and also for dispensation of the personal service of the originating summons on LCT.

8. The originating summons dated 20 September 2019 to commit LCT for contempt proceedings was issued and served on LCT’s Hong Kong lawyers. On 3 December 2019, LCT issued two summonses. In HCA 2302/2014, he asked to set aside the Judge’s order of 10 September 2019. In HCMP 1532/2019, LCT asked 1) to set aside the originating summons dated 20 September 2019 and the substituted service thereof on LCT on the ground that the 10 September 2019 order is to be set aside, and 2) the contempt proceedings be dismissed.

9. The Judge dismissed the two summonses. The argument before the Judge was that LCT who is a foreigner had not been properly served with the originating summons out of jurisdiction.

10. The Judge held that service of the originating summons out of jurisdiction on LCT is unnecessary because he had submitted to the jurisdiction of the Hong Kong Court by commencing HCA 2302/2014 in Hong Kong. The Judge followed the approach of Anthony Chan J in Saif Partners II LP v Joe Zhixiong Zhou [2020] HKCFI 987, who dealt with the issue of serving contempt proceedings on a foreign contemnor who was before the court in that case. Anthony Chan J observed that there was no apparent gateway under Order 11, rule 1 for the service out of contempt proceedings brought to enforce procedural orders as opposed to judgments. After reviewing Marketmaker Technology Ltd & Ors v CMC Group Plc & Ors [2008] EWHC 1556 (QB), Deutsche Bank AG v Sebastian Holdings Inc [2017] 1 WLR 1842 and Deutsche Bank AG v Sebastian Holdings Inc (No 2) [2017] 1 WLR 3056 (upheld on appeal in Deutsche Bank AG v. Sebastian Holdings Inc (Nos 1 and 2) [2019] 1 WLR 1737), Anthony Chan J said :

‘ 16. In summary, these English authorities stand for the following propositions. In a case where (a) the court had already established jurisdiction over a party to proceedings due to his submission to jurisdiction (Marketmaker) or (b) the court had already established jurisdiction over a party to proceedings, whether by way of service within jurisdiction or by service out properly authorised (Deutsche Bank), and the contempt complained of arose out of and is incidental to an order made in those proceedings, permission to serve out against the contemnor is not required, and it is possible to obtain an order dispensing with personal service and for alternative service.

17. With respect, I fully agree. The analysis of Teare J resonates with common sense. Once a party is under the jurisdiction of the court, it would not be necessary to invoke O 11, which provides for the extension of the court’s jurisdiction (to parties...

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