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CAMP 101/2018
[2018] HKCA 505
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF APPEAL
MISCELLANEOUS PROCEEDINGS NO 101OF 2018
(ON AN INTENDED APPEAL FROM HCCT 31/2018)
________________________
| BETWEEN |
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| SYMPHONY PARTNERS LIMITED |
1st Plaintiff |
| NEXT GLOBAL INVESTMENTS LIMITED |
2nd Plaintiff |
| DYNAMIC LINK VENTURES LIMITED |
3rd Plaintiff |
| and |
| FULLERTON BAY INVESTMENT LIMITED |
1st Defendant |
| KPN ENERGY HOLDING CO, LIMITED |
2nd Defendant |
| GOLDEN MUSIC LIMITED |
3rd Defendant |
________________________
| Before: Hon Lam VP, Barma and Poon JJA in Court |
| Date of Hearing: 10 July 2018 |
| Date of Judgment: 10 July 2018 |
| Date of Reasons for Judgment: 13 August 2018 |
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REASONS FOR JUDGMENT
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Hon Lam VP (giving the Reasons for Judgment of the Court):
Introduction
1. On 10 July 2018, after hearing counsel, we dismissed the application of the Plaintiffs for appointment of receivers in respect of certain shares held by the 3rd Defendant in a Thai renewable energy company called Wind Energy Holding Company Limited [“the WEH shares”].
2. The application was based on two Partial Awards by an arbitral tribunal in Singapore in favour of the Plaintiffs.
3. The underlying disputes arose from two share purchase agreements made in June 2015: one made between Symphony Partners Limited, the 1st Plaintiff as vendor, and Fullerton Bay Investment Limited, the 1st Defendant as purchaser [“the Fullerton Agreement”]; and the other one made between Next Global Investments Limited and Dynamic Link Ventures Limited, the 2nd and 3rd Plaintiffs as vendors, and KPN Energy Holding Company Limited, the 2nd Defendant as purchaser [“the KPN Agreement”]. The subject matters under both agreements were shares in a Thai company called Renewable Energy Corporation Company Limited [“REC”]. The Fullerton Agreement was in respect of 49% of the share capital of REC whilst the KPN Agreement was in respect of a further 49.94% of REC’s share capital. The total price to be paid under these agreements was US$700 million.
4. At the time of these agreements, the main asset of REC was a 59.4% shareholding in WEH. Pursuant to the agreements, the shares in REC were transferred to Fullerton and KPN before the price was fully paid.
5. The Plaintiffs alleged there were defaults in payment of the price and commenced two sets of arbitration proceedings in Singapore pursuant to the arbitration clauses in the agreements.
6. For reasons which will become apparent below, it is not necessary for us to set out the details of the disputes and the arbitration proceedings. It suffices to state that the arbitral tribunal gave two Partial Awards on 22 September 2017 in favour of the Plaintiffs. Mr Smith SC (appearing with Mr Lam for the Plaintiffs) summarized the two Partial Awards as follows at paragraph 14 of their skeleton submissions of 11 May 2018 placed before the court below:
“ 14. On 22 September 2017, the Tribunal rendered two Partial Awards in respect of the first phase:
(1) In relation to Symphony, the Tribunal found, inter alia, that Fullerton breached the relevant SPA by not paying the First Fullerton Instalment, but that Symphony did not, from a procedural point of view, properly notify Fullerton of the rescission of the SPA (the Tribunal held that the notice period was too short to allow Fullerton to pay). Nevertheless, the Tribunal held that the First Fullerton Instalment is payable, together with interest.
(2) In the NGI & DLV arbitration proceedings, the Tribunal dismissed NGI and DLV’s claims for payment of the shortfall under the First KPN EH Instalment. Nevertheless, the Tribunal held that KPN EH was required to pay interest on the KPN EH First Instalment.”
7. The Plaintiffs also obtained injunctive relief, which was summarized at paragraph 12 of counsel’s of submissions as follows:
“ 12. Crucially for present purposes:
(1) Symphony became aware that Fullerton and/or KPN EH were attempting to dispose of the REC shares to a third party. As a result, Symphony sought and obtained emergency measures before the ICC emergency arbitrator, who granted the order (“the Emergency Arbitrator Order”) on the basis that there was a substantial risk that Fullerton or KPN EH would try to dispose of the share in REC.
(2) The Emergency Arbitrator Order provided inter alia that Fullerton was prohibited from disposing, transferring or taking “any other action having an economic effect similar to the disposal and/or transfer and/or encumbrance” of the REC shares and KPN EH was ordered “not to pledge, encumber or dispose of” its REC shares.
(3) Similarly, Symphony sought and obtained an ex parte interim injunction from the BVI court whereby Fullerton was prohibited from inter alia “selling pledging, dealing with, charging or otherwise disposing of the shares in [REC].”
8. Counsel also highlighted the confirmation of the injunctive relief in the Partial Awards at paragraph 16 of their submissions:
“ 16. Crucially for present purposes:
(1) In both Partial Awards, the Arbitral Tribunal reconfirmed the Emergency Arbitrator Order (on the freezing of the REC Shares) and further ordered Fullerton and KPN EH “not to dispose of the WEH Shares in any manner until the Global Purchase Price is paid to Symphony, NGI and DLV, subject to the Arbitral Tribunal’s findings in the second phase of this arbitration” as this may cause “irreparable or substantial harm” to Symphony, NGI and DLV.
(2) There was no suggestion at the arbitral hearing that Fullerton and KPN EH no longer held the WEH Shares through REC and it was on this basis that the Arbitral Tribunal made this further order to preserve the status quo pending the second phase of the arbitration.”
9. Whilst the shares of REC remained held by Fullerton and KPN, the Plaintiffs discovered in October 2017 that REC had disposed of its holding in WEH to an unnamed third party in 2016. The Plaintiffs further learnt that some WEH shares (representing 37.9% of the shareholding in WEH) were transferred to the 3rd Defendant.
10. On 11 May 2018, the Plaintiffs obtained ex parte injunction in Hong Kong against the 3rd Defendant to restrain the latter from disposing of the WEH shares. That injunction was continued at an inter partes hearing on 18 May 2018.
11. On 27 June 2018, the Plaintiffs made an ex parte application on notice for a receivership order in respect of the WEH shares to reinforce the injunction in light of certain developments in respect of the shareholders of the 3rd Defendant. In view of our decision based on the jurisdiction point under Order 59 rule 14(3), we shall not go into the details of these developments. The application came before M Chan J [“the Judge”], the judge in charge of the Construction and Arbitration List. After hearing counsel for the Plaintiffs and counsel for the 3rd Defendant, the Judge decided to adjourn the application and gave directions for evidence to be filed and an early date be fixed for arguments.
12. Instead of proceeding in accordance with the directions of the Judge, the Plaintiffs chose to make a renewed application for the same relief in this Court, purportedly under Order 59 Rule 14(3), Rules of the High Court, Cap 4A. By taking such a step, up to the time when the matter was heard by us on 10 July 2018, the Plaintiffs did not attend to the fixing of the date for the inter partes hearing as envisaged by the Judge.
13. The papers were first placed on 29 June 2018 before Kwan JA who gave a direction that the matter be listed for hearing before 2 judges on a date between 4 and 13 July 2018.
14. On 5 July 2018, the Court notified the parties that the hearing would be held on 10 July 2018. Initially, the case was listed under HCCT 31/2018. On 6 July 2018, pursuant to the direction of Lam VP, the matter was relisted under CAMP 101/2018. This being an application before the Court of Appeal as opposed to an application before the Court of First Instance, it should not be listed under its original action number.
15. On 9 July 2018, the Court raised the following concerns with the parties:
(1) Does the Court of Appeal have any original jurisdiction as opposed to appellate jurisdiction?
(2) Can the jurisdiction of the Court of Appeal be expanded by the rules made under Section 54 of the High Court Ordinance, Cap 4 (“HCO”)?
(3) If the jurisdiction is appellate in nature, is leave required under Section 14AA of HCO?
(4) If the jurisdiction is original in nature, why should the law provide for two levels of courts exercising the same original jurisdiction on the same application?
(5) Can there be an appeal arising from the decision of the Court of Appeal? If so, to which court?
(6) And would there be any difference in the approach to be adopted by the Court of Appeal in exercising such original jurisdiction as opposed to its approach in exercising an appellate jurisdiction?
(7) If the jurisdiction is original, should it be heard by one, two or three judges?
(8) Bearing in mind that there is now in place a mechanism for entertaining urgent appeals (provided for in PD4.1),...
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