Re Central Pacific Enterprises Limited
Court of First Instance
Miscellaneous Proceedings No 1944 of 2017
Peter Ng J in Chambers
10 August, 20 November 2018

Civil procedure — stay of proceedings — abuse of process —application to stay proceedings pending payment of costs in previous actions — whether present action concerned same subject matter as previous actions — whether abuse of process

H was the former director and executive vice-president of PEWC, a Taiwanese formerly listed company, and also a former director of CPE, a wholly owned subsidiary of PEWC. CPE was dissolved in 2001, but revived by court order in 2003 on PEWC’s application to facilitate an investigation into CPE’s intra-group transactions. In 2016, CPE’s liquidators (“Ls”) held the final meeting of members of CPE, approved its final statement of account and ceased to act as its liquidators. Meanwhile, in 2004, PEWC brought three actions (the “HCCL Actions”) against H inter alia to recover various assets (the “Properties”) in Hong Kong. The Judge found that H’s defence in the HCCL Actions was a fabrication and ordered H to return the Properties to PEWC. H’s appeals had been finally determined against him and H was ordered to pay costs in the failed proceedings (the “Taxed Costs”). Subsequently, H was convicted in Taiwan of offences involving dishonesty and imprisoned; and his appeals finally dismissed by the Courts. Asserting that Ls had not properly discharged their duties and he was advised that there might be evidence to justify a retrial, H brought the present action against inter alia PEWC and Ls seeking: (a) an order that the dissolution of CPE be declared void; and (b) the replacement of Ls by new liquidators to conduct an investigation into CPE’s intra-group transactions to challenge the conclusions in the HCCL Actions to establish his innocence (the “Action”). PEWC sought: (a) to stay the Action pending the payment to it of the Taxed Costs (the “Stay Application”); and (b) an order requiring H to pay into court $4,406,650 as security for PEWC’s costs in the proceedings (the “Security for Costs Application”).

Held, dismissing the Stay Application and granting the Security for Costs Application in part, that:

Stay Application

1) Where a party having failed in one action commenced a second action for the same subject matter, the court had an inherent jurisdiction to stay the second action until the costs of the first action had been paid. However, this principle should not be elevated to a wide discretion to enforce unsatisfied cost orders in separate proceedings (Society of Lloyd’s v Jaffray [1999] 1 All ER (Comm) 354, Investment Invoice Financing Ltd v Limehouse Board Mills Ltd [2006] 1 WLR 985 applied). (See paras. 24–26.)

2) Thus, while it was highly unsatisfactory that H had failed to pay the Taxed Costs, it was not an abuse of process for him to have instituted the Action to “revive” CPE, appoint new liquidators in order to uncover fresh evidence which might bear on inter alia his intended application for a retrial of his criminal charges in Taiwan. It did not concern the “same subject matter” since the HCCL Actions and should not be classified as “needless procedural duplication”. (See paras. 27, 31.)

2) Assuming (without deciding) that H succeeded in invoking the Court’s jurisdiction under s. 290 of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32) and, even if he obtained the relief sought, the new liquidators might or might not uncover evidence to overturn his criminal convictions in Taiwan. If and when H brought fresh proceedings to challenge the concurrent findings in the HCCL Actions without first paying the Taxed Costs, he would be truly relitigating the same subject matter in a second action and it would be an abuse of process for him to do so without paying those costs. However, at this time, the Stay Application was premature. Instead, PEWC could take enforcement against H in Taiwan. (See paras. 28–30.)

Security for Costs

3) Given that H was ordinarily resident outside the jurisdiction in Taiwan and taking a broad-brush approach to PEWC’s costs relating to the Action, an order for security of $2 million was appropriate. However, regarding PEWC’s costs relating to the Stay Application, as it took up most of the hearing and had failed and it was more complicated than the Security for Costs Application, the Court, at present, was not minded to order H to provide security for PEWC’s costs. (See paras. 33–35, 39–41.)

4) Accordingly, the proceedings against PEWC were stayed pending the payment into court of $2 million in security by H. (See paras. 42–44.)

Application

This was an application by the first respondent seeking to stay the proceedings brought by the applicant pending the payment to it taxed costs ordered against the plaintiff in previous proceedings. The facts are set out in the judgment.

Jurisdictions: 

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