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

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BETWEEN

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R U L I N G

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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 1^st 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 2^nd defendant (“D2”), their elder son Lau Hoi and their younger son the 3^rd 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)	D1,[13] D2[14] and D3[15] had assets/investments in Hong Kong.

6.Ds’ case: connection to Singapore  In the D3 6^th Aff (referred to in paragraph 19 below), it was said P was incorporated in Liberia, was not registered under the Companies Ordinance Cap 622, and had no presence or place of business here. D3 claimed Ds had substantial connection to Singapore. In the early 1990s D1 planned to establish a tanker arm in Singapore, so he invested in Singapore, obtained Singaporean permanent residency and founded Parakou SG in/about 1995, and gradually expanded his business. D3 claimed D2 was/is a homemaker/ caregiver with no substantive involvement in the Parakou business although she would accompany D1 to the office from time to time (but Shaw (referred to in paragraph 9 below) disputed this – see footnote 11(b)-(c) above). D1/D2 lived in Hong Kong, but visited Singapore several times a year (D3 3^rd Aff (referred to in paragraph 19 below) §48). D3 claimed that since/about 2008 D1 gradually reduced his involvement in the Parakou business.

7.D1/D2 owned significant assets in Singapore including 2G Bishopsgate, Singapore 249993 (acquired in 2005 and jointly owned by D1/D2, “2G Bishopsgate”) and 9 Temasek Boulevard, #32-01 to #32-03, Suntec Tower Two, Singapore 038989[16] (acquired by D1/D2 in 2010 via a Singapore company Golden Wisdom Pte Ltd (“Golden Wisdom”), “9 Temasek”) (collectively, “SG Properties”). Based on valuation in late 2014, their total unencumbered market value was about S$51,960,000 (or US$36,890,000). The SG Properties had since been sold, but more of this later. As for D3, he emigrated to Singapore in/about 2005. He married and lived there, and was shareholder of various Singapore companies (including Parakou SG as explained in paragraph 3(c) above) and a director of nearly all such companies. D3 denied having substantial assets in Hong Kong.[17]

II.  OVERVIEW OF P’s CLAIM

8.P claimed against Ds for unlawful means conspiracy that caused P to suffer loss/damage:

III.  PROCEDURAL HISTORY

9.On 8 March 2017 (ie a month after the Chua Judgment was handed down), P by its counsel Mr Alder applied ex parte for Mareva injunctions against Ds supported by the 1^st affidavit of P’s London solicitor Nicholas John Ashley Shaw (“Shaw”) dated 6 March 2017 (“Shaw 1^st Aff”), the 1^st/2^nd affidavits of P’s Hong Kong solicitor Jason Marc Toms (“Toms”) dated 8-9 March 2017 (“Toms 1^st and 2^nd Affs”), and Mr Alder’s written submissions dated 8 March 2017 (“Alder Submissions”).

10.On 9 March 2017, upon cross-undertakings given by P and Jinhui, Barnes J granted ex parte Mareva injunctions restraining each of D1/D2 (“1^st Order”) and D3 (“2^nd Order”) from removing from Hong Kong any of his/her Hong Kong assets up to the amount of the Cap Sum or in any way disposing of, dealing with or diminishing any of his/her global assets up to the same value. Ds were also required to make disclosure (to be confirmed by affidavit) of their global assets of an individual value of US$1,000 (“Disclosure Orders”).

11.On 9 March 2017, P filed the Writ of Summons against Ds (“WoS”). On 10 March 2017, P filed a summons (“P’s Summons”) for continuation of the 1^st/2^nd Orders until conclusion of the trial or until further order (“Continuation Application”). On 14 and 17 March 2017, D1/D2 and D3 by their solicitors gave notice of intention to defend. By the order of Campbell-Moffat J dated 17 March 2017 (“Variation Order”) made by consent, (a) the 1^st/2^nd Orders were varied for Ds to comply with the Disclosure Orders by affidavits to be served on/before 29 March 2017 and for Ds to have ordinary/legal expenditure at capped sums, (b) the 1^st/2^nd Orders as varied continued until further order, and (c) P’s Summons was adjourned for argument.

12.On 29 March 2017, D1/D2 filed their respective 1^st affirmation to exhibit list of his/her assets but did not give the value of private company shareholdings (“D1 1^st Aff” and “D2 1^st Aff”). On 30 March 2017, D3 filed his 1^st affirmation (“D3 1^st Aff”), and save for unknown information about certain assets, D3 exhibited list of his assets but did not give the value of private company shareholdings. By the Toms 3^rd Aff filed on 17 March 2017 (referred to in paragraph 20 below), P complained against Ds’ failure to provide inter alia valuations for their private company shareholdings.

13.On 26 April 2017, P filed its Statement of Claim (“SoC”). On 6 May 2017, D1 passed away.

14.On 8 May 2017, D2 filed her 2^nd affirmation to give pro-rated net asset value of her private company shareholdings with valuation as at 31 December 2016 (or such dates as specified) (“Shareholdings Valuation”) (“D2 2^nd Aff”), and D3 filed his 2^nd affirmation to set out further assets in Hong Kong / Mainland China and his Shareholdings Valuation (“D3 2^nd Aff”). There was a draft 2^nd affirmation of D1 (who had passed away) that set out his Shareholdings Valuation (“Draft D1 2^nd Aff”).

15.But the Shaw 3^rd Aff (referred to in paragraph 19 below) (a) complained the Shareholdings Valuations were merely historic valuations unsupported by documentation/methodology and failed to give valuation for subsidiary companies, and (b) raised concern about the accuracy/ completeness of Ds’ information. The D3 6^th Aff disagreed, and noted Ds’ solicitors addressed such concerns by letter dated 5 June 2017 to P’s solicitors, and thereafter P did not take out any application or commence any contempt proceedings despite having obtained leave to do.

16.On 8 May 2017, P filed Shaw’s 2^nd affidavit (“Shaw 2^nd Aff”) to support P’s Summons and allegedly to provide full and frank disclosure.

17.On 17 May 2017, D2/D3 filed a summons for the following reliefs:

18.By the order of DHCJ Saunders dated 23 May 2017, D3 was appointed to represent the estate of D1 (deceased) for the purpose of the present action. On 24 May 2017, Ds filed a summons for the same reliefs in paragraph 17(a)-(c) above on behalf of all Ds. I shall refer to Ds’ summonses filed on 17 and 24 May 2017 collectively as “Ds’ Summonses”.

19.To support Ds’ Summonses and to oppose P’s Summons, on 17 May 2017 Ds filed D3’s 3^rd affirmation (“D3 3^rd Aff”) and the 1^st affidavit of Kathryn Sara Hippolyte Sanger (Ds’ solicitor, “Sanger”) (“Sanger 1^st Aff”), and on 21 August 2017 Ds filed D3’s 6^th affirmation (“D3 6^th Aff”) and Sanger’s 2^nd affidavit (“Sanger 2^nd Aff”). On 10 July 2017, P filed Shaw’s 3^rd affidavit (“Shaw 3^rd Aff”) to oppose Ds’ Summonses and to support P’s Summons.

20.Upon P’s application by summons filed on 17 March 2017 (“Variation Summons”) supported by Toms’ 3^rd affidavit filed on the same day (“Toms 3^rd Aff”), which Ds opposed by D3’s 5^th affirmation filed on 31 May 2017 (“D3 5^th Aff”), Au-Yeung J on 26 May 2017 further varied the 2^nd Order to the effect that (a) mv “Pretty Scene”, mv “PTI Phoenix” (formerly mv “Pretty Time”) and mv “PTI Volans” (formerly mv “Pretty Jewellry”)[20] were not to be disposed of, charged or otherwise dealt with without 14 days’ notice to P’s solicitors, and (b) D3 gave undertaking to procure/ensure (i) the sale proceeds of 5 other named vessels[21] were and would remain retained by their former registered owners, and (ii) if the 3 vessels in (a) above were sold, the sale proceeds would be retained by the registered owners and would only be used for repayment of mortgage loan for the relevant vessel(s) and for ordinary/proper course of business of the registered owners and Parakou TI (provided D3 shall give 7 days’ prior notice to P of any transfer of the sale proceeds to Parakou TI) (“Further Variation Order”).

21.On 1 June 2017, Master R Lai extended time for Ds to file/serve their Defence(s) until 28 days after disposal of the Ds’ Summonses or further order, whichever was earlier, and further directed (a) no further evidence to be filed for P’s/Ds’ Summonses without leave and (b) any application for such leave to be made to the judge hearing such summonses at least 28 days before the substantive hearing (“Lai Order”).

22.On 24 July 2017, P filed its ASoC.

23.On 11 August 2017 (“Discharge Hearing”), Ds applied to further vary the 1^st/2^nd Orders to seek further provision for Ds’ legal expenditure, but A Chan J considered the 1^st/2^nd Orders as varied caused serious prejudice to Ds by freezing assets up to the amount of the Cap Sum against each of Ds without any rider/qualification, ie the affidavit evidence showed D3 appeared to have assets valued over US$80,000,000, and D1’s and D2’s assets were valued at/about US$60,000,000 and US$36,000,000 respectively, so about US$126,000,000 worth of assets were frozen. A Chan J discharged the 1^st Order as varied against D2, and dismissed P’s application for leave to appeal.

24.P renewed its application for leave to appeal to the Court of Appeal. On 25 August 2017, the Court of Appeal indicated its intention to allow P’s application, but since the SG Properties were subject to caveats/ undertakings to the SG Court (see paragraph 84 below) and thus not at risk of dissipation, the Court of Appeal enquired whether the matter could be met by undertakings by Ds as follows:

25.On 28 August 2017, Ds confirmed their willingness to give such undertakings. On 29 August 2017, upon Ds’ such undertakings, the Court of Appeal dismissed P’s application for leave to appeal with no order as to costs, and varied the costs orders made by A Chan J accordingly.

26.On 6 September 2017, P filed a summons (with the supporting affidavit of P’s solicitor Tang Ho Ling Leticia (“Tang Aff”)) for leave under the Lai Order to apply out of time for leave to file/serve Shaw’s 4^th affidavit dated 4 September 2017 (with exhibits) (“Shaw 4^th Aff”) in response to the D3 6^th Aff (“1^st Aff Summons”).

27.P’s, Ds’ and 1^st Aff Summonses came before this court for hearing on 12-13 September 2017 (“1^st Hearing”). Mr Yu SC (and with him Ms Sit) appeared for P, and Mr Man SC (and with him Mr Tang) appeared for Ds. Judgment was reserved after such hearing.

28.On 17 January 2018, the Singapore Court of Appeal (“SGCA”) handed down the SGCA Judgment (referred to in paragraph 41(a)(iv) below) in the SG Proceedings (referred to in paragraph 40(c) below) in Singapore. On 11 September 2018, the SA Court handed down the Lopes Judgment (referred to in paragraph 41(b)(iv) below) in the SA Proceedings (referred to in paragraph 40(d) below) in South Africa. By a joint letter of the parties’ solicitors dated 22 October 2018, the parties agreed for the SGCA and Lopes Judgments (collectively, “Related Judgments”) to be adduced before this court, but Ds wished to adduce affidavit evidence of relevant developments since the 1^st Hearing not mentioned in the Related Judgments.

29.By written directions dated 1 November 2018, this court took into account the following matters:

On such basis, this court granted the following case management directions:

30.Ds lodged their written submissions and draft 7^th affirmation of D3 (“Draft D3 7^th Aff”) on 15 November 2018, and P lodged its written submissions and draft 5^th affidavit of Shaw on 29 November 2018. On 4 December 2018, P’s solicitors lodged revised draft 5^th affidavit of Shaw with minor amendments (“Draft Shaw 5^th Aff”). Upon considering the joint letter dated 13 December 2018 by the parties’ solicitors, this court granted the following directions on 21 December 2018:

31.On 2 January 2019, Ds filed a summons for leave to file/ serve further evidence as per the Draft D3 7^th Aff to support Ds’ Summonses and to oppose P’s Summons (“2^nd Aff Summons”). On 11 January 2019, P lodged the draft 2^nd affirmation of Dominic Adrian Geiser (“Geiser”) (“Draft Geiser 2^nd Aff”).

32.By joint letter and Consent Summons dated 1 April 2019 by the parties’ solicitors, this court was informed of further developments in the SA Proceedings, and the parties’ proposal to place such information before this court. On 2 April 2019, this court granted the following order by consent:

33.On 3 April 2019, Ds lodged the draft 3^rd affirmation of Geiser (“Draft Geiser 3^rd Aff”). On 30 April 2019, P lodged the draft affidavit of Keoy Soo Khim (“Draft Keoy Aff”). On 12 June 2019, Ds lodged the draft 4^th affirmation of Geiser (“Draft Geiser 4^th Aff”). All such draft affidavit evidence was lodged on de bene esse basis.

34.Thus, the issue under the 2^nd Aff Summons was whether any or all of the Draft D3 7^th Aff, Draft Shaw 5^th Aff, Draft Geiser 2^nd, 3^rd and 4^th Affs and Draft Keoy Aff (collectively, “Draft Affs”) should be adduced as evidence for the purpose of P’s/Ds’ Summonses.

35.On 3 May 2019, P filed a summons for an order that D2 (whether acting by herself or through others) must not in any way dispose of or deal with or diminish the net proceeds of sale of 2G Bishopsgate completed on 15 February 2019 save that D2 might pay such net proceeds or parts thereof to the Liquidator solely for the purpose of settling the judgment sum and/or other sums payable in whole or in part by D1/D2 in, arising from or in connection with Suit 434/2014 before the SG Court and Civil Appeals Nos 55-58/2017 before the SGCA (“P’s Injunction Summons”). On the same day, P filed the supporting affirmation of Jinhui’s vice-president Ching Wei Man Raymond (“Ching Aff”).

36.By a joint letter dated 21 June 2019 by the parties’ solicitors, this court was informed that the Shaw 1^st Aff in stating Jinhui (which company also gave cross-undertaking for the 1^st/2^nd Orders as varied) was the Hong Kong registered holding company of P (through Jinhui Shipping Inc), which stance was maintained in a letter dated 20 February 2019 by P’s solicitors, was erroneous in that Jinhui was incorporated in Bermuda, was not registered under the Companies Ordinance Cap 622, and had no place of business in Hong Kong. Ds considered such error constituted material non-disclosure, but Ps contended such error in asserting Jinhui was a suitable entity to meaningfully provide the cross-undertaking was inadvertent, and Jinhui Holdings was willing to offer cross-undertaking to alleviate any concern as to the vitality of existing cross-undertakings. By a Consent Summons filed on the same date (“Jinhui Consent Summons”), the parties agreed on the terms of the cross-undertaking offered by Jinhui Holdings, and I accordingly granted an order in terms on 28 June 2019 (“28/6/19 Order”).

37.But the parties could not agree on the appropriate costs order for the Jinhui Consent Summons, so by the 28/6/19 Order I directed (a) the issue as to costs of and occasioned by such application be determined by this court at the 2^nd Hearing referred to in the paragraph below, and (b) the parties shall lodge with court a joint bundle of correspondence that were strictly relevant to the costs issue in (a) above. By the 28/6/19 Order, I also directed the parties to lodge/serve skeleton submissions on (i) the costs issue in (a) above and (ii) the issues arising from the further de bene esse evidence lodged pursuant to my order dated 2 April 2019.

38.As a result of the above developments, the disputed matters for determination by this court are (a) P’s Summons, (b) Ds’ Summonses, (c) 1^st Aff Summons, (d) 2^nd Aff Summons and consequent admissibility of the Draft Affs, (e) costs of and occasioned by the Jinhui Consent Summons, and (f) P’s Injunction Summons. The hearing of the matters in (c)-(f) above came before this court on 22 July 2019 (“2^nd Hearing”). Ms Sit SC (and with her Mr Dong) appeared for P, and Mr Man SC (and with him Mr Tang) appeared for Ds.

IV.  P’s INJUNCTION SUMMONS

39.By the time of the 2^nd Hearing, the parties agreed to deal with P’s Injunction Summons by way of a Consent Summons dated 17 July 2019, ie (a) to set out a case management timetable for filing affirmation evidence, and (b) to adjourn such summons for substantive argument upon certain undertakings given by D2 to P and the court. Thus, at the 2^nd Hearing, upon P’s undertaking through counsel to file such Consent Summons on or before 4pm on 22 July 2019, I granted an order in terms thereof.

V.  OVERSEAS PROCEEDINGS / JUDGMENTS AND FOREIGN LAW

40.Apart from the present action, there were 4 other related sets of proceedings directly/indirectly involving Parakou SG: (a) the Arbitration explained in paragraph 8 above, (b) HCAJ184/2009 commenced by Parakou SG  in the HK Court against various companies in the Jinhui Group (other than P) in parallel to the Arbitration for indemnity in respect of sums that might be awarded against Parakou SG in the Arbitration (“HK Proceedings”), (c) proceedings in Singapore brought by the Liquidator against inter alia Ds, Yang Jian Guo (“Yang”), Parakou IH and Parakou SM (“SG Proceedings”), and (d) proceedings in South Africa brought by P in relation to the PT Arrest including the setting aside application by the relevant Pretty Entity (“PT Arrest Proceedings”), the arrest of mv “Pretty Scene” (“PS Arrest”) including the setting aside applications by the relevant Pretty Entity (“PS Arrest Proceedings”), and other writs of summons / warrants of arrest issued out of the SA Court for arrest of other “associated” vessels that might call at South Africa (collectively, “SA Proceedings”). The Shaw 1^st Aff claimed the Liquidator[22] brought the SG Proceedings in the interests of Parakou SG and its creditors as a whole, but P brought the present proceedings without involvement of the Liquidator for personal wrong done to P.

41.The SG Court / SGCA and the SA Court / South Africa Full Court (“SAFC”) rendered the following judgments which I will refer to in the discussion below:

Although the Related Judgments were adduced on de bene esse basis, both Mr Man SC and Ms Sit SC agreed that irrespective of the ultimate admissibility of the Draft Affs, the Related Judgments should be placed before this court for the purpose of P’s/Ds’ Summonses.

42.P and Ds relied on the following written expert memoranda on South African law exhibited to the supporting and/or opposing affirmations, some of which were adduced on de bene esse basis pending resolution of the admissibility of the Shaw 4^th Aff and Draft Affs:

43.I set out in Parts VI and VII below P’s and Ds’ respective case. Where convenient, I will highlight the opposing views in the course of describing each party’s case.

VI.  P’S CASE

44.P claimed (a) Ds were unable to show P’s cause of action had no prospect of success or was not reasonably arguable, (b) P actually had more than a good arguable case, (c) the Stay Application was unsubstantiated, and (d) there was no material non-disclosure by P, so the Striking Out / Stay Applications should be dismissed, and the 1^st/2^nd Orders as varied ought to be continued against D1/D3.

45.Parakou SG Parakou SG was incorporated by D1/D2 in 1995 and run as a family business (Chua Judgment §§3-4). In 2006, Parakou SG’s business expanded as D1 shifted its “wet-cargo business”[23] and senior employees/staff from Hong Kong to Singapore. Yang (who previously worked for Sinotrans Hong Kong) was asked to join and oversee Parakou SG’s tanker operations. By 2007, Parakou SG had 3 lines of business: OPL services that provided offshore supply vessel services to ships in/around Singapore (“OPL Business”), ship-management services for, say, the Pretty Fleet (“SM Business”) and ship-chartering services (“SC Business”) (Chua Judgment §3). In July 2007, Du Hong (“Du”) joined Parakou SG as senior manager for the SC Business, and he reported to Yang.

46.By the end of 2007, Parakou SG was expanding its OPL Business, and entered into long-term S$6,200,000 ship-building agreement for 4 new OPL hulls to be delivered from August 2008 to January 2009. Parakou SG took substantial loans from Parakou SA[24] and from Parakou IH.[25] The Parakou SA loans were for construction of new “boats” to increase the fleet with a view to monopolise the market for OPL Business (Chua Judgment §49). According to Parakou SG’s website, since 2008 the Parakou Group had gone from strength to strength, taking delivery of 30 new build vessels, and ordering a further 21.

47.Charterparty  As of early June 2008, Parakou SG chartered mv “Maritime Newanda” and mv “Thermidor”, which were then sub-chartered to Ocean Glory. Parakou SG was looking to charter a 3^rd vessel and to sub-charter it to Ocean Glory (Chua Judgment §6). On 17 June 2008, (a) the shipbroker sent to Parakou SG a “Clean Recap” for mv “Canton Trader” “to conclude a clean fixture” between P (owner) and Parakou SG (charterer) for a long-term Charterparty (minimum 5 years) at daily hire rate of US$32,250 and laycan of 1 March to 30 April 2009, and (b) Ocean Glory sent to Parakou SG a similar “Clean Recap” for mv “Canton Trader” to “conclude the clear fixture” for a sub-charterparty between Parakou SG (charterer) and Ocean Glory (sub-charterer) (“Sub-Charterparty”) (Chua Judgment §§7, 80(b)-(c)). Delivery was due to take place in February/March 2009.

48.Between June and September 2008, Parakou SG did not object to the binding nature of the Charterparty (Chua Judgment §80(d)-(e)). On 15 September 2008, the Lehman Brothers collapse triggered a worldwide financial crisis. At end of October 2008, the Baltic Dry Index (which was “an authoritative index for dry bulk freight rates”) hit an all-time low, which had direct effect on Parakou SG’s SC Business (Chua Judgment §9). By 30 October 2008, Ocean Glory experienced financial difficulties. It subsequently ceased trading, and defaulted on hire due under sub-charterparties made with Parakou SG for mv “Maritime Newanda” and mv “Thermidor”. The Shaw 1^st Aff claimed that by end of October 2008 Ds/Yang knew the following matters:

Nevertheless, Parakou SG started to raise various excuses to delay formal execution of the Charterparty, including querying the existence of the Charterparty and whether Parakou SG was the right party (Chua Judgment §11 and Levinsohn Judgment §11).

49.Challenged Transactions  P claimed it was around this stage that Ds took steps to wrongfully dispose of Parakou SG’s assets, ie D1 as director of the Pretty Entities caused such companies to terminate the SMAs with Parakou SG with effect on 30 November 2008, and D1/D2 caused the Pretty Entities to enter into new SMAs with Parakou SM on 1 December 2008. Although the Pretty Entities were well within their rights to terminate the SMAs, the Chua Judgment found (a) there was no reason to rush Sale of OPL Vessels and Transfer of SMAs (referred to in paragraph 51(a)-(b) below), and (b) Ds orchestrated these steps with the objective of transferring the SMAs to Parakou SM.[26] It was said Ds/Yang acted with unnecessary haste in an aggressive Asset Stripping Exercise vis-à-vis Parakou SG, and as from 31 October 2008 assets worth over S$16,000,000 were removed from Parakou SG by various transactions, including those described in paragraph 51 below (collectively, “Challenged Transactions”).

50.P claimed that between 7 November and 5 December 2008, Ds/ Yang[27] caused Parakou SG to seek advice from Rajah & Tann LLP (“R&T”) on inter alia the consequences if Parakou SG were to use monies received from Parakou IH for Sale of OPL Vessels to discharge existing director loans, eg D1’s loan of S$10,000,000 to Parakou SG (Chua Judgment §85(c)).

51.The Shaw 1^st Aff claimed that unbeknownst to P at the time, Ds tried to find ways to surreptitiously repay D1’s loan, and armed with R&T’s advice[28] they refined the mechanics for various disposals. Between November 2008 and March 2011 (but mostly in the compressed period from November 2008 to January 2009), Ds caused Parakou SG to effect the Challenged Transactions as follows:

52.During this period, D1/D2 on 22 December 2008 (a) transferred their shares in Parakou SG to D3/Yang, (b) appointed D3/Yang as directors of Parakou SG, and (c) gave notice of their own resignation as directors of Parakou SG with effect from 31 December 2008 (Chua Judgment §15 and see paragraph 3 above).

53.The 9 Challenged Transactions[30] formed the bulk of the Liquidator’s case in the SG Proceedings that they were part of a scheme to strip Parakou SG of assets in anticipation of it being put into liquidation as a result of the forthcoming Awards to benefit Ds/Yang directly or indirectly via their interests in Parakou IH / Parakou SM. Ds were concerned about P taking steps to wind up Parakou SG before expiry of 2-year claw back period (ie December 2010) in which case its liquidator would have been able to claw back repayments from Parakou IH and Parakou SA as undue preference payments, so Ds tried to delay any liquidation of Parakou SG until after expiry of such period.

54.Arbitration: commencement  On 26 January 2009, the shipbroker reminded Parakou SG to execute the Charterparty. On 11 February 2009, Parakou SG declined on the basis that “there was no fixture” (Chua Judgment §21). P commenced the Arbitration to claim damages for Parakou SG’s repudiatory breach (Chua Judgment §22). Despite receiving legal advice there was no legal basis for impugning the Charterparty or refusing to perform the same, on 16 March 2009 (ie shortly before the laycan), some/all of Ds caused Parakou SG to state unequivocally it would not take delivery of mv “Canton Trader” (Shaw 1^st Aff §68). P claimed some/all of Ds then took steps via Parakou SG to delay the Arbitration[31] (Chua Judgment §136(c)).

55.P’s claim for damages was initially brought under 2 heads, ie (a) the difference between the hire that should have been paid by Parakou SG and the hire actually earned under various spot fixtures for the period from 13 March to 16 July 2009 (US$2,673,279.15), and (b) the full amount of hire that should have been paid by Parakou SG for the period from 16 July 2009 to 13 March 2014. Shortly before the arbitration hearing on 26-30 July 2010,[32] P introduced an alternative basis of damages dubbed the “loss of profit claim”.

56.SA Proceedings: PT Arrest  On 27 March 2009 (ie 1 month after commencement of the Arbitration), P sought pre-award security for its claim, and successfully obtained an order from the SA Court for the PT Arrest pursuant to the unique “associated” arrest provisions under section 5(3)(a) of South Africa’s Admiralty Jurisdiction Regulation Act 1983 (“AJR Act”) (Levinsohn Judgment §2) that allow for arrest of a vessel in “associated” ownership/control with the vessel against which a maritime claim arose (“Concerned Ship”) (section 3(6) of the AJR Act):[33]

57.So in South Africa, a jurisdiction well known in the maritime context (see Vitol SA v Capri Marine Ltd & ors (No 2)),[34]  a vessel owned by a company can be arrested to secure the obligations of a sister company. For the PT Arrest, the Concerned Ship was mv “Canton Trader”, its deemed owner was Parakou SG, and the maritime claim was P’s arbitration claim. The founding affidavit of Quintus van der Merwe (“van der Merwe”) served by P asserted the common “association” vis-à-vis D1 under the AJR Act (Levinsohn Judgment §§2-5) was demonstrated by:

58.SA Proceedings: setting aside PT Arrest  Pretty Time Shipping SA applied to set aside the PT Arrest, and made an in limine argument that no case was made out on the founding papers, so the PT Arrest should not have been made in the first place (Levinsohn Judgment §§11-22). The founding affidavit of Pretty Time Shipping SA’s attorney Malcolm Hartwell (“Hartwell”) suggested P misconstrued Parakou SG’s ACRA records since Parakou SG’s report of 18 February 2009 filed with the ACRA showing its directors/shareholders were D3/Yang with D3 as the majority shareholder (“18/2/09 ACRA Report”) was in fact exhibited to van der Merwe’s founding affidavit (Levinsohn Judgment §§11-13). Mr Man SC submitted that van der Merwe’s answering affidavit to the setting aside application appeared to have accepted this mistake,[35] but P nevertheless advanced a case that D1 retained de facto control over Parakou SG (ie P’s answering affidavits filed on 14 April 2009[36] cast suspicion over the transfer of D1’s/D2’s shares in Parakou SG to D3/Yang in December 2008). Pretty Time Shipping SA filed a replying affirmation dated 17 April 2009 by David Yeung (Parakou SG’s auditor, “Yeung”) that exhibited the 17/3/08 Resolution purportedly signed by D1/D2 at a purported meeting of Parakou SG’s board of directors (ie D1/D2) allegedly held on 17 March 2008 concerning transfer of their shares in Parakou SG to D3/Yang “for the purposes of restructuring”, and asserting that “after the transfer of the shares, [Parakou SG] will focus only on [SC Business]” (see footnote 18 above). Other replying affirmations by Hartwell, Yang and Ds were also filed on 17 April 2009 to state D1/D2 had transferred their shares in Parakou SG to D3 (70%) and Yang (30%) in December 2008, to confirm the legitimacy of such share transfers for the alleged “restructuring”, and to further confirm D1 did not remain in de facto ownership/control of Parakou SG and D3 exercised control over Parakou SG independently of D1 when P’s cause of action under the Charterparty arose. D1’s/D2’s affirmations and D3’s affirmation were respectively affirmed in Hong Kong and Singapore before notary public.

59.After the hearing on 24 April 2009, Levinsohn AJP handed down the Levinsohn Judgment on 30 April 2009 that set aside the PT Arrest. Levinsohn AJP laid emphasis on the error in P’s founding papers as the 18/2/09 ACRA Report showed that D1 was not the majority shareholder of Parakou SG at the time when P’s claim arose, and found that P in misconstruing the ACRA records failed to appreciate Parakou SG’s shareholders/directors at the relevant time were D3 (70%) and Yang (30%) (Levinsohn Judgment §§11-22).

60.As regards P’s claim that D1 retained de facto control over Parakou SG, Levinsohn AJP said as follows (Levinsohn Judgment §20):

“…… The founding affidavit read with the various annexures that were put up simply did not make out a case that [D1] by virtue of his shareholding of [Parakou SG] exercised control over that company. The applicants clearly relied on the documentation it had put up. It made its bed and is forced to lie on it. No case whatsoever was made in the alternative to suggest that [D1] notwithstanding that he did not control [Parakou SG] by virtue of his shareholding nevertheless was still the puppet master pulling the strings and controlling that company as well.”

On such basis, Levinsohn AJP was satisfied the PT Arrest should not have been ordered in the first place, so it should “accordingly be set aside on this ground alone” (Levinsohn Judgment §22).

61.Then, “on the assumption that his foregoing conclusion [was] an incorrect one”, Levinsohn AJP went on to consider P’s application for hearing oral evidence on the dispute over whether or not mv “Pretty Time” was an “associated” vessel (Levinsohn Judgment §24). He agreed the determination of such issue involved an exercise of discretion on his part upon consideration of all the papers before the court, and he concluded on the papers that had he not set aside the PT Arrest on the ground of defective founding affidavit alone, he would have refused to order oral evidence (Levinsohn Judgment §27) on the following grounds:

62.SA Proceedings: vessel mortgage  The Shaw 1^st Aff mentioned that at the time of the PT Arrest in March 2009 there was a mortgage over the entire Pretty Fleet (including mv “Pretty Time”) in favour of Calyon Asia Shipfinance Ltd (“Mortgagee”) for US$246,000,000, but the available documents did not show the amount of the mortgage over mv “Pretty Time”. The Toms 2^nd Aff filed after the 1^st/2^nd Orders were granted explained there was a mortgage over the entire Pretty Fleet for US$246,000,000 and a further mortgage of up to the lower of (a) US$30,800,000 or (b) 10% of the aggregate market value of mv “Pretty Time” and other vessels on the relevant delivery date.

63.Toms suggested that for reasons given in the Shaw 1^st Aff §155(3)-(4) (see paragraphs 65 and 107(b) below) this would not have materially altered P’s ex parte application for the 1^st/2^nd Orders because whilst the Pretty Entities might put up a fight regarding arrests of their vessels to an extent (as they had in the past), it would be inconceivable for them not to ultimately secure P’s claims and rather to subject all Pretty Vessels to potential arrest without warning with each arrest potentially taking weeks/months to resolve, which would have been disastrous to their ability to operate commercially.

64.South Africa: “associated” ship arrests  The Wragge 1^st Memo citing section 3(8) of the AJR Act advised that P could arrest more than 1 vessel in South Africa in order to fully secure its claim. The Toms 2^nd Aff noted Mr Krish Reddy (P’s South African solicitor, “Reddy”) also confirmed this (see also section 5(2)(d) of the AJR Act).[37]

65.The Shaw 1^st Aff §155(4) claimed 5 tankers built in 2006/2007 and controlled by D1 in the same manner as mv “Pretty Time” called at South Africa on 11 separate occasions between 2009 and 2016.[38] The Shaw 2^nd Aff filed after the 1^st/2^nd Orders were granted at §§17-19 accepted there were wrong dates, including those for mv “Pretty Scene” which in fact called at South Africa on 11-13 January 2011, 19-21 September 2011 and 17-20 May 2012 whilst controlled by D1 in the same manner as mv “Pretty Time” (see footnote 38 above),[39] but claimed such errors were not material. According to the ASoC, the updated position was that between 2009 and March 2017, at least 17 “associated” vessels[40] owned/controlled by D1 in the same manner as mv “Pretty Time” (later renamed mv “PTI Phoenix”) (“17 Vessels”) called at South African ports on 59 occasions (“59 Occasions”).[41]

66.It was said P had intended to arrest those other “associated” vessels, but on each occasion, as a result of (a) the false statements/evidence as to the control/ownership of Parakou SG that Ds or each of them placed before the SA Court in the PT Arrest Proceedings and (b) the precedent formed by the SA Court’s acceptance of such statements/evidence in the shape of the Levinsohn Judgment which caused P to refrain from arresting and/or to abandon attempts to arrest such “associated” vessels, P was precluded from securing and/or “topping up” security for the claims in the Arbitration.

67.HK Proceedings Having set aside the PT Arrest, on 27 June 2009, some/all of Ds caused Parakou SG to commence the parallel HK Proceedings at the HK Court (initially in rem and subsequently in personam) against various companies in the Jinhui Group (other than P) claiming for damages and/or indemnity in respect of any liability to which Parakou SG might be exposed in the Arbitration (Chua Judgment §23). Parakou SG applied for the HK Proceedings to be expedited even though some/all of Ds received legal advice from Charles Sussex SC that their contentions were “hopeless” (Chua Judgment §136(d)).

68.On 25 August 2009, Parakou SG arrested mv “Jin Fu” allegedly “associated” to Goldbeam Shipping Inc (“GSI”) in South Africa, and demanded security of US$44,000,000 for their indemnity claim in the in personam HK Proceedings (“JF Arrest”). On 4 September 2009, GSI provided security to Parakou SG in the sum of US$44,412,905 for release of mv “Jin Fu” from the JF Arrest. Such security remained tied up in Hong Kong for a year (Chua Judgment §139).

69.On 22 September 2010 (1^st day of trial), Reyes J struck out the HK Proceedings as collateral attack on the outcome of the Arbitration and therefore an abuse of process (Chua Judgment §§25, 136(d)). Some/all of Ds then caused Parakou SG to pursue an appeal, but advice from Charles Sussex SC summed up that the insistence by some/all of Ds to appeal was to “hold off winding up proceedings in Singapore on the basis of a pending appeal in Hong Kong” (Chua Judgment §136(e)). The appeal was also struck out.

70.Arbitration: awards  On 31 August 2010 the Tribunal published the 1^st Award that held (a) P and Parakou SG entered into the legally binding Charterparty, (b) Parakou SG was in repudiatory breach, and (c) P was entitled to legally recoverable damages flowing from such repudiatory breach, including US$2,673,279.15 with interest. On 6 September 2010, P issued a statutory demand for payment of the 1^st Award, but this was not pursued in light of P’s voluntary liquidation (see paragraph 4 above).

71.As for damages in paragraph 55(b) above, the Tribunal determined that assessment should be on “loss of profit” basis, and directed Parakou SG to serve further submissions. Parakou SG did not attend the further hearing on 20-21 April 2011 because by this time D3/Yang had caused Parakou SG to be placed into voluntary liquidation (see paragraph 4 above and paragraph 72 below). On 13 May 2011, the Tribunal published the 2^nd Award, and held that (a) P was entitled to further damages of US$38,579,000 with interest at 5%pa compounded at 3 monthly rests from 17 July 2009 to the date of payment, and (b) Parakou SG should bear its own costs and P’s costs of the Arbitration (to be assessed if not agreed) and the Tribunal’s costs of the 1^st Award[42] and 2^nd Award[43] together with interest on such costs at 4.75%pa compounded at 3 monthly rests from the date of payment to the date of reimbursement. Despite numerous demands, Parakou SG never made any payment to P for the 1^st Award,[44] 2^nd Award[45] and/or costs.

72.Parakou SG’s liquidation  Following expiry of the 2-year claw back period, D3/Yang caused Parakou SG to be placed into voluntary liquidation on 17 March 2011. As of 17 March 2011, total creditors’ claim was S$46,748,753. On 14 April 2011, Parakou SG was placed in creditors’ voluntary liquidation. From April 2011 to October 2012, the Liquidator investigated into Parakou SG’s affairs, including having interviews with Yang, Ds, Yeung, Andy Ng (see footnote 27 above) and others, reviewed inter alia accounts/documents from Parakou SG’s company secretary, auditors and solicitors, and reviewed emails retrieved from the imaged server at Parakou SG’s place of business. The Liquidator discovered the Asset Stripping Exercise, and identified the 9 Challenged Transactions that they considered questionable. The Liquidator further found out Andy Ng’s computer on which the 17/3/08 Resolution was allegedly created had been “reformatted”, D3 “lost” his laptop in a taxi in New York, and Du’s laptop had a new hard disk drive installed.

73.In/about August 2012, P as Parakou SG’s major creditor successfully applied to the SG Court to inspect Parakou SG’s books/records to assist the Liquidator in his investigation. In April 2013, upon P’s agreement to provide funding, the Liquidator successfully applied to the SG Court for an order to summon Yeung to be examined on oath and to deliver up books/records in his possession. The Liquidator examined Yeung on oath from June to October 2013. The Shaw 1^st Aff claimed the Liquidator’s investigations revealed stealthy manoeuvre of Parakou SG’s assets by Ds/Yang through related companies of Parakou IL and Parakou SM in what was believed to be a conspiracy to defraud Parakou SG and its creditors,[46] but such investigations were hampered by Ds’ actions.[47]

74.South Africa: other “associated” vessels  P claimed Ds continued with their corporate manoeuvres. In July 2014, 8 Pretty Vessels under Parakou IL were moved to Parakou TI that was newly formed in 2014 under D3’s sole ownership/control. P claimed that on 16 April 2015, upon ascertaining Parakou TI was incorporated/owned by D3, it caused to be issued out of the SA Court writs of summons in rem citing mv “Pretty Scene” and 7 other Pretty Vessels owned/controlled by D3 through Parakou TI as defendants with corresponding warrants of arrest. P was concerned that if such writs/warrants came to the attention of those in control of the Pretty Entities, steps would be taken to ensure those Pretty Vessels would not call at South African ports. So on 16 April 2015 P successfully applied to the SA Court for an order authorising/directing the registrar to issue such writs/warrants but to refrain from entering particulars in the court register and to embargo inspection of the court files except with P’s written consent or court order. At the beginning of 2016, it became evident to P it was highly unlikely for such writs/warrants to be served before expiry of the 1^st anniversary of their issue, so P obtained an order from the SA Court to extend the validity of such writs/warrants for 2 years to 15 April 2018.

75.SG Proceedings  In/about January 2014, P as Parakou SG’s major creditor funded the Liquidator in pursuing claims against Ds, Yang, Parakou IH and Parakou SM. On 10 April 2014, P and Jinhui entered into a Deed of Indemnity with the Liquidator and his firm. On 23 April 2014, the Liquidator commenced Suit No 434/2014 in the SG Court to seek a range of loss-based and gain-based remedies (Chua Judgment §30):

76.On the other hand, Ds/Yang claimed the Challenged Transactions were carried out as part of a legitimate commercial restructuring plan, the objective of which was for Parakou SG to focus on the more profitable SC Business and to cease the non-performing and/or loss-making OPL/SM Businesses (Chua Judgment §41).

77.On 23 April 2014, the Liquidator applied ex parte to the SG Court on short notice to the defendants for a worldwide freezing injunction restraining (a) each of D1/D2 from disposing of his/her global assets up to the value of S$23,975,895.04, (b) each of D3/Yang from disposing of his global assets up to the value of S$12,431,113.07, (c) Parakou IH from disposing of its assets up to the value of S$14,021,951.97, and (d) Parakou SM from disposing of its assets up to the value of S$309,376.85.

78.The Shaw 1^st Aff summarised the Liquidator’s supporting affidavit of 23 April 2014 as follows: (a) given Ds’/Yang’s actions in perpetrating a conspiracy to defraud Parakou SG and its creditors, they were likely to dissipate assets they arguably held on constructive trust for Parakou SG, and (b) this was “especially likely since [they] could easily facilitate such transfer by wielding their controlling interests in the various related companies whether incorporated in Singapore or in other jurisdictions, thereby putting these assets out of reach of the Liquidator and [Parakou SG’s] creditors”. The Liquidator also relied on Parakou IH’s sale of 6 of the OPL Vessels (which it acquired from Parakou SG under Sale of OPL Vessels), and noted 3 OPL Vessels were no longer registered in Singapore.

79.On 29 April 2014, Choo J granted an interim injunction pending inter partes hearing of the Liquidator’s summons on 27 October 2014, and gave directions for the defendants and Liquidator to file affidavits by 10 and 24 June 2014 respectively (Choo 1^st Judgment §4). The defendants filed affirmations of D1, D3 and Yang, and their collective position was (a) Ds/Yang were reputable persons, (b) disposal of Parakou SG’s assets was part of a group restructuring process and not dissipation, (c) the Liquidator failed to adduce evidence of risk of dissipation, (d) Parakou SG had delayed the injunction application, and (e) any cross-undertaking in damages by Parakou SG would be worthless. D1’s affirmation further claimed the Liquidator failed to disclose to the SG Court (i) the defendants’ explanation of relevant background facts including their claim of legitimate corporate restructuring, (ii) the defendants had cooperated with the Liquidator’s enquiries, and (iii) D1 as a major creditor of Parakou SG for the sum of S$10,356,305 had a 22% stake in assets recoverable by the Liquidator.

80.The Liquidator addressed these points in his affidavit by saying (a) he had met his disclosure obligations, (b) Parakou SM already started to sell 9 of 21 OPL Vessels transferred to it by Parakou SG, (c) the defendants refused to give an undertaking in lieu of Mareva injunction so the Liquidator was compelled to proceed with the application, and (d) whilst the defendants had attended interviews by the Liquidator, they “provided materially inconsistent answers on the same subject matter” and “when confronted with material issues, [they] had either feigned ignorance or simply evaded the questions”.

81.As alluded to above, in July 2014 Parakou IL (of which D1 was the majority shareholder) transferred ownership of 8 Pretty Vessels to Parakou TI (owned by D3). The defendants then served further reply affirmations of D1 and D3 to challenge the Liquidator’s independence as liquidator/officer of the SG Court as well as the documentation made available to them. The Liquidator responded by way of affidavit.

82.On 21 November 2014, Choo J handed down the Choo 1^st Judgment that allowed the Liquidator’s application for continuation of the injunction on the basis that (a) the alleged delay was due to lack of funds and the Liquidator had acted with sufficient diligence in the circumstances, and (b) looking at the chronology of events the defendants’ actions (singularly and in concert) appeared to have been carried out with the intention of preventing P from getting paid the Awards it had won against Parakou SG. Choo J considered the argument that all transfers of assets/contracts were part of a corporate restructuring did not seem plausible, and observed “[how] would all these transfers help the group’s business generally, and [Parakou SG] in particular? The answer seems obvious – to prevent whatever that is left from going to [P]. I am thus satisfied that unless prevented, the assets of [Parakou SG] will be dissipated to the detriment of [P]”. Later the same day, Choo J granted a stay of his order as the defendants indicated they would apply for a variation of such order.

83.On 10 December 2014, the defendants applied to set aside or discharge the Mareva order, or alternatively to set aside the terms of such order save that (a) D1/D2 be restrained from disposing of, dealing with or diminishing the value or further encumbering the SG Properties and (b) Parakou IH be prohibited from removing from Singapore or in any way disposing, dealing with or diminishing the value of the sum of S$635,000 held in a law firm’s client account (“Client A/C Sum”) pending final determination of the SG Proceedings including any appeal (Choo 2^nd Judgment §2). The “thrust” of the defendants’ argument for setting aside the Mareva order was that their assets covered by such proposed undertakings were sufficient to meet Parakou SG’s liquidated damages claims (Choo 2^nd Judgment §3).

84.On 31 March 2015, the Liquidator applied to increase the limit of the Mareva order to include Ds’ 100% shareholding in Parakou SM. But it transpired that by 31 July 2014 Ds’ shareholdings in Parakou SM had been transferred to Parakou TI with proposed merger between Parakou TI and a third party in the United States (Choo 2^nd Judgment §4). The Liquidator also advised the SG Court that Parakou SG’s claims for unliquidated damages would exceed the security provided. But on 13 April 2015, Choo J handed down the Choo 2^nd Judgment that dismissed the Liquidator’s application (Choo 2^nd Judgment §9), and found as follows (Choo 2^nd Judgment §6):

“…… I am of the view that the defendant’s conduct on the whole has not been satisfactorily explained. They seem to be carrying out transactions that appear to dissipate their assets under the guise of corporate restructuring – previously in the form of vessels and now in the form of share transfers. I am unable to accept that the share transfers and proposed merger are merely part of a corporate restructuring process. Nonetheless, since the purpose of a Mareva injunction is merely to preserve sufficient assets so that judgment obtained against the defendants for the plaintiff’s claims would not be rendered nugatory by the dissipation of assets. In light of this purpose, I find the properties set out in the undertakings to be sufficient, at present, to satisfy the plaintiff’s claim. The defendants have collectively identified and provided undertakings in respect of assets with an unencumbered value of S$51.1 million. I accept that this is more than double the liquidated claim amount and there is no evidence to show specifically that [SG Properties] and the amount in the client account are at risk of being dissipated.”

Choo J then accepted the defendants’ voluntary undertakings not to dispose of assets with an unencumbered value totalling S$51,100,000 (equivalent to about US$37,500,000), including caveats against the SG Properties that belonged to D1/D2, and the Client A/C Sum of Parakou IH (“SG Undertakings”).

85.The Shaw 1^st Aff contended that whilst P as a creditor of Parakou SG would benefit indirectly from those arrangements as they would enhance the prospect of recovery by Parakou SG with corresponding dividend to the creditors, those arrangements were in respect of different claims by a different claimant from the claims P would advance in the present action. Shaw went on to say:

86.But the Shaw 2^nd Aff filed after the 1^st/2^nd Orders were granted clarified that upon receipt of Singaporean legal advice the Liquidator did have a caveatable interest in the SG Properties as soon as the Mareva order was granted by the SG Court, and that on 5 April 2017 the Liquidator did lodge caveats prohibiting sale of the SG Properties with the Singapore Land Authority. Shaw claimed the mistake in the Shaw 1^st Aff was not material, and in any event such development would only benefit P indirectly by merely fortifying a pre-existing undertaking, so it could not be regarded as material change in circumstances in respect of the 1^st/2^nd Orders as varied.

87.SA Proceedings: PS Arrest and setting it aside  The tanker mv “Pretty Scene” (which by 2016 was part of the Parakou TI fleet, “PTI Fleet”) sailed to and called at South Africa in June 2016. D3 claimed it was a slip of mind on his part, and it would not happen again. But as a result P succeeded in arresting mv “Pretty Scene” twice in June and October 2016 on the basis that she was an “associated” vessel belonging to Parakou TI via Pretty Scene Shipping SA (and thus owned/controlled by D3 who, according to the replying affidavits filed by Pretty Time Shipping SA for setting aside the PT Arrest under the PT Arrest Proceedings, in turn owned/controlled Parakou SG), which “association” was different from that for the purpose of the PT Arrest.

88.On 18 June 2016, P caused mv “Pretty Scene” to be arrested in South Africa. On 1 July 2016, Pretty Scene Shipping SA as owner of mv “Pretty Scene” applied to set aside the PS Arrest and to seek ancillary relief. After the hearing on 12 August 2016, Vahed J reserved judgment. On 28 October 2016, before Vahed J delivered his judgment, P caused mv “Pretty Scene” to be arrested again, and instituted a 2^nd action in rem. On 31 October 2016, Vahed J delivered the Vahed Judgment to set aside the 1^st PS Arrest on the basis that the application was defective (ie the form of the summons did not comply with requirements of the relevant rules and practice direction). P’s application for leave to appeal was refused. P then made renewed application for leave to appeal to the SAFC. Thus, but for the 2^nd action in rem and 2^nd PS Arrest, mv “Pretty Scene” would have been free to depart South Africa. Leave to appeal was granted by the SAFC, and on 4 March 2019 the SAFC handed down the SAFC Judgment to dismiss such appeal.

89.Pretty Scene Shipping SA applied to set aside the 2^nd PS Arrest, and argued that (a) such arrest was vexatious and an abuse of process, (b) P’s cause of action no longer existed as it had merged with the Awards, (c) Parakou SG was not the charterer of mv “Canton Trader” at the time when the Awards were handed down, and (d) P’s claims were time-barred. Pretty Scene Shipping SA also indicated it would counterclaim against P for damages said to arise from P’s pursuit of excessive security. A hearing took place on 24 February 2017. On 10 August 2017, Henriques J of the SA Court handed down the Henriques Judgment that declined to set aside the 2^nd PT Arrest. On 11 August 2017, Pretty Scene Shipping SA applied for leave to appeal. Leave to appeal was granted and on 4 March 2019 the SAFC handed down the SAFC Judgment to allow the appeal.

90.Turning to the necessary “association” for the PS Arrest, P claimed D3 controlled Pretty Scene Shipping SA that owned mv “Pretty Scene” upon the transfer of control from Parakou IL to Parakou TI in July 2014, and D3 (by virtue of allegations in Ds’ replying affirmations for setting aside the PT Arrest in the PT Arrest Proceedings – see paragraph 58 above) also controlled Parakou SG upon transfer of its shares to him in 2008 (in contra-distinction to P’s stance in the PT Arrest Proceedings in 2009 that it was D1 who controlled both Pretty Time Shipping SA and Parakou SG which remained the basis of P’s contentions in the present action). The D3 3^rd Aff complained that P blew hot and cold on who controlled Parakou SG, but the Wragge 2^nd Memo §§48-49, 55 explained there were de jure control and de facto control, and D3’s control was of the former type.

91.SG Proceedings: Chua Judgment  On 8 February 2017, Chua J handed down the Chua Judgment which found for the Liquidator on several causes of action, and in particular Chua J held that:

92.Mr Man SC in his written submissions helpfully summarised Chua J’s findings in a tabulated form as follows:

93.Parakou SG was awarded alternative remedies against each defendant, including loss-based awards (ie for damages to be paid), gain- based awards (ie for account of profits) and proprietary claims. Shaw claimed Parakou SG was entitled to elect the most favourable remedy to pursue, but such election remained to be pursued/resolved in the SG Proceedings pending further information to be sought by the Liquidators from the defendants to facilitate such election. Mr Yu SC submitted the Liquidator had the right to elect remedies against Ds in relation to Sale of OPL Vessels (but see paragraph 96(a) below) and PIH Repayment, but this appeared to be incorrect because the Chua Judgment §§191, 201-202 held it was Parakou IH rather than Ds who was liable for losses caused to Parakou SG as a result of dishonest assistance and knowing receipt in respect of Sale of OPL Vessels (but see paragraph 96(a) below) and PIH Repayments, or alternatively it was Parakou IH rather than Ds who was liable as a constructive trustee for account of profits made as a result of its dishonest assistance and knowing receipt in connection with Sale of OPL Vessels (but see paragraph 96(a) below) and PIH Repayments. On such note, Mr Man SC submitted Ds’ liabilities were largely loss-based, and it was only in relation to Bonus Payments (for which only D1/D2 were liable) that Parakou SG might elect a gain-based award (Chua Judgment §§206-209 and Sanger 1^st Aff §§38-41), but it seemed the right to elect alternative remedy might also cover Salary Increases (Chua Judgment §187).

94.The total claims by the Liquidator allowed by Chua J amounted to an estimated liquidated sum of S$16,935,000 including estimated interest (see ASoC §68 and Shaw 1^st Aff §19) or about US$12,020,000 according to Sanger 1^st Aff §14 (or US$11,968,000 according to the ASoC §68). But Mr Man SC reminded that the conspiracy claim against Parakou SG was founded only on 3 Challenged Transactions (ie Sale of OPL Vessels (see paragraph 96(a) below) – S$1,192,900, PIH Repayments – S$9,812,542.80 and Bonus Payments – S$267,127.50) in the Chua Judgment §200, the quantum of which was S$11,272,570 or about US$8,002,400 (D3 3^rd Aff §§59-63 and Sanger 1^st Aff §29).

95.Shaw conceded that should the Liquidator make a recovery P as the largest unsecured third party creditor of Parakou SG would stand to benefit pro rata as the proceeds of such recovery after deduction on account of litigation costs, Liquidator’s costs, preferential creditors’ claims etc would be distributed to unsecured creditors (including P) on the usual pro rata or pari passu basis.

96.On 21 March 2017, each of Ds filed/served notices of appeal with the SGCA challenging the whole Chua Judgment except those findings of fact/law in their favour. On 24 March 2017, the Liquidator filed a cross appeal with the SGCA in respect of some claims rejected by Chua J. On 17 January 2018, the SGCA handed down the SGCA Judgment that upheld the Chua Judgment except that:

97.Disposal of Parakou TI assets  The Toms 3^rd Aff noted D3 1^st/2^nd Affs showed D3 had global assets of US$95,456,126.98 with significant proportion held in private companies, eg assets valued at US$72,511,611.51 (about 75% of D3’s declared global assets) were held through Parakou TI and its subsidiaries (including some Pretty Entities/Vessels whose beneficial ownership was transferred from Parakou IL to Parakou TI in 2014). Toms claimed it appeared that between the D3 1^st Aff (29 March 2017) and D3 2^nd Aff (8 May 2017) 2 Pretty Entities[54] disposed of mv “PTI Hercules” and mv “PTI Orion”, and it was believed another Pretty Entity was then contemplating or had completed sale of mv “Pretty World”.

98.Toms complained that neither P nor the HK Court was given notice of anticipated disposal or information regarding disposition during the currency of the 1^st/2^nd Orders as varied (which Toms regarded as breach of the spirit of such orders),[55] so P by the Variation Summons asked for further variation of the 2^nd Order as varied, which was granted by Au-Yeung J on 26 May 2017 by way of the Further Variation Order (see paragraph 20 above).

99.SA Proceedings: D1’s de facto control  P claimed it was found/proven by the Chua Judgment that the evidence/statements adduced by Pretty Time Shipping SA for the setting aside application under the PT Arrest Proceedings as to the legitimacy of the transfer of Parakou SG shares from D1/D2 to D3/Yang and the alleged “restructuring” were false, ie (a) the 17/3/08 Resolution was not a contemporaneous document and was instead a forgery created by Ds shortly before 17 April 2009 and there was in fact no restructuring plan (Chua Judgment §§43-60), and (b) D1 remained as a “shadow director” and “key decision maker” of Parakou SG after his purported resignation from Parakou SG’s board of directors on 31 December 2008 (Chua Judgment §35). Consequently, it was said (i) D1’s exercise of de facto control of Parakou SG meant there were no grounds to oppose the PT Arrest and Parakou SG had no defence to P’s claim, and (ii) by the time of the PT Arrest Parakou SG was advised by Mr Luke Parsons QC this was the case. But Ds adduced false evidence/statements for the setting aside application under the PT Arrest Proceedings, and the SA Court set aside the PT Arrest on 30 April 2009. P claimed but for such false evidence/statements, the PT Arrest would not have been set aside.

100.The Wragge 1^st Memo opined that:

101.Shaw was advised by Mr Wragge SC that since Ds’ replying affirmations containing false statement regarding D1’s on-going involvement in the affairs of Parakou SG (see paragraph 58 above) were affirmed in Hong Kong and Singapore before notary public, Ds rendered themselves open to prosecution in South Africa for defeating/obstructing the course of justice in respect of the offence of putting statements containing false information regarding D1’s on-going involvement in the affairs of Parakou SG before the SA Court.[56] Shaw was further advised by Hong Kong counsel there was a good case that by having made false statements in their affirmations in Hong Kong D1/D2 had committed perjury in Hong Kong pursuant to sections 29-32 of the Crimes Ordinance Cap 200.[57]

102.P’s cause of action  Shaw claimed it was against such background that P brought the present action against Ds for conspiracy to injure by unlawful means. The Shaw 1^st Aff stated Singaporean counsel and South African counsel (by the Wragge 1^st Memo §§50-58) confirmed the same or analogous cause of action, ie conspiracy to injure by unlawful means, was actionable under those foreign laws.

103.In a nutshell, P’s pleaded claim against Ds for unlawful means conspiracy concerned alleged agreement/combination to defeat P’s enforcement of its then forthcoming Awards (ASoC §62(1)) that involved various unlawful acts, including the Asset Stripping Exercise that pertained to acts aimed at stripping Parakou SG’s assets (ASoC §62(1)(a)), the Asset Thwarting Exercise that pertained to acts aimed at thwarting the PT Arrest and arrest of other Pretty Vessels (ASoC §62(1)(c)-(d)), and commencing abusive the parallel HK Proceedings to delay any liquidation of Parakou SG until expiry of the 2-year claw back period (ASoC §62(1)(b)). P alleged Ds were therefore jointly and severally liable for damages (at large) for conspiracy, interest and costs. I turn to particulars of P’s claim set out in the ASoC.

104.Conspiracy  The ASoC §62 pleaded that by about end of October 2008 Ds knew Parakou SG would be liable to P for substantial damages in respect of the Charterparty (which would have a strong adverse impact on Parakou SG), and they conspired/combined together with an intention to injure or cause financial loss to P by the use of unlawful means and/or reached an understanding to embark upon concerted action with an intention to use unlawful means to injure or cause financial loss to P:

105.Unlawful means The ASoC §63 also pleaded the unlawful means which Ds agreed to be deployed and which were deployed by at least 1 of Ds as follows:

106.Loss and damages In the ASoC §64, P claimed that by reason of the above matters set out in the ASoC §§62-63 (see paragraphs 104-105 above), it suffered resulting financial loss and damages as particularised below:

107.In support of the above contentions, P by the ASoC §§67-69 relied on inter alia the following facts and matters:

P would give credit for any recovery it would make via the liquidation of Parakou SG, but this would not be full recovery of all pecuniary damage P suffered because the Chua Judgment (subject to election) was S$16,935,000 (broadly equivalent to US$11,968,000 or US$12,020,000 – see paragraph 94 above), which was far less than P’s claim against Ds in the present action, and from this would have to be deducted the Liquidator’s costs/fees. In any event, P was not the only creditor of Parakou SG, so its share would only be a % share of the remaining recovery (ASoC §68).

108.Thus, by the ASoC, P sought “damages (at large) for conspiracy”. There was no dispute the Cap Sum for the 1^st/2^nd Orders as varied was set by reference to the Award Sum (see Alder Submissions §46), so presumably P sought at least the entirety of the Award Sum as damages but undertook to give credit for any recovery from Parakou SG’s liquidation (ASoC §68 and Shaw 1^st Aff §156).

109.Limitation  The Shaw 1^st Aff addressed the question of possible statutory limitation of P’s claims. Although P obtained the 1^st Award against Parakou SG more than 6 years ago in August 2010, Shaw claimed he was advised by Hong Kong counsel that any claim for damages based on unlawful conspiracy in thwarting enforcement of the 1^st Award would not have been time-barred as any limitation period would only run from the time the conspiracy could have been reasonably discovered by P.

110.Although section 4(1) of the Limitation Ordinance Cap 347 (“LO”) provides that action shall not be brought after the expiration of 6 years from the date on which a cause of action in tort accrued, P relied on the provision for extension of time in section 26 of the LO (see paragraph 252 below). P pointed out its cause of action was based upon Ds’ conspiracy and unlawful means in the form of fraud, ie deployment of the forged 17/3/08 Resolution and false replying affidavits for setting aside the PT Arrest before the SA Court, and claimed its present claim was not out of time because both conspiracy and fraud were concealed from P until at the latest the Chua Judgment in February 2017 or at the earliest date when the Liquidator (a) commenced investigations into Parakou SG in 2014 by accessing/reviewing relevant documents and interviewing key individuals, and (b) relayed such information to P. On such basis, it was said P’s cause of action was well within time.

111.Connection to Hong Kong  P claimed that by its very nature the conspiracy perpetrated by Ds against P was secret. Whilst P relied on unlawful acts effected and effective in South Africa / Singapore, P believed the conspiracy was masterminded from and effected in Hong Kong (being the headquarters of the Parakou Group and domicile of D1/D2):

Thus, Shaw believed the majority of witnesses/documents relevant to P’s cause of action were in Hong Kong, and he understood from the Liquidator that the documentary evidence in the SG Proceedings was, by and large, limited to Parakou SG’s books/records located in Singapore. Shaw suggested that as a matter of case management it would be proportionate and just for the HK Court to determine P’s claim.

112.Summary  In the circumstances, P argued it had a viable cause of action against Ds that was justiciable by the HK Court, and its prima facie claim for damages was a strong one that met and easily surpassed the “good arguable case” standard.

VII.  Ds’ CASE

113.Overview  In the absence of pleadings by Ds, Mr Man SC helpfully summarised Ds’ case as follows:

114.D3 claimed P’s present action and injunction proceedings were the culmination of some 9 years of litigation between P and Ds (together with various Parakou entities/representatives). In the D3 6^th Aff, D3 alleged Ds were victims of P’s abuse of process in transforming a commercial dispute with Parakou SG into a personal attack on them for many years that significantly affected their personal lives and left D1 to pass away “under the black cloud of the Injunction”.

115.D3 claimed even on P’s own case the Asset Stripping Exercise had been litigated between the Liquidator (funded by P) and inter alia Ds in the SG Proceedings, so there should not be re-litigation of the same issues in Hong Kong. But after realising its inability to recover the Awards in full from Parakou SG via the SG Proceedings, P brought the present action against Ds primarily on the same asset-stripping acts that had been litigated in the SG Proceedings. D3 claimed that although P’s claim based on the Asset Stripping Exercise was adequately secured by the voluntary SG Undertakings, P in the present action applied ex parte for and obtained the 1^st/2^nd Orders in the amount of the Cap Sum against each of Ds personally, which A Chan J regarded as “serious injustice” to Ds and which Ds claimed to have caused financial pressure on them, especially when they had put up adequate security in the SG Proceedings. Ds further complained that by requiring the Cap Sum for the 1^st/2^nd Orders P sought maximum security (to exert the maximum pressure) when it did not even estimate the likely amount of recovery from Parakou SG’s liquidation that would reduce the amount covered by the 1^st/2^nd Orders as varied even though P funded the SG Proceedings, was a major creditor of Parakou SG in liquidation, and acknowledged there should not be double recovery.

116.D3 also claimed P’s conduct after securing the 1^st/2^nd Orders was also oppressive, eg seeking leave to commence committal proceedings against Ds around the time of D1’s funeral which P did not then pursue, unreasonably resisting Ds’ requests to release funds for further ordinary/ legal expenses that eventually led to discharge of the 1^st Order as varied as against D2 and Ds’ undertakings at the suggestion of the Court of Appeal, and seeking to extend the scope of the 1^st/2^nd Orders as varied to further freeze assets held by related third party companies of which D3 was shareholder/director but eventually dropped such application.

117.D3 also made the following preliminary points:

118.P’s overview response  Shaw reminded that the SG Court found D3 dishonest and was not a creditable witness, and made similar findings against D1 whose hearsay evidence D3 relied in the D3 3^rd Aff, so Shaw urged this court to view D3’s assertions (including his portrayal in the trade press that P was having a personal vendetta against Ds as victims) with caution.

119.The Shaw 3^rd Aff suggested the present action was not to enforce the Awards, and D3/Sanger misconstrued the background/context of the present action brought by P (not the Liquidator) in its personal capacity that rested on a cause of action in tort in Hong Kong for Ds’ sophisticated/fraudulent conspiracy by unlawful means to prevent P from enforcing the Awards (and in effect made Parakou SG, Pretty Fleet and their interests “judgment proof”) which caused financial loss to P being the target of such conspiracy. It was P’s case that for years Ds conspired to hide assets, to “cheat” P by unlawful means and to conceal fraudulent actions, and the unlawful means that Ds deployed were numerous making it inappropriate to compartmentalise P’s claim into 1 conspiracy in relation to the Asset Thwarting Exercise and another conspiracy in relation to the Asset Stripping Exercise. P’s claim for damages was not limited to the Award Sum (plus interest and costs) but included the Expenditure (estimated to exceed US$6,000,000). In light of the above, the fact some 8 years later events “caught up” with Ds upon revelation of the true nature/extent of the conspiracy should not be held against P especially at a “summary” stage.

120.Shaw said Ds (as inter alia the controlling minds of Parakou SG) by their fraudulent scheme succeeded in evading P’s legitimate enforcement action against Parakou SG and against “associated” vessels controlled by D1/D3 over the past 8 years pursuant to the South Africa “associated” arrest procedure, which albeit unique was a legitimate and well recognised/used form of obtaining security for disputed shipping claims. Indeed, Ds caused Parakou SG to effect the JF Arrest in 2009 and obtained security in the sum of US$44,412,905 for the HK Proceedings.

121.On the other hand, the SG Proceedings were brought by the Liquidator (an independent officer of the SG Court whose duties were owed to Parakou SG and its creditors as a whole) against Parakou SG’s former directors (including Ds) and their associated companies for breach of fiduciary duties, liability to pay damages or account for profits caused by undervalue transactions, and conspiracy by unlawful means to injure Parakou SG. Shaw said P (the largest but not the only third party creditor of Parakou SG) was upfront about its provision of funding for such litigation,[59] but P did not “direct” the SG Proceedings.

122.The Shaw 3^rd Aff said the SG Proceedings was relevant to P’s present action as follows: (a) it was via such proceedings that P with reasonable diligence discovered the fraud and facts relevant to P’s own personal cause of action, (b) P in its personal claim sought to rely, at least in part, on common factual findings in the Chua Judgment a large part of which appeared to have been undisputed, and (c) P would give credit for any indirect recovery via the liquidation process to avoid any double recovery (but there would never be full recovery of all pecuniary loss P claimed it suffered as a result of Ds’ unlawful conspiracy). But P’s personal cause of action did not rely as an unlawful act Ds’ conspiracy to defraud Parakou SG (that was actionable at the behest of the Liquidator), and P did not just rely on the Challenged Transactions but also relied on subsequent steps Ds took to avert asset recovery and to place Parakou SG into liquidation. So Shaw disagreed P was essentially bringing the same claim as that brought by Parakou SG in the SG Proceedings, especially when the SG Court was not asked to consider (i) the unlawfulness of Ds’ actions in the context of the SA Proceedings when Ds’ false evidence as deployed in such proceedings was planned/sworn/affirmed/created in Singapore and Hong Kong, (ii) whether there was a conspiracy to defraud P in contra-distinction to Parakou SG, and (iii) what loss/damage P suffered as a result of Ds’ unlawful conspiracy, which was not quantified by reference to the amounts of the assets stripped from Parakou SG. On such basis, it was said D3’s allegations did not give the entire picture, and it was inappropriate to say P or Liquidator/P already had security in Singapore for P’s claims.

123.Shaw added that P was not a party to the Liquidator’s successful Mareva application in Singapore in 2014 and/or unsuccessful application to increase the amount of the Mareva order in Singapore in 2015, so Choo J did not find P was more than adequately secured. The 1^st/2^nd Orders as varied were not attempts to secure “via the backdoor” additional security that the Liquidator could not get in Singapore in 2015 since P was not seeking security for the same claims as those brought by Parakou SG in Singapore or trying to circumvent the liquidation process. Rather, it was said P had no security for its claims when Parakou TI (which owned Pretty Scene Shipping SA) had yet to put up security following the PS Arrest in 2016, which highlighted the importance of the 1^st/2^nd Orders as varied.

124.The Shaw 3^rd Aff also disagreed that P suffered no loss in any event, that the false evidence Ds deployed before the SA Court had no effect on the outcome of the PT Arrest, or alternatively that even if the PT Arrest had been maintained D1 would not have put up security in any circumstance, and claimed that at the very least there were serious factual issues that required full evidence, which should not be determined summarily upon a striking out application.

125.Asset Stripping Exercise: value  For the present purposes, D3 was prepared to proceed on the basis of findings made in the Chua Judgment (but see paragraph 96 above). Ds claimed it appeared from assertions about the Asset Stripping Exercise in the Shaw 1^st Aff §§61-65 and the ASoC §48 that P relied on the Challenged Transactions which were essentially the same matters the Liquidator relied on in the SG Proceedings, which matters had been considered at length in the Chua Judgment. The SG Proceedings (including the Mareva proceedings that the Liquidator brought in the name of Parakou SG) were funded by P as the largest third party creditor of Parakou SG who stood to recover a proportion of its claim in the present action via amounts received and to be paid out by the Liquidator, and by a Deed of Indemnity for P’s funding the Liquidator was required to keep P informed of all developments in connection with the SG Proceedings, to send drafts of court documents to P for its review and to obtain P’s prior written approval before undertaking any work in connection with the SG Proceedings.

126.In the SG Proceedings, the Liquidator argued Ds carried out the Challenged Transactions to shift assets away from Parakou SG to defeat P’s claim in the Arbitration and its enforcement of the ensuing Awards. D3 noted although Chua J allowed some Liquidator’s claims, he rejected all claims against D3 for breach of fiduciary duties except for Employees’ Salary Payments, and P had not disclosed to the HK Court Chua J found D3 was not a de facto director of Parakou SG before his formal appointment as a director on 22 December 2008, which meant he was not Parakou SG’s director during nearly all Challenged Transactions save for Employees’ Salary Payments in 2009-2010. Chua J found D1/D2 were in breach of fiduciary duties for 6 Challenged Transactions (total value of S$16,935,000 / about US$12,020,000 inclusive of estimated interest – see paragraph 94 above) (but see paragraph 96(a) above for Sale of OPL Vessels), and found against the Liquidator on 3 such transactions,^[60] so the loss caused to Parakou SG (and by extension to P) due to alleged asset-stripping was only at best about US$12,020,000 which was far less than the Award Sum being part of the damages claimed in the present action.

127.D3 said it was also important to note Chua J only made finding of conspiracy by unlawful means to injure Parakou SG for 3 out of 6 Challenged Transactions (ie Sale of OPL Vessels (but see paragraph 96(a) above), PIH Repayments and Bonus Payments)[61] with total liquidated value of S$11,272,570 (or about US$8,002,400). Although P relied upon Chua J’s findings to establish the unlawful means relevant to the Asset Stripping Exercise, the Shaw 1^st Aff failed to disclose this fact and P’s ASoC still relied on all 9 Challenged Transactions for its present claim against Ds for conspiracy by unlawful means. Ds claimed these matters had been litigated/quantified in the SG Proceedings that P was aware and stood interested.

128.The Shaw 1^st Aff §19 also stated Parakou SG might be entitled to elect between remedies against one/more defendants in the SG Proceedings, ie account of profits or damages to be assessed, and gave impression that the Liquidator would likely be entitled to a much greater sum than S$16,935,000 (US$12,020,000) for the Asset Stripping Exercise and conspiracy claim. But D3 said Shaw should have clarified that Chua J (a) held that an account of profits against Ds was available for just Bonus Payments out of 9 Challenged Transactions (which amounted to S$267,127.50 or US$189,633.81), and (b) emphasised Parakou SG was not entitled to double recovery for damages to be assessed on the conspiracy claim. D3 was advised that since loss caused by the alleged conspiracy should be equal to the value of the underlying assets that were allegedly stripped out, P’s claim for the tort of conspiracy would not increase the value of the Liquidator’s / P’s claim significantly or at all.

129.Shaw claimed the Liquidator proposed to seek information in the week of 6 March 2017 before electing damages or profits, but no such information requests were made even by the time of the D3 3^rd Aff. To date, the Liquidator had not made such election. But D3 was advised the above showed the value of P’s claim for the Asset Stripping Exercise was worth only about S$16,935,000 (including estimated interest) or US$12,020,000 at the highest, so even if the Liquidator ultimately sought account of profits from D1/D2 in relation to Bonus Payments, D3 did not expect profits to be greater or much greater than the amount of Bonus Payments, so the most P would receive for its claim in the present action for loss caused by the Asset Stripping Exercise would have been S$16,935,000 or US$12,020,000, and if the loss was assessed by reference to the unlawful means established by the conspiracy findings in relation to the Asset Stripping Exercise in the Chua Judgment, P’s loss would be S$11,272,570 (or about US$8,002,400) (but see paragraph 96(a) above).

130.Asset Stripping Exercise: security  D3 claimed the SG Proceedings were also relevant because on any view P had more than adequate security under the SG Proceedings (ie not to deal with the SG Properties and Client A/C Sum) for its present claim based on the Asset Stripping Exercise. For P’s liquidated claims, the Choo 2^nd Judgment found the unencumbered value of the SG Properties as at 13 April 2015 was S$51,100,000 (about US$36,280,000), which Choo J observed was “more than double the liquidated claim amount” with “no evidence to show specifically that [SG Properties] and [Client A/C Sum] are at risk of being dissipated” (Choo 2^nd Judgment §6). For P’s unliquidated claims, no independent valuation of profits derived from the SMAs was provided to the SG Court, so there was no basis to increase the security on this ground too. Also Chua J found the SM Business was in fact loss-making (which the Liquidator admitted during oral testimony), so Transfer of SMAs was in fact in the interests of Parakou SG’s creditors and not in breach of directors’ duties (Chua Judgment §§128-129). On such basis, it was said the Liquidator (and hence P) were more than adequately secured.

131.D3 claimed that given Chua J’s findings in the SG Proceedings and the unencumbered value of the SG Properties (about S$51,100,000) was then more than 3 times the total value of the liquidated asset-stripping (S$16,935,000 or US$12,020,000), the Liquidator clearly had far more security than needed. D3 noted the Liquidator applied unsuccessfully to increase the limit of the Mareva order by US$131,000,000 by reference to an account of profits in respect of Transfer of SMAs to Parakou SM (ie a Challenged Transaction that the Liquidator unsuccessfully argued was in breach of directors’ duties and thus amounted to asset-stripping – Chua Judgment §§128-129, 175). Thus, D3 claimed there was no basis to increase the security obtained in the SG Proceedings for the asset-stripping, and by the same token P also had no basis to supplement that security via the present action.

132.In/about April 2017, Golden Wisdom received an offer from an arms-length third party MTZ Properties Private Limited to purchase Unit #32-01 of 9 Temasek for S$11,500,000. At the time of the D3 3^rd Aff, there were ongoing negotiations for potential sale of such unit with offered price commensurate with market value. As 9 Temasek was subject to the SG Undertakings, the potential sale was discussed in correspondence between the Liquidator’s Singaporean solicitors and D1/D2. D3 claimed any sale would simply convert the property asset to cash to pay down the mortgage with remainder to be paid into court.

133.But the Shaw 3^rd Aff claimed “[the] blasé manner in which this [ie the proposed sale] was brought to the attention of [P] and seemingly to the [HK Court] is of serious concern. This sale was planned without notice and notwithstanding the Injunction Orders, though given the Lius’ previous conduct which I have seen over the last 8-9 years I am not altogether surprised. Goodness knows what would happen if [Ds] were not constrained by the Injunction Orders”.

134.The D3 3^rd Aff disagreed the potential sale was in breach of the Mareva order in Singapore as the sale itself would not have diminished the value of any of D1’s/D2’s assets, and claimed Ds gave notice to P when notice was given to the Liquidator on 17 April 2017 in the context of the SG Proceedings since the Liquidator was required under the Deed of Indemnity to keep P notified of all inter-partes correspondence in the SG Proceedings. It was further said Shaw well knew 9 Temasek was a core part of the SG Undertakings that had been in place for years, and such property could not have been sold without consent of the SG Court or Liquidator who had a caveatable interest and had placed a caveat on such property (which fact was omitted in the Shaw 1^st Aff and not corrected until the Shaw 2^nd Aff 2 months later). In fact, the Liquidator expressly consented to the proposed sale by varying the terms of the voluntary SG Undertakings without alleging dissipation or diminution in the value of assets. According to the Ching Aff, Unit #32-01 of 9 Temasek was sold by consent on 29 June 2017 to discharge mortgage obligations. On 30 November 2018, the Liquidator and D1/D2 agreed to permit D1/D2 to sell the remaining units of 9 Temasek, which sale realised about S$21,000,000 and net sale proceeds of S$19,004,528.77.

135.According to the Ching Aff, on 9 October 2018, the defendants in the SG proceedings sought consent from the Liquidator to lift the caveat on 2G Bishopgate. On 18 and 21 January 2019, the defendants applied to the SG Court to vary the SG Undertakings and to have the caveat with respect to 2G Bishopgate withdrawn to facilitate its sale. On 31 January 2019, such application was granted by consent by the SG Court on the basis inter alia that upon completion of the sale of such property for no less than S$27,880,000, the proceeds less reasonable expenses incurred in the sale would be stakeheld by D1’s/D2’s Singaporean legal representatives until full and final settlement of the SG Judgment Debt (referred to in paragraph 213 below). On 15 February 2019, the caveat on 2G Bishopgate was withdrawn and the sale of such property was completed.

136.Asset Stripping Exercise: disclosure  The Sanger 1^st Aff pointed out a number of matters which Sanger claimed were not drawn to the attention of the ex parte judge. The Shaw 3^rd Aff disagreed, referred to the Alder Submissions that showed P’s awareness of the duty of disclosure and non-reliance on matters “buried” in exhibits, and took issue on Ds’ approach as having “wrongly artificially compartmentalised [P’s] cause of action” (see paragraph 119 above).

137.The Sanger 1^st Aff made the following complaints as to the tort of unlawful conspiracy:

138.Sanger claimed the above misleading allegations were relevant for the following reasons: (a) Chua J’s specific findings and their relevance to the present action were highly material and should have been disclosed to the ex parte judge, (b) P used Chua J’s findings to make sweeping and highly prejudicial allegations against Ds so P should present such findings accurately/fairly, and (c) insofar as P sought to establish loss for unlawful means conspiracy based on civil wrong findings of conspiracy in the Chua Judgment such loss should be limited to that caused by the 3 Challenged Transactions found by Chua J for the conspiracy claim with total liquidated quantum worth about S$11,272,570 (or about US$8,002,400) (but see paragraph 96(a) above). On such basis, Sanger claimed P had more than adequate security in Singapore for this aspect of its claim.

139.The Shaw 3^rd Aff disagreed with Sanger’s criticisms:

140.Shaw reiterated (a) it was the Liquidator who had some security but P had no security (or Mareva relief) in Singapore, (b) even though P funded the SG Proceedings the Liquidator was an independent officer of the SG Court and had his own solicitors, (c) any recovery by the Liquidator would go first to paying his costs/fees, and (d) P not being the only creditor of Parakou SG would only receive a % share of the remaining damages.

141.Sanger next complained about P’s disclosure in relation to the current Mareva position. She noted the Shaw 1^st Aff stated the Liquidator advised that the SG Undertakings in respect of the SG Properties were not caveatable and it was unclear whether Parakou SG could register an interest upon handing down of the Chua Judgment in its favour, and that D1/D2 could choose to ignore such undertakings, sell the SG Properties and face the consequences. In short, Shaw asked the court to infer the Liquidator’s security in Singapore was not very secure and the Liquidator’s claim was somehow at risk. But the Shaw 2^nd Aff was constrained to acknowledge the Liquidator had a caveatable interest in the SG Properties as soon as the Mareva order was granted, and the Liquidator did lodge caveats with the Singapore Land Authority on 5 April 2017 to prohibit sale of the SG Properties. Sanger claimed such errors / corrected facts were clearly material to the injunction application in the present action when, contrary to the Shaw 1^st Aff, the Liquidator was fully secured for the asset-stripping claim in the SG Proceedings (which mirrored the claim based on the Asset Stripping Exercise in the present action). Ds said the security voluntarily offered by Ds was not at risk and was in fact protected by caveats filed by the Liquidator.

142.On the other hand, the Shaw 3^rd Aff disagreed Shaw misstated the security position in the Shaw 1^st/2^nd Affs. First, Shaw disagreed with Sanger’s attempt to conflate the Liquidator and P as having the benefit of security in Singapore. P (in contra-distinction to the Liquidator) had no security and was not a party to the SG Proceedings. Secondly, Ds did not voluntarily provide the security in Singapore since the SG Undertakings were proffered only when the Liquidator (not P) obtained the Mareva order against them (which application they opposed). Thirdly, Shaw said the Shaw 1^st Aff (including the aforesaid error) was true to the best of his knowledge and belief at that time (6 March 2017), and it was only on 27 March 2017 that the Liquidator advised he was considering the possibility of lodging caveats against the SG Properties and only on 5 April 2017 that the Liquidator lodged such caveats. Shaw then brought these developments to the HK Court’s attention in the Shaw 2^nd Aff well before Ds had to file evidence to oppose P’s Summons.

143.Sanger further complained about P’s disclosure in relation to the 17/3/08 Resolution. She pointed out P treated it as part of the unlawful means for the conspiracy that rested on the Asset Stripping Exercise (Shaw 1^st Aff §152), but Chua J found such resolution was created by Ds in April 2009 in the context of the SA proceedings and did not exist when the Challenged Transactions took place in November/December 2008, so even on P’s case such resolution had nothing to do with the asset-stripping, and did not cause/contribute to damage that allegedly arose as a result. Insofar as Ds deployed the 17/3/08 Resolution, D3 claimed it was to evidence Ds’ allegation of a legitimate restructuring plan which Chua J did not accept in the end. Had Chua J accepted there was such restructuring plan, the 17/3/08 Resolution might have had the effect P claimed, but since he rejected such evidence, no injury was caused to P as a result. Sanger claimed the same could also be said for the PT Arrest Proceedings discussed below. Sanger reminded the 17/3/08 Resolution had no effect on Levinsohn AJP’s decision to set aside the PT Arrest even in the context of his obiter discussion on oral evidence.

144.But Shaw claimed Sanger missed the point. Sanger’s contentions implicitly accepted the 17/3/08 Resolution was a forgery created by Ds in 2009 but back-dated to make it look like it had been created a year earlier in March 2008 as purported justification for the transfer of Parakou SG’s shares from D1/D2 to D3/Yang and for the Challenged Transactions. Shaw claimed it was bizzrre for Sanger to suggest had Ds “got away with it” before the SG Court and the 17/3/08 Resolution found to be genuine then P would have suffered loss, but since it was found to be a forgery P suffered no loss. Shaw referred to the Wragge 2^nd Memo which explained why this was incorrect.

145.Sanger then turned to the relief for account of profits, and said P should have made disclosure as to the potential remedies available to P against Ds in the SG Proceedings. Sanger claimed that even though the Shaw 1^st Aff §19 said Parakou SG had a “number of remedies against the defendants [in the SG Proceedings] …… including an account of profits and/or damages to be assessed from which [Parakou SG] is entitled to elect the most favourable”, so the impression Shaw gave was that the Liquidator was entitled to claim a larger sum of unliquidated damages from Ds than the liquidated amount (including interest) of S$16,935,000 (or US$12,020,000) Chua J determined for the asset-stripping and conspiracy claims (or S$11,272,570 (or US$8,002,400) for the conspiracy claim only). Sanger said this was relevant to the question as to whether P already had adequate security in Singapore for the Asset Stripping Exercise relied on in the present action. There was security of S$51,100,000 (or US$36,400,000) in Singapore as of 13 April 2015 (Choo 2^nd Judgment §6), and this value was unlikely to have changed significantly since then. But as explained above, 2G Bishopsgate and 9 Temasek had since been sold, leaving net sale proceeds of S$19,004,528.77.

146.Sanger claimed Shaw should have disclosed that Chua J found election for account of profits in the SG Proceedings was only available for 1 Challenged Transaction (ie Bonus Payments valued at S$267,127.50 or about US$266,000) available for D1/D2 and not D3 who was not a director of Parakou SG when these payments were made (Chua Judgment §§206-207). Sanger said it seemed unlikely an account of profits[64] for Bonus Payments would increase the Liquidator’s remedy either significantly or at all, and she noted Chua J emphasised the Liquidator was not entitled to double recovery for damages to be assessed for the conspiracy claim. Sanger claimed such material matters should have been disclosed to the court.

147.Shaw disagreed and reiterated that the remedies in the SG Proceedings were those of Parakou SG in liquidation with recovery by the Liquidator but not by P who was not the only creditor and who had been upfront with the fact it expected to make some indirect recovery from the SG Proceedings and would give credit for the same against the present claim in its personal right. Shaw insisted P’s personal claim in the present action was different from the Liquidator’s claim in the SG Proceedings, and it was the Liquidator and not P who had some security in Singapore. Further, P was not a party to the Mareva application in Singapore. The Shaw 3^rd Aff was concerned that at that time there was no updated valuation for the SG Properties, and the then proposed sale of Unit #32-01 of 9 Temasek raised serious questions even though the proceeds would be paid into court after paying off the mortgage.

148.Shaw added that apart from liquidated loss of S$16,935,000, the Liquidator had claims in the SG Proceedings for unliquidated damages which at the time of the D3 3^rd Aff were on appeal. Eventually, the SGCA Judgment largely dismissed the defendants’ appeal in this regard. Further, the Liquidator could elect for account of profits from the unlawful transactions, which right was not as limited as Sanger suggested, eg the Liquidator might also elect for account of profits gained in relation to Sale of OPL Vessels (PIH to account) (but see paragraph 96(a) above), PIH Repayments (PIH to account), Bonus Payments (D1/D3 to account) and Salary Increases (D1/D3 to account), but he had yet to make his election. Still further, it was said the Liquidator could in conjunction with account of profits seek tracing orders to ascertain (a) what happened to specific property unlawfully disposed of, (b) the persons who received such property, and (c) whether Parakou SG could establish a proprietary claim over substitute assets. Thus, the overall amounts recoverable by the Liquidator might increase. Shaw disagreed these matters were not disclosed to the court at the ex parte stage.

149.Asset Thwarting Exercise: South African legal opinion  P relied on the Wragge 1^st Memo by Mr Wragge SC who was P’s counsel in the PS Arrest Proceedings in 2016 to support its case on loss caused by Ds’ conspiracy on matters relating to the SA Proceedings. D3 complained that Shaw’s summary of the Wragge 1^st Memo was incorrect in many places, and Ds obtained the MacWilliam 1^st Memo by Mr MacWilliam SC (an advocate of the SA Court not representing any party in the SA Proceedings) in response. P replied by the Wragge 2^nd Memo, and Shaw pointed out Mr Wragge SC was candid about his acting for P in the PS Arrest Proceedings (as disclosed in the Wragge 1^st Memo) but he did not act for P in the PT Arrest Proceedings. P further asked Mr Fitzgerald SC (advocate of the SA Court who did not act for P) to comment on Mr Wragge SC’s and Mr MacWilliam SC’s opinion, which Mr Fitzgerald SC did in the Fitzgerald Memo. Ds further replied by the MacWilliam 2^nd Memo.

150.Asset Thwarting Exercise: quantum  P claimed to suffer loss from the Asset Thwarting Exercise by being denied the ability to maintain the PT Arrest in 2009 and to arrest other Pretty Vessels in South Africa because of false evidence deployed by Ds in the PT Arrest Proceedings. D3 claimed that if P’s claim based on the Asset Stripping Exercise was quantified at US$12,020,000 as discussed above, P had to show the claimed conspiracy relating to the SA Proceedings gave rise to loss of some US$48,430,000 in order to maintain the Cap Sum for 1^st/2^nd Orders as varied. D3 contended P failed to demonstrate this, so its claim must fail.

151.Asset Thwarting Exercise: unusual arrest provisions  D3 complained that since the thrust of P’s claim based on the Asset Thwarting Exercise was premised on P being unable to maintain the PT Arrest and to arrest other Pretty Vessels pursuant to the South African “associated” arrest procedure, P failed to make clear to the ex parte judge these provisions were highly unusual in that they would allow a creditor to arrest vessels that belonged to a sister company of the debtor company that were under ultimate common control.[65] D3 said South Africa was the only major shipping jurisdiction to which the Pretty Vessels sailed that permitted “associated” arrest, and he himself was not aware of this until the PT Arrest in 2009. The uniqueness of South African “associated” arrest procedure was emphasised in various learned articles/texts, so in the absence of evidence otherwise this court should proceed on the basis that such extraordinary powers did not exist in other major shipping jurisdictions in the vicinity of South Africa.

152.D3/Sanger claimed that although the Shaw 1^st Aff §122 stated such procedure is now available in Hong Kong under section 20 of the Arbitration Ordinance Cap 609 albeit confined to the subject/sister vessels, such distinction (relevant to whether the claim in tort in Hong Kong was sustainable given that the damage claimed was not something recognised under Hong Kong laws) was critical. P did not make this sufficiently clear, but this was important because (a) P alleged it suffered loss for being unable to successfully invoke such procedure (not recognised under Hong Kong laws) to arrest the Pretty Vessels not otherwise related to the Charterparty dispute, and (b) P was in effect asking this court to make a finding that required speculation on what the SA Court would have done and that would have contradicted the Levinsohn Judgment in 2009.

153.Bearing in mind that P’s complaint in such context was not that it had been thwarted from being able to enforce the Awards against Parakou SG’s assets but that it was not able to get security against assets (vessels) that belonged to separate (but “associated”) entities, D3 went on to claim the uniqueness of the arrest provisions in South Africa meant it could not be assumed that had the PT Arrest been maintained, other Pretty Vessels would necessarily have continued to call at South Africa and to expose themselves to such powers of the SA Court.

154.P disagreed, and asserted as follows:

155.Shaw also disagreed P was in effect asking for a finding that required speculation on what the SA Court would have done and that would have contradicted the Levinsohn Judgment in 2009, which decision was made on the basis of evidence sworn to be honest/truthful but was untested. Shaw said following a full trial in the SG Proceedings, that same evidence (in particular the 17/3/08 Resolution) was shown to be false. But the Wragge 2^nd Memo §74 advised that by that stage the prospects of appealing the Levinsohn Judgment were remote, not least because an appeal would have no practical purpose as mv “Pretty Time” was no longer in South Africa.

156.Asset Thwarting Exercise: setting aside PT Arrest  D3 disagreed the PT Arrest was defeated because Ds deployed false evidence before the SA Court, and claimed such arrest was released because P’s founding papers for the PT Arrest order on 27 March 2009 for security in respect of P’s claim in the Arbitration did not show mv “Pretty Time” and Parakou SG were under “associated” ownership or common control for the AJR Act, ie D1 was the ultimate owner of mv “Pretty Time” through Pretty Time Shipping SA and Parakou IL but D3 was the majority shareholder of Parakou SG in April 2009 (being the date when P’s cause of action against Parakou SG arose). At the urgent hearing on 24 April 2009 for setting aside the PT Arrest, Pretty Time Shipping SA pointed out the 18/2/09 ACRA Report exhibited to van der Merwe’s founding affidavit for the PT Arrest order showed that by the end of December 2008 D1/D2 ceased to be the shareholders/directors of Parakou SG, and D3 (70% shareholding) and Yang (30% shareholding) became shareholders and directors on 22 and 31 December 2008 respctively. D3 claimed P was forced to accept it had made a mistake in its founding papers, and Levinsohn AJP held as a threshold matter that “[P’s] founding affidavit read with the various annexures that were put up simply did not make out a case that [D1] by virtue of his shareholding of [Parakou SG] exercised control over that company”, and as “[P] clearly relied on the documentation it had put up”, “[it] made its bed and is forced to lie on it” (Levinsohn Judgment §20), so “the order should not have been granted in the first place and it should accordingly be set aside on this ground alone” (Levinsohn Judgment §22). Sanger complained Shaw did not disclose that the Wragge 1^st Memo §13 noted the Levinsohn Judgment did not take into account any affirmation evidence filed by Ds, including Yeung’s affirmation and the 17/3/08 Resolution (see the Shaw 1^st Aff §131(3) which made no reference to Mr Wragge SC’s opinion in this regard).

157.So D3 claimed even P’s own case failed make out D1 by his shareholding exercised control of Parakou SG and hence any “association” between Parakou SG and Petty Time Shipping SA (Levinsohn Judgment §20), which meant any loss P suffered was entirely of its own making and had nothing to do with anything which Ds did or did not do (Levinsohn Judgment §22). D3 further claimed it was incorrect for Shaw to say the SG Proceedings and/or Chua Judgment were of “direct relevance to” or “cast significant fresh light on” the PT Arrest Proceedings in 2009. It was said the Wragge 1^st Memo §13 acknowledged as much,[66] but this was not referred to in the Shaw 1^st Aff.

158.Asset Thwarting Exercise: de facto control  D3 claimed there were also a number of points to make in relation to P’s arguments about the impact of the Chua Judgment on the question of de facto control in the PT Arrest Proceedings:

159.Asset Thwarting Exercise: no funds from sale of mv “Pretty Time”  D3 claimed P did not suffer any loss for being unable to maintain the PT Arrest. In the D3 3^rd Aff, D3 said he had discussed this with D1 prior to his death, and D1 confirmed to him that if the PT Arrest were maintained, he would not have caused security to be put up for P’s claim. D3 claimed it would have made no commercial sense for D1 to have done so which would have placed P in a far better position than it would have been in if it had to sell mv “Pretty Time” in order to get security for its claim.

160.Both Shaw 1^st Aff and Toms 2^nd Aff acknowledged mv “Pretty Time” was subject to the fleet-wide mortgages described in paragraph 62 above, which meant that proceeds from the sale of such vessel under the PT Arrest (if it were maintained) would have to be first applied to such mortgages which far exceeded P’s claimed market value of such vessel of US$35,000,000-US$40,000,000 in 2009[67] (and D3 claimed it was likely that the price upon auction sale of mv “Pretty Time” would have been considerably less due to inter alia unavailability of financing at auction) with nothing left over for P (or any other potential creditors), which meant P suffered no loss as a result of being unable to maintain the PT Arrest.

161.Asset Thwarting Exercise: no loss from subsequent arrests of Pretty Vessels  P argued that if Ds had not conspired against it, it would have been able to successfully invoke the South African “associate” arrest procedure to arrest other “associated” vessels until it got sufficient security for the full amount of the Awards, and to enforce the Awards against such security. But D3 considered the argument flawed, especially if mv “Pretty Time” were successfully arrested and sold:

“[D1] and [D3] have discussed that he would not have permitted any further vessels within the fleet (then under the control of his company, [Parakou IL]) to continue calling at South Africa. Indeed, South Africa was primarily used as a bunkering (fueling) port. It would, therefore, have been extremely easy for [D1] to have diverted the vessels to other jurisdictions. In [Shaw 1^st Aff §136(2)], [Shaw] acknowledges that it would have been entirely in [Parakou IL’s] and the ship owning companies’ power to ensure that the ‘PRETTY’ vessels did not call at South African ports, thereby avoiding completely the ongoing risk of arrest pursuant to the South African associated arrest provisions.”

The D3 3^rd Aff further explained that until late July 2014 D1 had ultimate ownership of the Pretty Fleet through his control of Parakou IL (which owned all shares in each of the Pretty Entities), but in late July 2014 Parakou IL transferred all shares of the Pretty Entities to Parakou TI (but P claimed only 8 Pretty Vessels being tankers and their corresponding Pretty Entities were so transferred – see paragraph 2 above and paragraph 178 below), and since January 2015 D3 became the sole shareholder of Parakou TI.

162.In its application for the 1^st/2^nd Orders, P relied on the fact 5 Pretty Vessels called at South Africa on 11 separate occasions after the PT Arrest in 2009 (see table exhibited to the Shaw 1^st Aff and paragraph 65 above) to suggest it would have arrested further Pretty Vessels until it got sufficient security for its claim. D3 made the following points:

163.So D3 disagreed P would have been able to make multiple arrests to obtain security for its claim and/or Ds’ actions caused any loss to P. D3 claimed the only way for P to have any chance of receiving any funds was to arrest/sell all Pretty Vessels, but it would not have happened and even if it did there was unlikely to have been much, if any, equity left for P who ranked at the bottom of the pile of creditors. D3 claimed P’s own case that Ds’ alleged conspiracy caused loss up to at least the Cap Sum was not made out on the facts.

164.P’s response  The Shaw 3^rd Aff claimed D3’s assertions were self-serving arguments that ignored commercial realities and that could not be determined at a summary stage. Shaw disagreed (a) it would have been easy enough for D1 to divert the Pretty Fleet from South Africa and/or (b) D1 would not have come under commercial pressure to put up security to obtain the release of mv “Pretty Time” and/or any other Pretty Vessel that might have been subsequently arrested in South Africa.

165.As to (a) above, P contended as follows:

166.As to (b) above, Shaw claimed D3’s allegation that D1 told him he would not put up security was contradicted by Ds’ applications to release mv “Pretty Time” and later mv “Pretty Scene” to avoid them being sold. Shaw also questioned how this court should take D3’s hearsay evidence at face value. Further, the sale of mv “Pretty Time” (even if it would not have resulted in any net value to P) and potential arrest of other Pretty Vessels would have attracted the Mortgagee’s attention, and Shaw’s experience with banks/lenders caused him to believe US$40,000,000 of extra potential debt would have placed the Pretty Fleet in danger of being in breach of its loan-to-value covenant with the Mortgagee (who had already been generous before the market crash in the 3^rd quarter in 2008), so Ds would have come under pressure to resolve the situation by releasing mv “Pretty Time” from the PT Arrest or else face possible Mortgagee’s foreclosure of the entire Pretty Fleet (which foreclosures were not uncommon at the end of 2008 and in 2009), so Shaw believed Ds would have put up security or sought to settle the case rather than lose the funding stream.

167.But D3 disagreed there would have been commercial pressure to put up security:

168.Shaw next contended that at the time of the PT Arrest in March 2009 the market for dirty tankers was moving upwards and peaked in June 2009. On 20 June 2009 (3 months after the PT Arrest), mv “PTI Volans” called at South Africa and stayed for 5 days. Shaw said if the PT Arrest had been upheld, Ds would not have been able to divert mv “PTI Volans” from South Africa in time, and in those market conditions there would have been considerable commercial pressure to put up security for mv “Pretty Time” and mv “Pretty Volans” as no ship owner would want a reputation in the market for having its vessels arrested all the time and out of action for so long. But D3 said such argument ignored the fact Levinsohn AJP set aside the PT Arrest on 30 April 2009, but even if the PT Arrest had not been set aside at that time, D1 would have had more than enough time (almost 2 months) to ensure mv “PTI Volans” did not sail to South Africa.

169.Still further, Shaw said since 2008 Ds’ personal wealth (see Ds’ asset affirmations in paragraphs 12 and 14 above) and size of the Pretty Fleet increased[73] despite apparent fleet-wide mortgages, so the existence of such mortgages did not mean there was no money in shipping or Ds had no commercial rationale for putting up security. In Shaw’s experience, Ds would have to persuade the lenders they had sufficient equity in order to obtain mortgages and to re-finance. Parakou TI and its subsidiaries were said by D3 to be worth US$72,511,611.51.

170.Further, Shaw said although D3 criticised P for not taking steps to arrest another Pretty Vessel until April 2015, this was not due to P’s own volition, but because the false evidence Ds placed before the SA Court to seek release of mv “Pretty Time” deceived P (as Ds intended) and prevented further “associated” arrest based on D1’s ownership/control. It was not until 2014 when P learned from word in the market and press reports that Parakou TI was formed under D3’s control and also from public documents that emerged in the United States about proposed merger of Parakou TI and a third party that P had firm evidence (a) Parakou TI was indeed formed and owned/controlled by D3, and (b) which vessels were within its fleet and how they were owned/controlled. Shaw said only then was it possible for P to consider these vessels as potential targets for “associated” arrest, and in due course to effect the PS Arrest. Shaw reminded that Parakou TI was a Marshall Islands company with no publicly available shareholding information through a corporate register.

171.But the D3 6^th Aff noted other than the PS Arrest that was made on a basis different from that for the PT Arrest, P did not in fact try to arrest any other Pretty Vessel between 2009 and 2015, and despite the PS Arrest Proceedings and subsequent events[74] D3 did not cause security to be put up for release of mv “Pretty Scene” and the Mortgagee did not put any pressure on D3 to do so. On 10 August 2017, Henriques J declined to set aside the 2^nd PS Arrest. On 11 August 2017, Pretty Scene Shipping SA applied for leave to appeal, which meant mv “Pretty Scene” remained under the PS Arrest all along, but still D3 did not put up security for her release. D3 said there was no reason to do so because had the Mortgagee sold such vessel the sale proceeds would have been used to discharge the mortgages and P would not have received anything. D3 also had not changed his decision since the 1^st PS Arrest in June 2016 not to allow other Pretty Vessels to sail to South Africa, but they continued to trade and to be chartered.

172.D3 said these matters showed D1 could have easily redirected the Pretty Vessels from South Africa which was not a critical destination had the PT Arrest been upheld. D3 claimed the Pretty Vessels were tankers (not bulkers trading coal and iron ore) and did not often sail along the FE/SA Route (and generally they only sailed along such route to re-position themselves). Moreover, even though South Africa was a common calling port, D3 claimed Shaw acknowledged it was primarily a bunkering port, which was in line with the D3 3^rd Aff saying the main reason why the Pretty Vessels historically called at South Africa was for bunkering (re-fuelling). So D3 was confident that had the PT Arrest been maintained, D1 would have been able to ensure the other Pretty Vessels bunkered elsewhere,[75] and depending on the economics of the particular voyage it might even be possible for such vessels to avoid the FE/SA Route altogether by taking an alternative route (such as sailing via the Panama/Suez Canal). So D3 claimed D1 would not have come under any commercial pressure to put up security to obtain release of mv “Pretty Time” or any other Pretty Vessel that would have fallen under arrest.

173.Asset Thwarting Exercise: PS Arrest  As alluded to above, D3 claimed that in July 2014 Parakou IL transferred to Parakou TI (then owned by D1/D3) its shares in (at least 8) Pretty Entities, and since January 2015 D3 became the sole shareholder of Parakou TI. D3 took note of the following 2 aspects of the PS Arrest Proceedings:

174.As explained in paragraph 165(c) above, D3 said when the PTI Vessels continued to sail to South Africa after the 2014 transfer of ownership, he had forgotten the “associated” arrest provisions might be triggered via his own “association” by Parakou TI and Parakou SG. But Hartwell advised it was by no means clear the PS Arrest would have been upheld, and even if it were upheld, D3 would not have arranged to put up security and upon a sale there would have been nothing left over for P after discharge of the mortgages over mv “Pretty Scene”.

175.The PS Arrest was based on D3’s direct control and not D1’s indirect control of Parakou SG. Sanger said this was important because P’s claim concerning the Asset Thwarting Exercise was based on Ds’ conspiracy to prevent the SA Court finding out D1 was the de facto controller of Parakou SG in April 2009, but with transfer of the Pretty Vessels to Parakou TI (under D3’s ultimate control) in July 2014, P changed tack in 2016 to rely on evidence D3 filed to oppose the PT Arrest in 2009 to say D3 controlled Parakou SG in April 2009 when P’s claim on the Charterparty arose, which “control” was opposite of the “control” it sought to establish in the PT Arrest Proceedings in 2009 and inconsistent with its position in the present action that the false evidence D3 deployed for the PT Arrest Proceedings in 2009 amounted to unlawful means for its conspiracy claim.

176.D3/Sanger complained neither Shaw nor Mr Wragge SC disclosed this to the ex parte judge, and although the Shaw 1^st Aff §136(1) stated a writ of summons in rem was issued on 16 April 2015 “citing another of the Pretty Vessels owned and controlled by [D3] through [Parakou TI], the “PRETTY SCENE” as defendant”, he did not disclose the “association” P relied upon was premised on D3 (not D1) owning/ controlling Parakou SG in April 2009 as explained above.

177.On the other hand, the matter concerning mv “Pretty Scene” was addressed in the Wragge 2^nd Memo §§47-49, 53-55. The warrant of arrest for mv “Pretty Scene” was issued in April 2015 (ie a year before the trial of the SG Proceedings), so all P could go on at the time were D3’s statements in the PT Arrest Proceedings (ie D3 by his shareholding was the owner/controller of Parakou SG in 2009 when P’s cause of action arose). Whilst P did not believe Ds’ story that D1 had divested himself of control, P could not at that stage (with reasonable diligence) have discovered the extent of the false evidence placed before the SA Court in 2009 nor could P have persuaded the SA Court otherwise in light of inter alia the Levinsohn Judgment. Shortly before the warrant for arrest of mv “Pretty Scene” was issued, P found from documents emanating from the United States on the proposed merger between Parakou TI and a third party and also from media reports of the establishment of a new PTI Fleet of tankers managed/ controlled by D3 that control of the Pretty Fleet had been transferred from D1 to D3 sometime in 2014. So P issued warrant of arrest against mv “Pretty Scene” based on D3’s ownership of Parakou SG in 2009, and it was implicit from the Shaw 1^st Aff §136(1) that the PS Arrest relied on “association” among D3, mv “Pretty Scene” and Parakou SG. There was no change of tack as P could not have done anything else but to rely on evidence Ds placed before the SA Court in 2009,[76] especially when by reason of Ds’ unlawful conspiracy P was not able to arrest any of the Pretty Vessels that called at South Africa from 2009 onwards. Shaw said the PS Arrest did not undermine P’s cause of action and was not inconsistent with P’s position in the failed PT Arrest (see the Wragge 2^nd Memo §§47-55).

178.But the Shaw 3^rd Aff noted what D3 did not state was that the entire Pretty Fleet was not transferred to him but just 8 tankers, and the drybulk vessels and some tankers remained under the ownership of Parakou IL and therefore D1. D3’s “account” also begged the question as to who controlled Parakou TI from August 2014 until January 2015 because 2 out of 11 “callings” in the revised table exhibited to the Shaw 2^nd Aff were in the period from July to October 2014, ie mv “Pretty World” on 21 September 2014 and mv “PTI Volans” on 6 August 2014, but those vessels did call in South Africa prior to July 2014, ie mv “Pretty World” on 11 October 2009 and 19 September 2011 and mv “PTI Volans” on 20 June 2009. This would not affect P’s substantive claim, but Shaw considered it right he should bring this to the court’s attention.

179.Asset Thwarting Exercise: disclosure  The Sanger 1^st Aff claimed P failed to disclose a number of material matters relevant to its claim for loss arising in relation to Ds’ alleged conspiracy concerning the Asset Thwarting Exercise, most of which have been canvassed above and will not be repeated here. On the other hand, Shaw claimed P fully complied with its obligation to provide full and frank disclosure to the court.

180.Sanger complained that a number of issues with the Wragge 1^st Memo were not disclosed to the ex parte judge:

181.On the other hand, the Shaw 3^rd Aff disagreed with Sanger’s interpretation of Mr Wragge SC’s opinion which Shaw said was not a matter of full and frank disclosure, and suggested that Sanger’s line by line analysis of such foreign law evidence showed this was not suitable for summary determination. Shaw referred to the Wragge 2^nd Memo and Fitzgerald Memo (which reviewed the PT Arrest Proceedings before Levinsohn AJP, the transcript of Ds’ evidence before Chua J and the Chua Judgment, gave opinion on those matters and on the Wragge/MacWilliam 1^st Memos, and confirmed Mr Wragge SC’s approach was correct). Shaw disagreed he gave an incorrect summary of the Wragge 1^st Memo or failed to draw the court’s attention to the full Wragge 1^st Memo (see the Shaw 1^st Aff §§25, 121 and Alder Submissions §10(5) which urged the court to read the Wragge 1^st Memo in full).

182.Disposal of the Pretty Vessels  By the Shaw/Toms 3^rd Affs, it was said that after the 1^st/2^nd Orders it came to P’s attention there was an on-going programme of vessel disposal by the one-ship subsidiaries owned by Parakou TI (wholly owned by D3) without warning/information to P or the HK Court. P was concerned this would/could severely affect the efficacy of the 1^st/2^nd Orders as varied against D3, so on 17 May 2017 P by the Variation Summons (supported by the Toms 3^rd Aff) applied to vary/extend the terms of the 2^nd Order as varied against D3, including (a) a prior notice regime so certain vessels owned by Parakou TI and its subsidiaries could not be disposed of without prior notice to P’s solicitors, and (b) proper disclosure of the proceeds of the 2-3 vessels sold by Parakou TI’s subsidiaries after the 1^st/2^nd Orders came into effect.

183.But the D3 5^th Aff denied any “program of disposal of assets”. It was said the shipping industry faced challenging times in a severe downturn in 2016 as evidenced by industry reports with falling prices for 2^nd hand bulkers and banks putting pressure on ship-owners. There was concern whether prices would level out or fall further, but in fact prices continued to fall since beginning of 2016. D3 said P was aware of this because Jinhui’s public announcements showed it sold 11 vessels between 22 June 2016 and 5 April 2017 (including 5 in February/April 2017), and the Jinhui Group used the sale proceeds to repay vessel mortgage loan and as general working capital. There was clear commercial rationale for selling the Pretty Vessels to maximise sale value before prices fell much further and to repay the mortgage debt and alleviate pressure with the Mortgagee, so 4 out of 8 Pretty Vessels were sold to third party arms-length buyers at market value with mv “PTI Cygnus” and mv “PTI Sextans” sold in October 2016 for US$20,400,000 per vessel pursuant to sales process that began before August 2016 (net cash received per vessel after payment of mortgage loan, commission and other expenses was US$4,880,000), and mv “PTI Hercules” and mv “PTI Orion” sold in April 2017 for US$16,500,000 per vessel pursuant to sales process that began before November 2016 (net cash received per vessel after payment of mortgage loan, commission and other expenses was US$2,390,000). Thus, the sales process started well before P obtained the 1^st/2^nd Orders or commenced the present action. The relevant ship-owner used the sale proceeds to repay the mortgage loan for each vessel and as general working capital for such ship-owner and/or Parakou TI. The D3 5^th Aff noted an agreement for sale of mv “Pretty World” was also reached for US$16,200,000, but no date was fixed yet for this deal to close.

184.As regards the complaint that no warning/notice of sale of the vessels had been provided to P or the HK Court, D3 noted such vessels were assets of Parakou TI’s subsidiaries and not assets directly owned by D3, and the 1^st/2^nd Orders as varied did not prohibit sale of such assets as long as the sales would not diminish the value of D3’s assets including his shareholding in Parakou TI. It was said the vessels were sold at market value to third party arms-length buyers in the ordinary course of business with no diminution in value of D3’s assets, so even P abandoned its application to extend the scope of the 1^st/2^nd Orders as varied to cover assets owned by subsidiaries of Parakou TI, which Au-Yeung J described as “a bit too ambitious”.

185.D3 claimed the vessels were sold for justifiable/pressing commercial reasons in the ordinary course of business with little equity after repayment of the mortgage debt for each vessel, which fact was acknowledged in the Alder Submissions §49, and what equity there was had been kept as working capital for the ship-owning company / Parakou TI so there was no dissipation or diminution of D3’s assets and no breach of the terms of the 1^st/2^nd Orders as varied. D3 reminded that his assets had been valued at US$81,750,000 in the D3 1^st/2^nd Affs, ie some US$20,000,000 in excess of the Cap Sum, but as a gesture of good faith and without prejudice to his rights, he noted the PS Arrest and offered voluntary undertakings to have in place a prior notice regime and to use the sale proceeds to repay the mortgage loan for each vessel and as general working capital for the relevant ship-owning company and/or Parakou TI. The matter came before Au-Yeung J on 26 May 2017, and the 2^nd Order as varied was further varied by the Further Variation Order as against D3.

186.But in response the Shaw 3^rd Aff alleged D3 did orchestrate a programme of disposal of assets after the 1^st/2^nd Orders were granted irrespective whether or not such programme could be commercially justified, so the safeguards put in place via the 1^st/2^nd Orders as varied had to be maintained. Further, if there was little net equity after the sales, Shaw claimed the figures given by D3 on sums realised upon sale of the Pretty tankers and the figure given in the D3 5^th Aff as to the value of D3’s shareholding in Parakou TI did not add up, and despite enquiry by P’s solicitors, the replies by Ds’ solicitors of 7 and 15 June 2017 did not properly address this.

187.Limitation  As seen in paragraph 110 above, the Shaw 1^st Aff asserted P could invoke section 26 of the LO because P did not learn of the conspiracy (or forgery of the 17/3/08 Resolution) until, at the earliest, 2014 when the Liquidator commenced his investigations into Parakou SG.

188.But Ds suggested Shaw should have brought the matters below specifically to the attention of the ex parte judge. First, on 14 April 2009 P filed an answering affidavit of van der Merwe in the SA Proceedings to oppose Pretty Time Shipping SA’s application to set aside the PT Arrest, and the thrust of such affidavit was that Parakou SG had taken steps to make itself “judgment-proof”, and in particular P disputed the transfer of ownership of Parakou SG from D1 to D3 in December 2008 and asserted D1 remained in control of Parakou SG notwithstanding such transfer. P also filed and relied on an affidavit from Mok Sai Kit or Danny Mok (manager of the business department of Goldbeam International Limited that managed P’s operations and mv “Canton Trader”, “Mok”) that made similar arguments:

189.In 2009, Levinsohn AJP further noted “Mr Shaw [had] …… argued that there were a number of surrounding features and circumstances which created the suspicion that [D1] still exercised control” (Levinsohn Judgment §25). On 23 August 2012, in support of P’s application to inspect the books/records of Parakou SG, Mok filed another affidavit with the SG Court that again made reference to alleged asset-stripping of Parakou SG, and that stated P commissioned a “confidential investigative report of [Parakou SG] (and the officers/directors and related companies)” in October 2010 and it appeared from such report that coincidentally and shortly before the Arbitration commenced in early 2009, “[Parakou SG] went through a change in ownership and/or directorship and disposed a large portion of their assets by selling these assets to a [sic] associated/related company”. D3 claimed this evidence (majority of which was given on oath) showed that as early as 2009 P was, on its own case, on notice and aware of Ds’ alleged conspiracy to strip assets from Parakou SG and to prevent P from successfully enforcing its Charterparty claim (including by thwarting arrest proceedings in South Africa), and made arguments to this effect in the SA/SG Proceedings. Ds claimed this was material to whether P’s claim for the tort of unlawful means conspiracy was time-barred, and should therefore have been disclosed to the ex parte judge.

190.Shaw disagreed he made any material non-disclosure and/or P knew of Ds’ alleged conspiracy to strip assets from Parakou SG as early as in 2009. Shaw said he drew the court’s attention to the fact that in 2009 P filed evidence (in response) disputing the genuineness of the share transfer from D1/D2 to D3, exhibited Mok’s affidavit and quoted from the Levinsohn Judgment §25 (see Shaw 1^st Aff §§129, 131(4)). But the real point was that whilst P did not believe Ds’ story about a genuine restructuring, the direct, false and forged evidence placed before the SA Court meant the true facts were concealed from P and the SA Court, and could not be discovered with reasonable diligence until many years later (see the Shaw 1^st Aff §160). The report P commissioned in 2010 revealed assets had been sold, but P did/could not with reasonable diligence have discovered the details of those transactions in 2010 when Parakou SG was still under Ds’ control. Anyway, Mok’s belief in August 2012 was within 6 years of the WoS issued on 9 March 2017. Shaw believed P had at least a good arguable case under section 26 of LO, which issue could not be determined summarily without regard to full disclosure and factual testimony.

191.No conspiracy  D3 claimed the following facts showed Ds did not conspire to cheat P and defeat its enforcement/security applications in South Africa: (a) Ds transferred their shares in Parakou SG to D3/Yang and resigned as directors in December 2008 some 3 months before the PT Arrest in March 2009, (b) the Pretty Fleet were not assets of Parakou SG and P had no automatic entitlement/claim to them even on the basis of the Awards, so P’s ability to make “associated” arrests was the result of a unique quirk of South African law which D3 did not know until the PT Arrest in 2009, and (c) the 2014 transfer of control of Pretty Vessels to D3 was the basis of P’s renewed (albeit still unsuccessful) attempt to arrest the Pretty Vessels and P’s allegation that Ds conspired to cheat it was misconceived.

VIII.  SHAW 4^TH AFF

192.The Shaw 4^th Aff was in response to the D3 6^th Aff §§19-48. First, Shaw claimed D3 appeared to say the 17 Vessels that called at South Africa between 2009 and 2017 (see Annex B of the ASoC) were tankers and not bulkers (see paragraph 172 above), but in fact only 9 were tankers. The tanker-bulker distinction went to the question whether it would not have been easy (contrary to D3’s assertions) for D1 to divert the Pretty Vessels away from South African ports to avoid arrest. Based on Shaw’s experience in maritime practice (and confirmed to him by Mr Bruce McDonald, a leading dry bulk chartering broker expert who regularly gave evidence in London maritime arbitrations), South Africa was an important high-volume exporter of dry bulk commodities such as iron ore, thermal coal, sugar, chrome ore, manganese ore, ferro-alloys, concentrates, minerals/mineral sands, anthracite, forest products, maize etc, so a bulker’s inability to call at South African ports would likely have material adverse impact on the ship-owner’s ability to enter into time-charters as the charterers would almost invariably have insisted that the charterparties should permit “worldwide trading in Charterers’ option” to maximise utility/gain of the chartered vessels to the charterers. D3 himself conceded there would have been commercial impact on the Pretty/PTI Fleet.

193.Secondly, Shaw said the assertion in the D3 6^th Aff that South Africa was “primarily” a bunkering port was incorrect (see paragraph 172 above). Shaw said he did not say so in the Shaw 3^rd Aff, and claimed it was not correct for D3 to say the Pretty Vessels called at South Africa for bunkering (ie re-fuelling). Shaw explained that normal call for bunkering would only take a few hours, especially when time was money and delay would cause financial loss to the charterer. A stay for more than 24 hours was more consistent with cargo operations, and Annex B to the ASoC showed 32 of the 59 Occasions for the 17 Vessels were for more than 24 hours. Anyway, Shaw said there was dearth of bunkering options in the vicinity of Sub-Saharan Africa, especially ones that offered the efficiency, stability and reliability of bunker supplies provided by South Africa. So the Pretty Vessels could not have easily bunkered elsewhere, and the fact (according to D3) so many Pretty Vessels did appear to bunker in South Africa supported Shaw’s view.

194.Given (a) the significant number of bulkers in the 17 Vessels and of calls at South Africa between 2009 and 2014 (ie 48 times (“48 Occasions”) – see Shaw 4^th Aff §5(6)) and (b) the duration of such calls which indicated such vessels called at South Africa for cargo operations, Shaw claimed it was incorrect for D3 to say the Pretty Vessels only sailed the FE/SA Route for re-positioning and such route could easily have been avoided (see paragraph 172 above).

195.Shaw also disagreed exclusion of South Africa would result in negative commercial impact that would be manageable by the Ds, and pointed out D3 failed to disclose the following:

196.Thirdly, as for D3’s suggestion that if the PT Arrest were not set aside on 30 April 2009 D1 would have had ample time to divert mv “PTI Volans” from South Africa (see paragraph 168 above), Shaw claimed D3 failed to tell the court mv “PTI Volans” most likely called at South Africa on 20-25 June 2009 (a 5-day period) for loading/discharging cargo and she was likely to have been subject to a charterparty (which Ds failed to disclose), which meant she sailed to South Africa pursuant to the charterparty and at the charter’s directions so it would not have been possible for D1 to divert mv “PTI Volans” even if he had wanted to.

197.Fourthly, D3 claimed the PT Arrest led him to decide not to allow other Pretty Vessels now controlled by him to sail to South Africa (see paragraph 171 above), but Shaw said:

IX.  DRAFT D3 7^TH AFF

198.The Draft D3 7^th Aff was to update on the New Developments that Ds considered necessary to bring to the court’s attention, particularly (a) the court-ordered sale of mv “Pretty Scene” (then part of the PTI Fleet) in South Africa by the Mortgagee of the Pretty Vessels, (b) the Lopes Judgment for paying the sale proceeds of mv “Pretty Scene” to the Mortgagee and not P, (c) the disposal of the remaining vessels of the Pretty Vessels in the PTI Fleet with all proceeds paid to the respective ship-owners (being subsidiaries of Parakou TI) after paying off mortgages/ costs, and (d) payment of a total sum of S$19,639,528.77 by Ds to the Liquidator in February 2018 (“Settlement Sums”) in settlement of the judgment debt awarded in the SG Proceedings (“SG Judgment Debt”).

199.In respect of (a) above, the 1^st PS Arrest on 18 June 2016 was set aside on 31 October 2016 by Vahed J because P’s summons did not comply with certain procedural rules, but on 10 August 2017 Henriques J declined to set aside the 2^nd PT Arrest on 28 October 2016. P was granted leave to appeal to the SAFC on 30 April 2017 against the Vahed Judgment, and Pretty Scene Shipping SA was granted leave to appeal to the SAFC on 18 December 2017 against the Henriques Judgment. The appeals were heard by the SAFC on 1 August 2018, and judgment was reserved. In the meantime, the Mortgagee did not ask D3 or Pretty Scene Shipping SA to put up any security, and D3 claimed there was no commercial or other reason to do so. Instead, the Mortgagee issued a notice of default on 12 September 2017 based on failure to release the PS Arrest in order to accelerate the loan, demanded payment of the outstanding mortgage, and caused an action in rem to be instituted against mv “Pretty Scene” on 22 September 2017 to arrest her for the outstanding claim. On 12 October 2017, the Mortgagee applied for sale of mv “Pretty Scene”, which was eventually sold at auction on 5 December 2017 for US$12,000,000 (plus USD288,282.21 for bunkers on board) (Lopes Judgment §1(p)), which proceeds were paid into a fund that was significantly less than the then outstanding sum of US$24,073,453.78 owed to the Mortgagee.

200.In respect of (b) above, D3 claimed P did not benefit from the PS Arrest because on 18 May 2018 the Mortgagee applied for the proceeds to be paid to it from the aforesaid fund except for payment of P’s costs/ expenses for its interlocutory application concerning the terms of the sale order under section 11(4)(a) of the AJR Act. P opposed this mainly on the ground that there was serious doubt as to the validity/legitimacy of the Mortgagee’s claim. After hearing the Mortgagee’s application on 24 August 2018, Lopes J handed down the Lopes Judgment on 11 September 2018 in favour of the Mortgagee, and directed the balance of the aforesaid fund after payment of P’s section 11(4)(a) costs (not its costs of the PS Arrest) be paid to the Mortgagee. As P would not seek leave to appeal, the Lopes Judgment was final, and such judgment would not be affected by the outcome of the then 2 pending appeals to SAFC in relation to the 1^st/2^nd PS Arrests because “the validity of [the Mortgagee]’s cause of action remains unaffected. That [the ship-owner] did not have the arrests of the ship timeously set aside constituted an event of default in terms of the loan agreement and mortgage bond”.

201.D3 claimed the Lopes Judgment showed that other than its section 11(4)(a) costs P was not able to obtain any funds from the PS Arrest whether by way of voluntary security or sale proceeds. Indeed, P admitted the Mortgagee’s claim by its superior ranking would effectively wipe out P’s claims (Lopes Judgment §6). Hence, it was said the Mortgagee’s course of action and the outcome of the Lopes Judgment supported D3’s stance that if the Mortgagee stepped in to sell the vessel, the sale proceeds would be used to discharge the mortgages and P would have received nothing, so it made no sense for D3 put up security in excess of US$60,000,000.

202.Further, it was said P also would not have benefitted from the PT Arrest even if it were upheld as the same situation would have applied as for the PS Arrest. D3 claimed that even on P’s best case that the SA Court would have exercised its discretion to refer the issue of whether or not mv “Pretty Time” was an “associated ship” to an oral hearing (a course of action which was speculative) and then proceeded to uphold the PT Arrest (which was even more speculative), D1 and the Mortgagee could/would have taken similar course of action as what had taken place following the PS Arrest, ie D1 would not have caused security to be put up for P’s claim (which course of action was what D1 confirmed to D3 prior to his death), the Mortgagee would have stepped in to have mv “Pretty Time” sold by auction, and as a result of the superior ranking of the Mortgagee’s outstanding claim which exceeded the sale proceeds (as admitted in the Shaw 1^st Aff) the sale proceeds of mv “Pretty Time” would have been wiped out, leaving nothing for P from the PT Arrest (even if upheld) for satisfying the Awards.

203.In response to P’s allegation that the sale of mv “Pretty Time” and potential arrest of other Pretty Vessels would have attracted the Mortgagee’s attention such that Ds would have come under pressure from the Mortgagee to resolve the situation and to release the PT Arrest or else face the possibility of foreclosure of the fleet-wide mortgages whereupon Ds would have put up security or sought to settle the case rather than lose the funding stream, D3 claimed that as a matter of fact even though mv “Pretty Scene” was sold at auction, Ds were under no pressure from the Mortgagee or otherwise “to resolve the situation” by putting up security or by settling the case, and indeed it would not have been in the commercial interests of Parakou TI and the ship-owner to do so.

204.In respect of (c) above, P appreciated the PT/PS Arrests would not be sufficient to establish its claims in the present action, and alleged it “could and would have made arrests of the further vessels in the Parakou/“Pretty” fleet resulting in further security”. D3 claimed this was speculative, and even if the PT Arrest were upheld, D1 could have redirected the Pretty Fleet from South Africa and/or sell all remaining vessels under such fleet.

205.Other than mv “Pretty Time” and mv “Pretty Scene”, there were 6 other vessels of the Pretty Fleet held by the respective Pretty Entities under Parakou IL that were transferred to Parakou TI after late July 2014. The D3 5^th Aff stated that since the PS Arrest 4 out of these 8 Pretty Vessels under the PTI Fleet had been sold as of 25 May 2017[79] to arms-length third party buyers at market value. The remaining 4 vessels[80] were subsequently sold to arms-length third party buyers at market value except for the court-ordered sale by auction in respect of mv “Pretty Scene”. The table below summarised such sales:

206.The above table showed that other than mv “Pretty Scene” and mv “PTI Phoenix” (formerly mv “Pretty Time”) there were proceeds remaining upon repayment to the Mortgagee after the sale of each vessel which totalled US$22,702,984.11. They were all paid to the respective ship-owners under Parakou TI and/or its subsidiaries, and P did not receive any share of those sales proceeds. D3 claimed that for the forced sale of mv “Pretty Scene”, there were no remaining proceeds because the entire proceeds were applied to repay part of the outstanding mortgages and costs.

207.Whilst these disposals occurred after the PS Arrest, D3 said the same could have happened if the PT Arrest was upheld. Knowing P would make “associated” arrests of further Pretty Vessels in South Africa, in addition to rediverting such vessels from South Africa D1 could have caused (just as D3 had done) all remaining vessels to be sold at market value to arms-length third party buyers, which would have been commercially justified taking into account the fact (a) the shipping market as evidenced by the Baltic Dirty Tanker Index was moving upwards at the time of the PT Arrest in March 2009 and was at or near its peak in June 2009 (see the Shaw 3^rd Aff §77(4)) and (b) whilst diverting vessels from calling at South Africa would have had an impact on their trading value, the value of such vessels from the perspective of third party buyers would not be affected because they would not be subject to any risk of arrest upon sale to third parties. So even if the PT Arrest were upheld, D1 would have every commercial reason to cause all remaining vessels to be sold in order to protect legitimate commercial interests of Parakou IL and its subsidiaries.

208.D3 claimed P (who was only an arbitration creditor of Parakou SG) had no proprietary interests in any of the vessels and no cause of action against Parakou IL, Parakou TI or the ship-owning companies, and D1/D3 were entitled and duty-bound to adopt a course of action that served the best interests of these companies. D3 further claimed sale of vessels and avoidance of South Africa were not mutually exclusive responses to P’s attempt to exploit the South African “associated” arrest procedure, ie D1/D3 could have continued to divert the PTI Fleet from South Africa while waiting for them to be sold at appropriate price, which was the course D3 adopted following the PS Arrest.

209.D3 claimed that in actual reality D1 did not have to sell any of the Pretty Vessels because the PT Arrest was set aside on 30 April 2009, ie about a month after such arrest, but this did not mean D1 could not have done so if the PT Arrest were upheld, and D3 believed D1 would have done so for the reasons/facts stated above. Also, as a matter of fact, P at best could only have managed to arrest/sell 1 vessel out of the entire PTI Fleet, but would have received nothing from such sale to satisfy the Awards. This was because once an arrest by P was upheld, D1/D3 would have (and indeed had) diverted the remaining vessels to avoid South Africa and commenced selling them to arms-length third party buyers to protect legitimate commercial interests of the relevant ship-owning companies.

210.D3 concluded by saying that although P managed to have effected the PT/PS Arrests, (a) mv “Pretty Time” was released from the PT Arrest by the time when mv “Pretty Scene” was arrested so P only managed to arrest 1 vessel at any given time, (b) the PS Arrest was the result of P’s change from relying on D1’s alleged indirect control of Parakou SG when making the PT Arrest to relying on D3’s direct control of Parakou SG in making the PS Arrest (which was inconsistent with P’s position in the present action as explained in the D3 3^rd Aff), and (c) once P managed the PS Arrest the Pretty Vessels in the PTI Fleet no longer sailed to South Africa and were then sold.

211.In respect of (d) above, D3 claimed P stood to benefit from the security of the SG Undertakings, and should give credit for such security in applying for the 1^st/2^nd Orders, and the position was even stronger in light of the New Developments after the 1^st Hearing.

212.In February 2018, the defendants in the SG Proceedings tendered the Settlement Sums in the total sum of S$19,639,528.77 (about US$14,200,000) being net proceeds in the sum of S$19,004,528.77 from the sale of 9 Temasek plus interest and the Client A/C Sum.

213.The Settlement Sums were paid to the Liquidator on condition that (a) they would be held by the Liquidator’s solicitors or in such manner specified by the Liquidator, (b) should the Liquidator elect to receive damages in satisfaction of any part of the SG Judgment Debt the Settlement Sums would be applied to satisfy the same and any costs order(s) to be decided by the SGCA (“SG Costs Order(s)”), (c) should the Liquidator elect to receive an account of profits and should such account reveal such profits were worth less than S$19,635,000, the Liquidator would as soon as practicable return or cause to be returned any Settlement Sums in excess of the value of profits, and (d) interest on any part of the SG Judgment Debt and SG Costs Order(s) up to the sum of S$19,635,000 would be calculated until 14 February 2018, but no interest would be payable thereafter on S$19,635,000 of the SG Judgment Debt plus any SG Costs Order(s). These conditions were imposed mainly because the Liquidator had not decided whether to elect for an account of profits or payment of damages. D3 said in reality it was reasonable to expect the Liquidator would simply elect for damages if he might have to refund part of the Settlement Sums on account of profits.

214.On such basis, D3 claimed that payment of the Settlement Sums would effectively be part settlement of the SG Judgment Debt. As P was the largest third party creditor of Parakou SG, it would receive a meaningful portion of the Settlement Sums from the Liquidator to partially settle the Awards for which it would to have to give credit (see the ASoC §68), hence the amount of P’s claim would effectively have been reduced or at the very least P would no longer require security from Ds for that part of its claim since those funds were held by the Liquidator with no risk of dissipation.

215.Since the question whether the 1^st/2^nd Orders should be continued had yet to be decided inter partes, D3 said P as applicant had a continued duty to inform the court of any material change in circumstances that might affect the injunction orders. D3 believed payment of the Settlement Sums, which represented about 23% of the Cap Sum against each of D1/D3, was clearly such material change in circumstances concerning P’s basis for maintaining the Cap Sum for the injunction orders. But P had not taken steps to tell the court of this development (that happened nearly 9 months ago in February 2018) despite requests by D3’s solicitors since April 2018. Although the Liquidator had yet to deduct his costs (and D3 had no information as to such costs) from the Settlement Sums before making distribution to P, the Deed of Indemnity required the Liquidator to keep P informed of all developments in or in connection with the SG Proceedings and required P’s approval before the Liquidator could incur any costs thereof, so D3 believed P must have information about costs incurred by the Liquidator to be applied against the Settlement Sums. But P had not taken steps to give the court or P this information.

216.In view of the above, D3 claimed that even if this court were to maintain the 1^st/2^nd Orders as varied, the Cap Sum should be reduced at least by the amount P would likely receive from the Liquidator from the Settlement Sums, which on the current evidence available was about US$14,200,000.

X.  DRAFT SHAW 5^TH AFF

217.Shaw disputed admissibility of the Draft D3 7^th Aff made at a late stage as it was either (a) in support of a new argument not hitherto raised or (b) of marginal relevance to the applications at hand, but if leave were granted to admit such affirmation, P would seek leave to adduce the Draft Shaw 5^th Aff.

218.Shaw claimed D3’s contention that had the PT Arrest been upheld D1 could have caused all remaining vessels in the Pretty Fleet to be sold to arms-length third party buyers was a new argument never raised before/at the 1^st Hearing that Ds tried to sneak in more than a year after conclusion of the 1^st Hearing. In any event, Shaw said the speculation that D1 would have caused all remaining Pretty Vessels to be sold to make the Pretty Fleet arrest-proof was incorrect, and theoretical disposal of such fleet would not have defeated P’s claim.

219.Shaw understood from Mr Wragge SC and Reddy that this was not the case. Shaw claimed that in England and Wales (and in Hong Kong too), it was well established by The Monica S[81]that provided a writ has been issued prior to the sale of a vessel, the writ will survive a change of ownership.[82]

220.In South Africa, the commencement of an admiralty action (both an action in rem and an action in personam) is dealt with in section 1(2) of the AJR Act (as amended):

“(a)  An admiralty action shall for any relevant purpose commence –

(i)  by the service of any process by which that action is instituted;

(ii)  by the making of an application for the attachment of property to found jurisdiction;

(iii)  by the issue of any process for the institution of an action in rem;

(iv)  by the giving of security or an undertaking as contemplated in section 3(10)(a).” (my emphasis)

221.Shaw said the principal authority in South Africa was a practitioner’s textbook by Gys Hofmeyr SC first published in 2006. In the 1^st edition, Mr Hofmeyr SC was of the view that the common law principle expounded in The Monica S was applicable, so the effect of section 1(2) of the AJR Act was that an action commenced by a writ in rem would survive a change in ownership.[83] This view was supported by a judgment of the South African Appellate Division (now South African Supreme Court of Appeal (“SASCA”)) in Jute Express[84] which held that either because of established procedural law or section 1(2)(b) of the AJR Act, an action in rem commenced in all instances by issue of the writ of summons. So when the Levinsohn Judgment was delivered on 30 April 2009, the prevailing view in South Africa was that a writ of summons would survive a change in ownership of a vessel.

222.But Shaw noted more recent publications questioned whether the effect of section 1(2) of the AJR Act was to deem an action in rem to have commenced against an “associated” ship with the action surviving change of ownership. The proposition was tested in 2 South African cases, ie Tebtale Marine v MS Mare Traveller Schiffahrts GMBH & Co KG in 2017 (in which Western Cape High Court held that a deemed commencement of an action did not survive a change in ownership) and Seaspan Grouse in 2018 (in which Durban High Court held that it was permissible to arrest a former “associated” vessel provided a writ was issued prior to the change in ownership). The latter decision (on appeal to the SASCA) was relevant as the Pretty Vessels called at Durban on 8 separate occasions between 2009 and 2014, albeit the position in 2009 and the years that followed was that P could have arrested at any port (including Cape Town).

223.Shaw claimed that had the PT Arrest been upheld in 2009, P would have issued writs against other target vessels of Parakou IL. Although Ds claimed D1 would not have put up security to secure release of any “associated” vessel and instead would have sold the Pretty Fleet despite the significantly different market conditions in 2009, P claimed it would have issued writs before such sale and continued to arrest any “associated” vessel calling at South Africa. Shaw said it was likely that a third party buyer would have put up security to enable the vessel to continue to trade, and then would have called upon the indemnity under the memorandum of agreement for the sale and purchase (which would have been much easier than to challenge P’s right of arrest). In this way, P’s prospects of enforcement would have been improved had D1 sought to take counter-measures in the manner D3 asserted.

224.For the SG Proceedings, D3 claimed payment of the Settlement Sums (some US$14,200,000) to the Liquidator in February 2018 was effectively security held on trust for P, criticised P in not bringing such payment to the attention of the HK Court earlier, and sought a reduction of the global Mareva limit by that amount. But Shaw said this position was flawed for the following reasons: (a) the Liquidator acted for all creditors even though P was the majority creditor, so P would not recover 100% of US$14,200,000, (b) the Liquidator’s own costs and legal fees/disbursements must be deducted before P was entitled to any recovery from the Settlement Sums, and (c) the Liquidator had yet to elect his remedies and if a gain-based equitable tracing remedy was chosen, the Liquidator might recover less and Ds would be entitled to a refund (in whole or part) of the US$14,200,000.

225.In reality, P had no present recovery from the SG Proceedings and was not presently entitled to such recovery, so it was not obliged to bring the Settlement Sums to the HK Court’s attention. Further, should the Liquidator make any interim payment to P, it certainly would not be US$14,200,000. The Liquidator’s solicitors in their letter dated 28 November 2018 advised that the Liquidator was then unable to ascertain what P’s estimated recovery might be from the Settlement Sums, and in any event any distribution to P would not be equivalent to the Settlement Sums because:

226.For the reasons given above and also in earlier affirmations served on behalf of P, Shaw invited this court to dismiss the 2^nd Aff Summons.

XI.  DRAFT GEISER 2^ND AND 3^RD AFFS

227.The Draft Shaw 5^th Aff referred to Seaspan Grouse which was then subject to appeal to the SASCA. Ds were granted leave to lodge and serve on de bene esse basis draft affidavit evidence in response to the Draft Shaw 5^th Aff §§5-18. The Draft Geiser 2^nd Aff exhibited the MacWilliam 3^rd Memo in response to those matters. On 1 February 2019, the SASCA handed down the appeal judgment for Seaspan Grouse (“SASCA Judgment”), and Ds intended to adduce the MacWilliam 4^th Memo to update the court in this regard.

XII.  DRAFT KEOY AFF

228.Keoy noted that on 4 March 2019 the SAFC handed down the SAFC Judgment on the 2 appeals concerning the 1^st/2^nd PS Arrests that dismissed P’s appeal against the Vahed Judgment that set aside the 1^st PS Arrest but allowed the appeal against the Henriques Judgment that declined to set aside the 2^nd PS Arrest. The SAFC Judgment set aide the PS Arrest because inter alia the Liquidator’s Mareva order in the SG Proceedings effectively gave P security for its claim (SAFC Judgment §76), and there was a prima facie case against P for “wrongful arrest” (SAFC Judgment §§91-100). Mr Man SC submitted the SASCA Judgment was plainly against P. But P asked Mr Wragge SC to provide the Wragge 3^rd Memo dated 19 April 2019 to (a) respond to the MacWilliam 4^th Memo and (b) to further update this court on the SAFC Judgment.

XIII.  DRAFT GEISER 4^TH AFF

229.Geiser reported that on 15 May 2019 the Constitutional Court of South Africa in MV Seaspan Grouse (CCT 44/19) dismissed the applicants’ application for leave to appeal against the SASCA Judgment. Ds intended to adduce the MacWilliam 5^th Memo on such issue. In addition, when P issued the writ of summons and warrant of arrest against mv “Pretty Scene”, P also issued writs/warrants against 7 other Pretty Vessels out of the SA Court. But after due search of the case files of the SA Court, there was only 1 application to extend these 7 writs/warrants until April 2018.

XIV.  OVERALL APPROACH

230.Both Mr Yu SC and Mr Man SC agreed this court should consider the subject applications in the following order: (a) whether Ds could establish that P’s cause of action had no prospect of success (ie the Striking Out Application), (b) if so, whether Ds established any basis to stay the present action on forum non conveniens ground (ie the Stay Application), and (c) whether Ds established any material non-disclosure and whether the 1^st/2^nd Orders should be maintained (ie the Continuation Application).

231.In respect of (b) above, despite Ds’ Summonses, Ds’ primary stance was to stay the present action in favour of the SA Court, but should Ds succeeded in “knocking out” P’s claim based on the Asset Thwarting Exercise, Mr Man SC asked for P’s remaining claims in the present action (which he submitted were essentially based on the Asset Stripping Exercise) to be stayed in favour of the SG Court. In respect of (c) above, notwithstanding the agreed approach in paragraph 230 above, where convenient I will deal with submissions by senior counsel for both parties on matters in (a) and (c) above together below, but will keep in mind the relevant threshold standards. But for (c) above, this court need not be concerned with D2 as the 1^st Order as valied was discharged against her, but she had extended undertakings to the Court of Appeal.

232.That leaves the 1^st/2^nd Aff Summonses. I propose to deal with the Shaw 4^th Aff and Draft Affs on de bene esse basis for the purpose of P’s/Ds’ Summonses in the discussion below, leaving the overall issue of their admissibility at a later stage. But some arguments as to whether leave ought to be granted for admitting the draft affirmations are better understood in context, so I will set out those arguments and my views as appropriate when I deal with P’s/Ds’ Summonses.

XV.  LEGAL PRINCIPLES

233.Striking out application: plain and obvious  I have summarised the general principles in paragraphs 35-39 of my judgment in Tsui Yuen (formerly known as Ho Wai Hung) v Ho Tse Wai, Philip Li Partners (a firm) (formerly known as Ho, Tse & Wai & Partners),[85] and I will not repeat them here. But it is useful to adopt Mr Man SC’s short-hand summary as follows:[86]

234.In respect of (b) above, Mr Yu SC submitted Ds must take P’s pleaded facts (especially P’s pleaded case on loss/damage for the purpose of the alleged conspiracy) as true, and Ds could not rely on evidence to contradict them. For this proposition, Mr Yu SC referred to Lonrho Plc & ors v Fayed & ors (No 5) in which Stuart Smith LJ said as follows:[87]

“This being an application to strike out on the basis that the statement of claim discloses no cause of action and/or is an abuse of process of the court, it is trite law that it should only be struck out if there is no arguable case disclosed on the pleadings and that situation cannot be cured by amendment or if the action is clearly an abuse of process. The allegations of fact have to be assumed to be true. ……”

In my view, whilst such proposition is generally applicable in most striking out applications, the court does have power to strike out a pleading when it is plain and obvious that the pleader’s case has no factual basis, has no “solid basis capable of proof”, is a “myth” with “no substantial foundation”, or presents “a tissue of improbabilities which ought not to be sent to proof”. So if the plaintiff pleads as a fact something which can clearly be shown to be incontrovertibly false (or, as Mr Man SC puts it, wholly incredible), then on a striking out application the court is not bound to accept the allegation as true and to proceed on a fictional basis.[88]

235.But this is a heavy burden for the court will not lightly engage in debate on affidavit evidence in a striking out application. Indeed, if there are disputes of facts such that the matter is not plain and obvious, the court ought not to accede to a striking out application as there should be no trial on affidavits.[89] Further, if on the facts alleged in the pleadings it is not possible to give a certain answer as to whether the claim is legally maintainable then the matter ought to go to trial to enable the relevant facts to be found.[90]

236.In respect of (c) above, Stuart Smith LJ in Lonrho Plc & ors (No 5) at p 1499 said “[furthermore], novel and difficult points of law in an expanding field of law should not be determined against a plaintiff ……” In Lonrho Plc v Fayed & ors, Lord Bridge said as follows:[91]

“…… But here the only possible reason for departing from the application of the ordinary tests would be if the House were satisfied that it was possible to distill from the pleadings a clearly defined issue of law which it would have been appropriate to determine as a preliminary question if the correct procedure to that end had been followed and which can be answered in a way which disposes of the action. But here it is important to remember how frequently the House has protested, where parties have agreed the terms of a preliminary question of law, at being required to answer difficult questions of law on hypothetical and disputed facts stated in general terms ……”

Thus, it was said that in seeking to decide a point of law which arose in a new and developing field of law in the context of a striking out application, such a point is better left to be decided at trial on the basis of the true facts.[92]

237.But the fact that a question of law appears difficult/obscure does not necessarily preclude the court from striking out pleadings if it is satisfied it has all the necessary information to decide the question, and has come to the conclusion after full argument in the face of all relevant information that the case is plainly and obviously one for striking out. In such circumstances, the court “should not decline to do so on the ground that the issues are difficult or complicated”.[93]

238.Mareva injunction: good arguable case  To obtain Mareva relief, the applicant has to satisfy the court inter alia he has a good arguable case on his claim, there is a risk of dissipation of assets so as to render any judgment that may be made in favour of the applicant nugatory, and the balance of convenience is in favour of a grant of such Mareva injunction.

239.In Arrow ECS Norway AS v Xin Cheng Holdings (International) Company Limited & ors,[94] Au-Yeung J explained the criteria for a “good arguable case” as follows:

“10. In order to show a ‘good arguable case’, ‘the plaintiff need not go so far as to persuade the judge that he is likely to win’.  He must show that his case ‘is one that is ‘more than barely capable of serious argument, and yet not necessarily one which the judge believes to have a better than 50% chance of success’ ’……

11. …… Here the words ‘strong’ and ‘good’ do become material.  It is not enough to show an arguable case, namely, one which a competent advocate can get on its feet.  Something markedly better than that is required, even if it cannot be said with confidence that the plaintiff is more likely to be right than wrong.  Gee on Commercial Injunctions, 5^th ed (2004), §12.024, citing Orri v Moundreas [1981] Com. LR 168, Mustill J.

12.  In terms of merits, the court will have regard to the relative strength of the parties’ cases in the exercise of its discretion:

‘In Mareva cases, the all-important question is whether, in the circumstances of the case, it is ‘just and convenient’ to grant the injunction ... the court will take into account the apparent strength or weakness of the respective cases in order to decide whether the plaintiff’s case, on the merits, is sufficiently strong to reach the threshold, and this will include assessing the apparent plausibility of statements in affidavits ... Although a good arguable case remains the minimum requirement, the judge’s view of the merits of the plaintiff’s case and his chances of ultimate success are obviously important factors in the exercise of his discretion.’ Gee on Commercial Injunctions (5^th ed, 2004), §§12.024-12.025”

240.Striking out vs Mareva relief  Mr Yu SC submitted (a) the Striking Out Application must fail for there is a sufficiently pleaded case (especially on loss/damage for the purpose of conspiracy), (b) P made  out a good arguable case on its pleaded case, undisputed facts and documentary evidence for continuing the 1^st/2^nd Orders as varied, and (c) Ds’ evidence as filed (mostly self-serving assertions of what Ds would have done between April 2009 and March 2017) at best raised a triable issue which this court should not resolve at this summary stage for it only went to show there was a good arguable case.

241.Such submissions highlighted the interplay of the Striking Out and Continuation Applications and the need to bear in mind the different threshold standards and burden of proof, which Stone J helpfully summarised in Akai Holdings Limited (in compulsory liquidation) & ors v Ho Wing On, Christopher & ors as follows:[95]

“157. At the outset Mr Snowden makes the point that although his submissions in respect of the Mareva application are distinct from those in respect of his (now forthcoming) strike out application, that of necessity there is some overlap between the two, and further that it is important constantly to bear in mind that whilst in terms of the strike out he bears the burden of making good his contentions – for example, that a specific plea is plainly and obviously demurrable, and thus should be struck from the Claim – that to the contrary in a Mareva application the onus lies on the plaintiffs to establish not only a ‘good arguable case’ for injunctive relief, but a good arguable case for injunctive relief in the amount of US$500 million, which is the figure for which in this application Mr Kosmin now was pressing.” (my emphasis)

Mr Man SC submitted that for the Continuation Application P had to show a good arguable case for the 1^st/2^nd Orders as varied in the amount of the Cap Sum.

242.Mareva injunction: material non-disclosure  I have summarised the general principles in paragraphs 36-38 of my judgment in A Company v W Company & ors[96] and paragraphs 94-97 of my judgment in Sin Yuk Hung v Sin Tung San,[97] and will not repeat them here. In short, an applicant for interlocutory relief at an ex parte hearing is under an onerous duty to give full and fair disclosure to the court of all material facts which are necessary for the proper disposal of the application, and the duty is one of the utmost or highest good faith.[98] Material facts to be disclosed are all those matters which are material for the judge to know and which are necessary to enable him to exercise his discretion properly, ie matters which the court should have in the weighing scales. Materiality is to be decided by the court and not to be assessed by the applicant or his adviser. It is the duty of the legal advisers and counsel to call the judge’s attention to everything that he must see if there is a mass of material, and to identify any points to the applicant’s disadvantage or any defences which, although not yet taken, will be available to be taken by the defendant had he been present at the application provided that the defence is one which can reasonably be expected to be raised in due course by the defendant and is not one which can be dismissed as without substance or importance.[99] In short, a plaintiff in discharge of his duty to make full and frank disclosure “should fairly state the points made against him by the defendant”.[100]

243.Further, the applicant must make proper enquiries before making the application for the ex parte Mareva relief, but the extent of such necessary/proper enquiries depends on all the circumstances of the case, including the nature of the case which the applicant is making when he makes the application, the order for which application is made, and the probable effect of the order on the defendant. Such duty of disclosure applies not only to facts known to the applicant but also to any additional facts which he would have known if he has made any such inquiries. Whether the fact not disclosed is of such sufficient materiality to justify or require immediate discharge of the ex parte order without examination of the merits depends on the importance of the facts to the issues which are to be decided by the ex parte judge on the application. The answer to the question whether the non-disclosure is innocent, in the sense that the fact is not known to the applicant or that its relevance is not perceived, is an important consideration but not decisive.[101]

244.Mr Yu SC referred to To J’s observation in Falcon Private Bank Ltd v Borry Bernard Edouard Charles Ltd & anor that “law or legal arguments do not fall within the category of material facts requiring disclosure”.[102] But Mr Man SC submitted the duty to make full and frank disclosure extends to matters of law, and he relied on the observation by Tang ACJHC (as he then was) in East Asia Satellite Television (Holdings) Ltd v New Cotai LLC.[103] In that case, the plaintiff entered into a joint venture with the 1^st defendant to develop a hotel complex on land in Macau of which the grantee was the 4^th defendant, which Macau company was owned by the 3^rd defendant (BVI company) and 2^nd defendant (wholly owned by the 3^rd defendant). The plaintiff brought personal actions against the 1^st defendant and its directors for inter alia breach of a share purchase agreement, and commenced derivative action on behalf of 2^nd, 3^rd and 4^th defendants against the 1^st defendant and its directors for dishonest assistance and conspiracy for loss of enterprise value of the joint venture project. In discussing the disclosure obligation for seeking orders for service out of jurisdiction, Tang ACJHC (as he then was) at page 757 noted Reyes J at the first instance set aside service of proceedings out of jurisdiction because the plaintiff (a) failed to provide the court with any evidence that multiple derivative actions were recognised under Macau and BVI law, and (b) should have pointed out it was seeking to make claims for reflective loss and explained why such claims were permissible. Tang ACJHC (as he then was) went on to observe at pages 757-758 as follows:

“82. As Mr Strachan submitted the duty of disclosure extends to matters of law.  In Memory Corporation Plc and Another v Sidhu (No 2) [2000] 1 WLR 1443 at 1460 Mummery LJ said the duty to disclose encompassed ‘significant factual, legal and procedural aspects of the case’.  Inadvertent (innocent) non-disclosure may well give rise to the ex parte order being discharged:  See, for example, Re A [2007] HKEC 2266 (§41).  ……”

In my view, the above authorities are not contradictory. Whilst there is no need to disclose law or legal arguments per se, if there are significant legal aspects of the case that go to the weighing operation, say, they provide a defence which can reasonably be expected to be raised in due course by the defendant, then it should come under the duty of disclosure.

245.Where there has been material non-disclosure at the ex parte application for Mareva relief, but full disclosure is made at the hearing inter partes, the court has a discretion to continue or regrant the order.[104] In Tiong King Sing v Sam Boon Peng Yee,[105] Chung J said the typical example where the discretion will be so exercised is (a) where the non-disclosure is innocent, and (b) an injunction would still have been granted even had the facts been properly disclosed.[106]

246.But in any event, such jurisdiction should be exercised sparingly, and should take into account the need to protect the administration of justice and to uphold the public interest in requiring full and fair disclosure. Kwan JA in Excel Courage Holdings Ltd v Wong Sin Lai[107] cited the “useful summary of the main principles” by Deputy Judge Alan Boyle QC in The Arena Corporation Ltd v Schroeder[108] that gave guidance as to the exercise of the court’s discretion, which has been neatly summarised by Au-Yeung J in China Medical Technologies Inc (in liquidation) v Bank of China (Hong Kong) Limited as follows:[109]

“111. If the Court finds that there has been material non-disclosure, the general rule is that it should discharge the order and refuse to renew it. Nevertheless, the Court has jurisdiction to continue or re-grant the order.  The relevant factors can be found in Excel Courage Holdings Ltd v Wong Sin Lai [2014] 3 HKLRD 642 at §56 (Kwan JA): 

(a)  That jurisdiction should be exercised sparingly, and should take account of the need to protect the administration of justice and uphold the public interest in requiring full and fair disclosure.

(b)  The Court should assess, among other things, the degree and extent of the culpability with regard to the non-disclosure, and the degree of importance of the undisclosed matters to the application (although the fact that the judge might have made the order anyway is of little significance).

(c)  The application of the general principle that an order should be discharged upon material non-disclosure being established should not be carried to extreme lengths or be allowed to become the instrument of injustice.

(d)  There are no hard and fast rules as to whether the discretion to continue or re-grant the order should be exercised, and the court should take into account all relevant circumstances.”

247.Forum non conveniens  D1/D2 were Hong Kong residents and D3 (a resident in Singapore) was served through Hong Kong solicitors, so process was served on them as of right. In Spiliada Maritime Corporation v Cansulex Ltd, Lord Goff of Chieveley said in cases where no particular forum can be described as the natural forum for the trial of the action, eg in commercial disputes where there can be pointers to a number of different jurisdictions or in admiralty cases where there are collisions on the high seas, “I can see no reason why the English court should not refuse to grant a stay in such a case, where jurisdiction has been founded as of right”.[110] Thus, where the defendant is served as of right within the jurisdiction, the burden rests on him to show there is a clearly or distinctly more appropriate forum other than Hong Kong.[111]

248.Lord Collins NPJ in SPH v SA[112]gave further guidance on the principles of stay of proceedings by reason of forum non conveniens as follows:

“1.  The single question to be decided is whether there is some other available forum, having competent jurisdiction, which is the appropriate forum for the trial of an action i.e. in which the action may be tried more suitably for the interests of all the parties and the ends of justice?

2.  In order to answer this question, the applicant for the stay has to establish that first, Hong Kong is not the natural or appropriate forum (‘appropriate’ in this context means the forum has the most real and substantial connection with the action) and second, there is another available forum which is clearly or distinctly more appropriate than Hong Kong. Failure by the applicant to establish these two matters at this stage is fatal.

3.  If the applicant is able to establish both of these two matters, then the plaintiff in the Hong Kong proceedings has to show that he will be deprived of a legitimate personal or juridical advantage if the action is tried in a forum other than Hong Kong.

4.  If the plaintiff is able to establish this, the court will have to balance the advantages of the alternative forum with the disadvantages that the plaintiff may suffer. Deprivation of one or more personal advantages will not necessarily be fatal to the applicant for the stay if he is able to establish to the court’s satisfaction that substantial justice will be done in the available appropriate forum.”

249.Both Mr Yu SC and Mr Man SC agreed the starting point is that in cases of tort the place of commission of the tort is the prima facie natural forum.[113] In China North Industries Investment Ltd v Chum, the defendants were not served as of right, and the judge granted ex parte leave for the plaintiffs to serve the defendants out of jurisdiction, but this was subsequently set aside. Stock JA held that although as a starting point the place of the tort’s commission is to be viewed as the prima facie natural forum, this factor should not be elevated to one that is non-contextual:

“96.     …… The tort factor is one that must necessarily be sensitive to nature and context.  In this case there was between the parties a pre-existing relationship which was governed by the law of Bermuda; the alleged tortious acts took place not only in Hong Kong but London also; and the very same assertions have been the subject of litigation elsewhere.  The plaintiffs’ concentration for its suggestion that Hong Kong was the centre of gravity of the case concentrated then, as now, on history rather than on questions of convenience at the date when the question of jurisdiction fell to be addressed by which latter date the factors had changed significantly.”

On such basis, the exercise of judicial discretion in this regard is pre-eminently a matter for the judge.

250.Both Mr Yu SC and Mr Man SC argued that for a global conspiracy one should consider where the centre of gravity for the conduct is in assessing the natural forum. Microsoft Mobile OY (Ltd) v Sony Europe Limited & ors[114] concerned a claim of unlawful means conspiracy advanced in England against Sony Europe in the jurisdiction of its domicile (England) and also against other defendants domiciled in Japan and South Korea for breach of competition in global cartel. Some defendants requested the order authorising service out of jurisdiction against them be set aside on the basis inter alia that England was not clearly and distinctly the proper forum for trial of the claims. The clear centre of gravity of the cartel was in East Asia, and the plaintiff could merely point to isolated events allegedly occurring in Finland and England, which meant the connection between the cartel and England was nebulous at best. It was said the claims were being brought on the basis that people got together in company groups and coordinated their behaviour, and those people were primarily and probably almost completely in East Asia. Marcus-Smith J was not convinced this was a multi-jurisdictional cartel operating globally with no unique natural home for any particular litigation, and held that the jurisdictions centrally engaged were not England which jurisdiction was only peripherally involved.

251.Mr Man SC also reminded that where the correct interpretation of foreign governing law is central to the case and substantial/difficult questions arise, that will be a relevant consideration. Recorder Geoffrey Ma SC (as he then was) in Rambas Marketing Co LLC v Chow Kam Fai David explained as follows:[115]

“In cases where substantial and difficult issues of foreign law are involved, the court may well be compelled to stay the proceedings where there is an appreciable risk that justice will not be done. This risk may in certain circumstances be attributable to factors such as expense, but in the usual case would arise where the court was somehow concerned with the possibility that it might reach a wrong conclusion on an important aspect of foreign law. In Credit Chimique, at p.136, Lord Jauncey said: ‘In the present case the risk of the Scottish court reaching the wrong conclusion on one or more of the questions of law involved is by no means remote whereas it must be presumed that such a risk does not exist in the French court’. The courts in Hong Kong (particularly the Commercial Court and the Admiralty Court), given the international identity and nature of the type of commercial litigation and litigants here, are often accustomed to dealing with aspects of foreign law. It does not therefore follow at all that once it is shown that issues of foreign law arise, that this will necessarily be a powerful, much less a decisive, factor in favour of a stay. On the other hand, however, it is unrealistic not to acknowledge the fact that complicated issues of foreign law may arise with which the Hong Kong courts will not feel itself confident to deal; it is all a question of degree: see Muduroglu Ltd v. TC Ziraat Bankasi [1986] QB 1225, 1246A-F (English Court of Appeal), per Mustill LJ.”

In VTB Capital Plc v Nutritek International Corpn & ors, Lord Mance JSC made similar observations:[116]

“46.  The governing law, which is here English, is in general terms a positive factor in favour of trial in England, because it is generally preferable, other things being equal, that a case should be tried in the country whose law applies. However, that factor is of particular force if issues of law are likely to be important and if there is evidence of relevant differences in the legal principles or rules applicable to such issues in the two countries in contention as the appropriate forum. ……”

252.Limitation of actions  There is no dispute that a tort claim is time-barred under section 4 of the LO unless the extension provision in section 26 of the LO applies. Section 26(1) of the LO provides that:

“…… where in the case of any action for which a period of limitation is prescribed by [the LO], either – (a) the action is based upon the fraud of the defendant, (b) any fact relevant to the plaintiff’s right of action has been deliberately concealed from him by the defendant ……, the period of limitation shall not begin to run until the plaintiff had discovered the fraud, concealment … (as the case may be) or could with reasonable diligence have discovered it”.

253.Under section 26(1) of the LO, time starts to run when the plaintiff could have discovered the fraud or concealment with reasonable diligence. In Paragon Finance Plc v D B Thakerar & Co (a firm),[117] Millett LJ said the question is not whether the plaintiff should have discovered the fraud sooner, but whether he could with reasonable diligence have done so. The burden is on the plaintiff to show he could not have discovered the fraud or concealment without exceptional measures which he could not reasonably have been expected to take. In this respect, “there must be an assumption that the claimant desires to discover whether or not there has been a fraud …… Further, the concept of “reasonable diligence” carries with it …… the notion of a desire to know, and, indeed, to investigate”.[118] Lord Hoffmann NPJ in Peconic Industrial Development Ltd v Lau Kwok Fai[119] reminded that the LO must be applied according to its terms, and the purpose of the LO is not to allow people to escape liability for fraud, but to avoid investigation of whether the defendant has been fraudulent after a lapse of time which can prejudice his ability to rebut the charge. “The question of what the plaintiff could with reasonable diligence have discovered must be answered dispassionately and without regard to what may be perceived as the merits”.

254.Double actionability  For torts committed overseas to be actionable in Hong Kong, the double actionability rule applies. Such rule has been helpfully summarised by DHCJ Poon (as he then was) in Shanghai Reeferco Container Co Ltd v Waggonbau Elze GmbH & Co Besitz KG as follows:[120]

“47.  To recap, the double actionability rule states, as a general rule, that an act done in Country A is a tort and actionable as such in Country B, only if it is both: (a) actionable as a tort according the law of Country B (lex fori), or in other words is an act which, if done in Country B, would be a tort; and (b) actionable according to the law of Country A where it was done (lex loci delicti). In Red Sea Insurance Co Ltd v Bouygues SA & Others [1995] 1 AC 190, the central issue arising on the appeal was whether the defendant could rely on Saudi Arabian law (lex loci delicti), to establish direct liability in tort when Hong Kong law (lex fori) does not recognise such liability. In summary, the Privy Council addressed the question in this way. The first requirement of the double actionability rule, that is, the act must be actionable as tort according to the lex fori, is not a test of jurisdiction. It is a rule of choice of law to decide which law should be chosen to determine the relevant issue or issues. That is not an invariable rule. English law (so does Hong Kong law for that purpose) recognises that a particular issue between the parties to litigation may be governed by the law of the country which, with respect to that issue, has the most significant relationship with the occurrence and with the parties. In an appropriate case, a plaintiff could rely exclusively on the lex loci delicti even if under the lex fori his claim would not be actionable. This is the exception to the double actionability rule.

48.  The exception, properly understood, is of no assistance to the plaintiff for two reasons. First, the exception, being an exception to a rule of the choice of law, cannot possibly be a test of jurisdiction. Second, under the exception, the court applies the lex loci delicti to see if the act complained of constitutes a tort. ……”

XVI.  PLEADING/PROVING CONSPIRACY

255.The starting point must be P’s pleadings on its cause of action for conspiracy to injure by unlawful means. Nourse LJ in Kuwait Oil Tanker Co SAK & anor v Al Bader & ors[121] explained there are 2 types of actionable conspiracy to injure by lawful means and by unlawful means. Their ingredients are the same save for 1 crucial difference:[122]

“107.   …… In both cases there must be conspiracy to injure the claimant …… whereas in the second case [ie conspiracy to injure by unlawful means], although the defendant must intend to injure the claimant, injury to the claimant need not be his predominant purpose.

108.…… (2) A conspiracy to injure by unlawful means is actionable where the claimant proves that he has suffered loss or damage as a result of unlawful action taken pursuant to a combination or agreement between the defendant and another person or persons to injure him by unlawful means, whether or not it is the predominant purpose of the defendant to do so.”

Thus, a conspiracy to injure by unlawful means is actionable where the plaintiff shows (a) there is an express/tacit agreement or understanding between the defendant and another or others, (b) there is an intention to injure the plaintiff by unlawful means whether or not the intention to injure is the predominant purpose, (c) unlawful acts are carried out pursuant to the agreement/understanding and stated intention, and (d) loss/damage has been caused to the plaintiff as a result.[123]

256.P’s case on conspiracy to injure by unlawful means is pleaded in the ASoC §62 (see preamble and (a) in paragraph 104 above). It appeared that P pleaded the criteria in paragraph 255(a)-(c) above in ASoC §62 (pleas of the alleged conspiracy and intention to injure – see paragraph 104 above) and §63 (pleas of unlawful acts carried out pursuant to the alleged conspiracy – see paragraph 105 above). P claimed that of the 5 unlawful acts pleaded in the ASoC §63,

In my view, Chua J’s findings that were largely affirmed by the SGCA Judgment (see paragraph 96 above) arguably lent support for P’s allegation as to the falsity of the evidence presented to the SA Court. Reyes J’s decision to strike out the HK Proceedings showed they were an abuse of process (see paragraphs 67-69 above). Thus, there was a good arguable case on the elements in paragraph 255(a)-(c) above for P’s cause of action against Ds based on conspiracy to injure by unlawful means.

257.So the main battleground was in relation to P’s pleas on the last criterion in paragraph 255(d) above, ie loss/damage caused by the alleged conspiracy to injure by unlawful means. The relevant pleas can be found in the ASoC §§64-69 (see paragraphs 106-107 above). Mr Yu SC submitted there was a good arguable case let alone a sufficiently pleaded case on loss/damage, but Ds took issue with that.

XVII.  PLEADING/PROVING CAUSATION AND LOSS

258.Legal principles Damage to the plaintiff is an essential ingredient of the tort of conspiracy. The tortious basis of damages has as its starting point the principle that the innocent party should be put, in monetary terms, in the same position as he would have been if the wrong had not been committed.[126] In Michael Gerson (Leasing) Ltd v Greatsunny Ltd, Nicholas Strauss QC sitting as deputy judge summarised the trite principles on measurement of loss as follows:[127]

“75.  I remind myself of the basic principles. …… The measure of damages in tort is the difference between the claimant’s actual position and the position he would have been in if the wrong had not been committed ……”

259.In Lonrho Plc & ors (No 5), the plaintiffs (2 individuals and a company) alleged that by a conspiracy the defendants sponsored/ encouraged a third party to publish defamatory statements about them and financed/caused another third party to bring an action against them, and that they thereby suffered loss/damage. The plaintiffs’ pleadings merely averred “the broad conventional allegation, without any particulars as against the defendants, …… that “by reason of the matters set out above the plaintiffs have suffered loss damage and injury” ” (page 1494). The judge struck out the action as an abuse of process of the court. The plaintiff produced particulars when the matter went on appeal, and the judge’s order was set aside in part for leave to be granted for the company to amend its pleadings to allege particulars of actual pecuniary loss; and given the particulars provided, the residual claim for damages at large “adds nothing, by way of particularity, and I would exclude it as unnecessary” (page 1498).

260.Dillon LJ at page 1494 made clear that “[a] plaintiff in a civil action for conspiracy must prove actual pecuniary loss ……”, which is a necessary ingredient of the tort of conspiracy to injure by unlawful means. But once a plaintiff proves actual pecuniary loss, “the damages are at large in the sense that they are not limited to a precise calculation of the amount of the actual pecuniary loss actually proved” (also page 1504). Stuart-Smith LJ at page 1501 also agreed that precise calculation is not necessary, particularly where such loss may be continuing, “though if losses had already been incurred from the cause …… I would expect some calculation to be pleaded”, and at pages 1504-1505 he cited Rookes v Barnard[128] to say a plaintiff can invite the court “to look at all the circumstances” (including the conduct of a defendant and the nature of his wrongdoing)[129] and to “award a round sum based on the pecuniary loss proved” (eg general damages such as inconvenience/unhappiness due to change of work).

261.Nevertheless, Dillon LJ considered the plaintiffs’ pleadings in that case “a grossly inadequate pleading”, and held that the plaintiff would need to give particulars of the financial loss claimed sufficient to ensure the defendants would not be taken by surprise by any evidence adduced on the amount of this loss. Evans LJ at page 1508 said as follows:

“…… Where, however, the pleading asserts that the plaintiffs are presently unable to identify any such loss, or to allege that any measurable loss has occurred, then the claim is defective because it fails to describe a factual situation which gives rise to the cause of action upon which the plaintiffs rely. In such cases, the claim is not necessarily struck out at once. A proper opportunity to amend or to add to particulars may well be given ……”

262.Both Mr Man SC and Mr Yu SC agreed the above reflects time-honoured principles of pleadings that also apply to pleading loss/ damage for a cause of action in conspiracy to injure by unlawful means. In my view, the court is concerned to consider whether the plaintiff’s pleadings (and in particular the pleaded heads of pecuniary loss) are sufficient to give fair notice to the defendants of (a) the loss that the plaintiff will in due course seek to prove and (b) how the complained unlawful acts caused such loss, so that the defendant will not be surprised and will understand what evidence to call for in response, but recognising that any presently quantified loss does not necessarily equate with the pleaded heads of loss. Although Mr Yu SC contended that for this purpose the court must assume the facts pleaded in the ASoC, this should be read in light of the discussion of paragraphs 234-235 above.

263.Mr Yu SC submitted that if the complaint was about lack of sufficient particulars of the pleaded loss/damage, then the right course is not to raise a striking out application but to seek further and better particulars, and the court will allow the plaintiff an opportunity to amend his pleadings to supplement particulars. Mr Yu SC drew support from Shenzhen Futaihong Precision Industry Co Ltd v BYD Co Ltd.[130] In that case, the defendants by their counterclaim for conspiracy to injure by unlawful means sought: “(1) Damages for unlawful interference with business (as pleaded in para.86 above). Paragraph 86 reads: By reason of the matters pleaded in paras.62 to 85 above, the plaintiffs have suffered loss and damage, including loss of business and business opportunities (to be assessed)”. The defendants contended it was at least arguable that where a wrongful act will ordinarily cause loss, it is unnecessary to demonstrate and prove particular items of loss, and damages would be “at large”, so it would be sufficient to raise facts from which it might properly be inferred that some damage must result to the defendants from the plaintiff’s wrongful acts, but in that case the defendants indicated they intended to serve voluntary particulars of damages in due course. Although Tang VP (as he then was) agreed such bare bones of a claim for damages cried out for particulars, he was satisfied this was not a case where it was plain the defendants had not suffered any damage by reason of “the matters pleaded in paras.62-68”, but rather the pleaded facts, if proved, could properly support the inference that the plaintiff’s wrongful acts resulted in some damage.

264.But much turns on the circumstances of each case. As Mr Man SC pointed out, unless there is reason to believe that the case can be improved by amendment/particulars to the plaintiff’s pleadings that are sustainable, leave will not be given to do so as it will be a futile exercise. Indeed, in Shenzhen Futaihong Precision Industry Co Ltd, the defendants accepted the pleadings should at least raise facts, if proved, could support proper inference that some damage must result to the defendant from the plaintiff’s wrongful acts.

265.Further, as explained by Ma CJHC (as he then was) in Pido v Compass Technology Co Ltd, loss/damage is just the starting point in that in any given conspiracy case for “the court will have to examine other aspects such as causation in order to reach a conclusion as to whether or not the damages claimed can be awarded”.[131] Stuart-Smith LJ at page 1505 of Lonrho Plc & ors (No 5) reminded it is also necessary to plead the causation nexus between the act complained of and the loss in question:

“…… But in so far as such acts cause damage to the plaintiffs it must, in my view, be pecuniary loss and other damage for which compensation is claimed. Since the tort of conspiracy to injure is not complete without pecuniary loss, any damages at large must be referable to the act causing the pecuniary loss which constitutes the tort.”

266.P’s pleaded case An issue arose at the 1^st Hearing as to what exactly was P’s pleaded case in relation to the “[resulting] financial loss and damage” of the alleged conspiracy. Mr Yu SC submitted that Mr Man SC misconstrued the contents of the ASoC and that Mr Man SC’s reading of the relevant parts of the ASoC failed to draw the necessary distinction between (a) the Awards and the Chua Judgment / Asset Stripping Exercise and (b) the pleas of unlawful means and pleas of resultant loss/damage, such that Ds wrongly assumed the acts pleaded in the ASoC equated to the loss which P sought to recover.

267.The ASoC §64 (see paragraph 106 above) pleaded that “[by] reason of the matters set out in [the ASoC §62 (pleas of the alleged conspiracy and intention to injure – see paragraph 104 above) and the ASoC §63 (pleas of the unlawful acts carried out pursuant to such alleged conspiracy – see paragraph 105 above) that included inter alia the Asset Stripping and Asset Thwarting Exercises], [P] has suffered financial loss and damage as particularised in [the ASoC §§65-69 – see paragraphs 106-107 above] below”.

268.Mr Man SC argued that ordinary reading of the ASoC §64 suggested P claimed for (a) “loss” caused by the Asset Stripping Exercise[132] and (b) “loss” caused by Asset Thwarting Exercise,[133] and the quantum of such “loss” under (a)-(b) above was (i) the ASoC Sum with further interest and costs under the Awards that P was unable to enforce by reason of the alleged conspiracy and (ii) the Expenditure estimated to be in excess of US$6,000,000. Mr Man SC explained that based on such understanding of the ASoC, Ds felt they had to raise the principle of no reflective loss and the collective procedure of insolvency (see paragraph 113(a) above) to “knock off” P’s claim for “loss” in (a) above[134] (by asserting P’s claim for such “loss” sustained by the Asset Stripping Exercise was in fact Parakou SG’s loss) because even if they were able to persuade this court on the striking-out standard that P had no case and/or P was unable to demonstrate any good arguable case that the Asset Thwarting Exercise in (b) above caused any “loss” , P would still try to have a 2^nd bite based on (a) above that the Asset Stripping Exercise was independently causative of “loss”.

269.But upon careful consideration of P’s pleadings (even though Mr Yu SC and Mr Man SC debated about this several times in the course of the 1^st Hearing), I agree with Mr Yu SC and Ms Sit SC that the above was a misreading of the ASoC. The Asset Stripping and Asset Thwarting Exercises were pleaded as the unlawful means carried out pursuant to the alleged conspiracy (see the ASoC §63 and paragraph 105 above) and not the resultant financial loss and damage (see the ASoC §§65-69 and paragraphs 106-107 above). Indeed, the plea in the ASoC §64 as explained in paragraph 267 above made clear the relevant loss/damage were pleaded in ASoC §§65-69 and not in ASoC §§62-63. Thus, the Asset Stripping Exercise was relevant to P’s cause of action as part (but not the entirety) of the unlawful means in the same way as P also relied on the Asset Thwarting Exercise and HK Proceedings as part of the unlawful acts of the alleged conspiracy, but it was further relevant in the sense that any recovery by the Liquidator in the SG Proceedings premised on the same would be, as Mr Yu SC said, “neutralised” by P giving credit for any distribution to be received via Parakou SG’s liquidation to avoid any double recovery. Indeed, this has been explained in the Shaw 3^rd Aff (see paragraph 122 above).

270.I agree with Mr Yu SC that P essentially pleaded 1 umbrella conspiracy to injure that involved inter alia the Asset Stripping Exercise, Asset Thwarting Exercise and HK Proceedings as unlawful acts committed pursuant to the alleged conspiracy, and the pleaded effect of the alleged conspiracy was to (a) denude P of its alleged ability to make rightful recovery of the Awards ie the ASoC Sum with further interest and costs, and (b) cause P to incur the Expenditure (as explained in the Shaw 3^rd Aff – see paragraph 119 above). Such heads of pecuniary loss (but not the exact amount of damages actually sought by P) were pleaded in the ASoC §65, 66, 69 (see paragraph 106(a)-(c) above).

271.In the ASoC §65 (see paragraph 106(a) above), P averred it was unable to enforce the Awards (the then amount exclusive of P’s legal costs to be assessed was the ASoC Sum but the actual quantification would be a matter for trial) against Parakou SG that was placed in liquidation in March 2011 before 2^nd Award in May 2011, but nowhere in the ASoC §65[135]  did P seek to recover as damages the value of the Challenged Transactions (ie the Asset Stripping Exercise) and/or the SG Judgment Debt (as largely affirmed on appeal by the SGCA Judgment) in full or part. Rather, Ds’ breaches of fiduciary duties, undervalue transactions and/or conspiracy against Parakou SG were part of the unlawful acts rather than damages P relied on in its present claim.

272.It was against this inability to satisfy the Awards against the primary arbitration debtor as explained in the ASoC §65 that P in the ASoC §66 (see paragraph 106(b) above) averred it suffered personal loss that resulted directly from its inability to invoke the South African “associated” ship arrest procedure to obtain security via the PT Arrest in 2009 and subsequent arrests of other “associated” vessels between 2009 and March 2017 to build up a fund against which the Awards could have been enforced, which loss was unaffected by Parakou SG’s liquidation as the vessels were or would have been third party assets.

273.The ASoC §66 expressly averred that the aforesaid pleaded causation/loss were associated with the Asset Thwarting Exercise that resulted in P’s inability to secure/enforce the Awards as follows:

“…… Had the order for [the PT Arrest] stood, [P] would have become significantly secured in respect of its claims in the [Arbitration]. [P] could and would have made arrests of the further vessels in the Parakou/‘Pretty’ fleet resulting in further security. Alternatively, [P] has lost the opportunity of obtaining security in respect of its claims in the [Arbitration] which it had a reasonable prospect of obtaining.”

It must be plain such loss did not turn on the Asset Stripping Exercise because asset-stripping Parakou SG of itself would not have resulted in inability to make “associated” arrests of vessels of Parakou SG’s sister companies. When properly understood, the plea in the ASoC §65 was a necessary material fact that explained the loss averred in the ASoC §66 but not the loss itself.

274.The pleaded facts/matters in support of such causation/loss as averred in the ASoC §§65-66 were said to be three-fold as set out in ASoC §67(1)-(3) (see paragraph 107(a)-(c) above):

This reinforced the view in paragraph 273 above that it was in the context of P having no joy from Parakou SG due to its asset-stripped liquidation that P averred it suffered loss from Ds’ asset-thwarting which prevented it from securing/enforcing the Awards from third party assets via the South African “associated” arrest regime. Plainly, there were no 2 separate losses being loss caused by the Asset Stripping Exercise and loss caused by the Asset Thwarting Exercise.

275.In my view, Ds also could not rely on the ASoC §68 (see paragraph 107 above) to argue P was claiming for loss in the amount of the SG Judgment Debt (as largely affirmed by the SGCA Judgment). Rather, for quantifying damages at large for the alleged conspiracy by Ds against P, the ASoC §68 focused on P’s personal loss in contra-distinction to Parakou SG’s loss by giving credit for any dividend P might receive from Parakou SG’s liquidation, but making clear there would not be full recovery.

276.Apart from the aforesaid loss, P in the ASoC §69 (see paragraph 106(c) above) also claimed for actual pecuniary loss being the Expenditure incurred for investigating, securing and enforcing the Awards. Mr Yu SC submitted (and Mr Man SC did not disagree) time/costs spent in detecting and countering a conspiracy is a permissible head of pecuniary loss for a cause of action in conspiracy to injure.[136]

277.Pleading point In my view, as a matter of pleadings and as explained in paragraphs 266-276 above, P pleaded the nature/heads of loss claimed with sufficient particularity such that Ds would not have been surprised by evidence that P would adduce on the amount of loss/damage under such heads of loss. Further, although P sought “damages (at large) for conspiracy”, I agree that on proper reading of the ASoC as explained above the averments on causation/loss therein were a far cry from the bare allegation in the plaintiff’s pleadings in Lonrho v Fayed & ors (No 5) which were considered grossly inadequate as they gave no particulars at all. More importantly, the aforesaid analysis showed P did not plead in the ASoC that the Asset Stripping Exercise was independently causative of loss.

278.On the aforesaid proper understanding of P’s pleaded case, Mr Yu SC submitted there was no question of P’s claim being impossible to succeed, and he went further to say P had a good arguable case. He submitted that the answering affidavits by inter alia Ds, Yang and Yeung adduced before the SA Court for setting aside the PT Arrest under the PT Arrest Proceedings that exhibited the 17/3/08 Resolution and that confirmed the legitimacy of the restructuring of Parakou SG and the transfer of Parakou SG’s shares from D1/D2 to Yang/D3 were demonstrably false according to findings in the Chua Judgment (largely affirmed by the SGCA Judgment), which thwarted P’s ability to secure/enforce the Awards and caused P to incure the Expenditure, and since Ds must take the facts pleaded in the ASoC as true, it would not have assisted them to adduce evidence in an attempt to show P could not have recovered any substantial damages for its pleaded loss as this would be a matter for trial and not for striking out.

279.Whilst I think Mr Man SC did not wish to challenge the findings by Chua J (as adjusted by the SACA Judgment) for the purpose of the applications before this court, he took issue with the suggestion that the ASoC contained sustainable pleas of P having suffered loss sufficient to support a cause of action in conspiracy whilst leaving the actual quantum of damages to be assessed upon relevant facts/evidence that would come to light at trial. But as seen in the discussion below, the challenge Mr Man SC mounted was not mere matter of pleadings but a dispute on the merits that required consideration of countervailing affidavit evidence. In short, Ds essentially argued the facts/arguments they marshalled to show that P suffered no loss were sufficient to meet the striking-out standard or at the very least P would be unable to show a good arguable case for Mareva injunction orders up to the amount of the Cap Sum.

280.Parties’ respective stance  At the 1^st Hearing, given the nature of pleaded loss as explained in paragraphs 106-107 and 266-276 above, Mr Yu SC fairly accepted the Asset Thwarting Exercise (see the ASoC §§66-67 and paragraphs 106(b) and 107(a)-(c) above) was a necessary causative factor in respect of P’s claimed inability to obtain security for the Awards (then accrued to the ASoC Sum with further interest/costs) and/or to enforce the Awards against such security even though P also relied on the Asset Stripping Exercise and HK Proceedings as part of the unlawful acts of the alleged conspiracy. So if Ds succeeded in demonstrating the Asset Thwarting Exercise was not causative of loss and/or P had no good arguable case in this regard, P would be unable to support its present claim for damages in the ASoC Sum with further interest/costs being the value of the Awards that allegedly could not have been secured/enforced, and P’s loss for the alleged conspiracy would be limited to its claim for the Expenditure in the ASoC §69 (see paragraph 106(c) above). On such basis, Mr Yu SC suggested the principle of no reflective loss and/or collective procedure of insolvency were not relevant because P’s asserted loss was separate from that suffered by Parakou SG as a direct result of the Asset Stripping Exercise.

281.Upon such basis, Mr Man SC agreed (a) the principle of no reflective loss would be of secondary importance and (b) the main focus of the parties’ dispute would be whether P had a sustainable claim for loss/damage as a result of the alleged conspiracy pursuant to unlawful means in the shape of the Asset Thwarting Exercise and/or whether there was a good arguable case that the Asset Thwarting Exercise was causative of loss in order to support the Mareva relief by way of the 1^st/2^nd Orders as varied.

282.But Mr Yu SC argued that even if it were shown the Asset Thwarting Exercise was not causative of loss being the value of the Awards which P could have secured/enforced but for the alleged conspiracy, it would still not be right to strike out P’s claim as there remained some sustainable claim for loss (ie the Expenditure) as a result of the alleged conspiracy, and it was open for the court to exercise its discretion to continue the 1^st/2^nd Orders as varied by reducing the Cap Sum to reflect the relevant loss. In this regard, Mr Yu SC referred to Akai Holdings Limited (in compulsory liquidation) & ors in which the plaintiffs sought to restrain dealings in the 1^st and 2^nd defendants’ assets up to a maximum (cumulative) value of US$500,000,000, but the plaintiff’s claim at that stage was “substantially unquantified” as accurate quantification would require discovery and expert evidence. Stone J found it virtually impossible to come to any definitive view as to quantum, but taking a broad view of the parties’ contentions and doing the best as he could, Mareva relief was granted with a maximum limit of US$200,000,000 against the 1^st defendant.

283.But Mr Man SC contended that if it was shown that the Asset Thwarting Exercise was not causative of loss, then unless the present action was stayed in favour of a foreign forum (which in those circumstances should be the SG Court rather than the SA Court) the impugned parts of the ASoC §§65-69 should be struck out to remove unsustainable pleas and to bring clarity to P’s more narrowed case, and the 1^st/2^nd Orders as varied ought to be discharged. He submitted Akai Holdings Limited (in compulsory liquidation) & ors provided support for the proposition in paragraph 241 above that not only would P have to demonstrate a good arguable case but also a good arguable case for the amount specified in the 1^st/2^nd Orders, so if P failed to show a good arguable case that the Asset Thwarting Exercise was causative of loss being the value of the Awards thus leaving the Expenditure as P’s remaining loss, then quite simply there would be no good arguable case to support continuation of Mareva relief in the amount of the Cap Sum:

284.Ex parte stage  Nevertheless, Mr Man SC contended that P’s position as presented to and the ex parte materials as placed before the ex parte judge focused on loss from the Asset Stripping Exercise, and were quite different from P’s stance as clarified by Mr Yu SC at the 1^st Hearing. It was said the picture presented to the ex parte judge was that the Asset Stripping Exercise was independently causative of loss, hence P should have alerted the ex parte judge about the rule against reflective loss. Such complaint would therefore go to the question of whether there was any material non-disclosure by P in obtaining the ex parte 1^st/2^nd Orders. Whilst I propose to deal with the issue of whether there had been material non- disclosure below, it is useful to discuss here whether P adopted a different stance as regards its claim for causation/loss at the ex parte stage.

285.Mr Man SC reminded that the Chua Judgment was handed down on 8 February 2017, and P’s application for ex parte Mareva relief in the present action was made very shortly thereafter on 9 March 2017 by putting at the forefront a personal claim against Ds resulting from inter alia the Asset Stripping Exercise. Mr Man SC suggested the Shaw 1^st Aff, EoC and Alder Submissions all told the ex parte judge that (i) there were 2 ways in which the alleged conspiracy resulted in loss, (ii) P had a personal claim against Ds resulting from inter alia the Asset Stripping Exercise that was independently causative of loss, and (iii) P tried to sustain the ex parte Mareva relief on alleged loss caused by the Asset Stripping Exercise being the subject matter of the SG proceedings in which Parakou SG was successful. Mr Man SC made the following points:

286.Mr Man SC submitted that in the aforesaid ex parte materials the Asset Stripping Exercise established by the Chua Judgment was put at the forefront of what caused P to suffer loss/damage, and gave an impression that P’s claim (and application for Mareva relief up to the amount of the Cap Sum) was an open and shut one because it coincided with the “success” in the SG Proceedings, and there was nothing in the ex parte materials to point out the present position as explained by Mr Yu SC that once the Asset Thwarting Exercise was “knocked out” P would only rely on the Expenditure as its loss (which loss was not even adopted as a basis for the Mareva injunction sought), and there was no explanation to the ex parte judge that Ds’ purported claim was at least arguably reflective loss.

287.Mr Yu SC submitted there was no change of stance by P, and P was in fact suing for its personal loss and not Parakou SG’s loss. Mr Yu SC said the EoC §§5-6 were consistent with the ASoC as explained in paragraphs 266-276 above. I agree. In my view, P relied on the Asset Stripping Exercise as part of the unlawful acts of the alleged conspiracy (EoS §5.1). P then averred that the Asset Stripping Exercise which contributed to Parakou SG’s asset-stripped insolvency and inability to satisfy the Awards was a primary/material fact that gave context to P’s loss in the EoS §6 in which P pleaded that “[as] a result of those unlawful acts, [P] has suffered loss and damage as follows ……” After all, had Parakou SG as the primary arbitration debtor not been asset-stripped and/or had there been recovery from Parakou SG, the Asset Thwarting Exercise would not have caused P to suffer any or full extent of loss. It was only in the context of Parakou SG’s asset-stripped insolvency that P’s efforts to secure/enforce the Awards against third party assets in the shape of “associated” vessels calling at South Africa took on significance in terms of causation/loss, ie Ds’ asset-thwarting that prevented or inhibited P’s efforts in this regard (ie part of the unlawful means) caused P’s personal loss of being unable to secure/enforce the Awards against “associated” party assets (see paragraph 285(d) above).

288.This was why the Alder Submissions §9(1) made clear that P’s claim was a personal one and insofar as it coincided with with the successful SG Proceedings P might have some recovery therefrom which would reduce its personal claim (see paragraph 285(c) above), and why the Alder Submissions §9(2) also made clear P’s personal claim against Ds for thwarting the PT Arrest “is (a) entirely separate from any claim by the Liquidator from the asset stripping exercise, and (b) significantly exceeds it, although it relies at least in part on common facts, ie the [17/3/08 Resolution]”. In my view, the ex parte judge would have understood from the EoC and the Alder Submissions that P in the present action was not seeking to claim something it could not get through the liquidation of Parakou SG (ie assets of the primary arbitration debtor) for P made clear its present claim was a personal claim that rested on it being thwarted from recovery against “associated” assets, but P accepted it would have to account for any recovery from Parakou SG’s liquidation which they knew would not be full recovery.

XVIII.  ASSET THWARTING EXERCISE: CAUSATION AND LOSS

(a)  Ds’ contentions

289.As to the main battleground that turned on whether or not the Asset Thwarting Exercise was causative of loss up to the amount of the Cap Sum based on the value of the Award Sum, Mr Man SC submitted that for P to prove the requisite causal chain, it must demonstrate a good arguable case that had the PT Arrest stood, it would have obtained monetary recourse for the Awards when Parakou SG was already in liquidation. Mr Man SC submitted that even though P took advantage of the unique/exceptional arrest provisions under the AJR Act that allowed “associated” vessels to be arrested to pay the debts of sister companies (ie companies under common control as the debtor company) to claim it could have obtained recourse to secure/satisfy the Awards against the Parakou/ Pretty Fleet (owned by companies other than the arbitration debtor), which measure P claimed to have lost as a result of Ds having deployed false evidence before the SA Court to set aside the PT Arrest, P had to overcome the reality that (a) there were substantial cross-collaterised mortgages in respect of all Pretty Vessels that ranked prior to P’s unsecured Awards, and (b) P’s claim over any forced sale proceeds of any arrested “associated” vessel would be subject to the Mortgagee’s prior claims.

290.Mr Man SC submitted P would not have realised any value from mv “Pretty Time” and/or other Pretty Vessels because even if the PT Arrest were not set aside (but Ds’ false evidence (including the 17/3/08 Resolution) adduced at the setting aside application under the PT Arrest Proceedings actually had no causative link with the PT Arrest being set aside) and other “associated” vessels in D1’s common control could have been arrested, any sale proceeds would have been paid to the prior Mortgagee with nothing left for P, so P did not suffer any loss from the PT Arrest being set aside and/or from P’s inability to arrest other “associated” vessels in D1’s common control between April 2009 and March 2017.

291.Mr Man SC submitted that to overcome such matters P had to contend South African ports were such crucial/unavoidable destinations that inevitably one by one all vessels under the Parakou/Pretty Fleet in D1’s common control would have sailed to South Africa and be arrested there, and then either they would have been sold to recoup net proceeds until the Mortgagee and P were paid off or Ds would have been under commercial pressure from the Mortgagee to put up security for release of mv “Pretty Time” and/or other arrested vessels. Mr Man SC argued such contentions were inherently incredible and entirely contradicted by what had happened by the time of the 1^st Hearing (ie none of the Pretty Vessels under the PTI Fleet sailed to South Africa after the PS Arrest and no security was put up for the release of mv “Pretty Scene”, which was in line with what D1 told D3 he would have done for vessels under his control had the PT Arrest stood), so (a) P would not have been able to arrest other “associated” vessels as D1 would have prevented the Pretty Fleet and his other vessels from sailing to South Africa, (b) even if such vessels sailed to South Africa and P were able to make such arrests D1 would not have put up any security for their release, and (c) in any event P would not have been able to arrest other “associated” vessels on the basis of D1’s alleged de facto control of Parakou SG after such control passed to D3.

292.Mr Man SC further submitted P’s contentions as explained in paragraph 291 above was contrary to commercial common sense as D1 could have sold the entire Pretty Fleet without sailing them into South Africa as D3 did with 4 out of 8 Pretty Vessels of the PTI Fleet sold in 2016/2017 and with the remaining 4 such vessels sold in 2017/2018, and surplus available to the corresponding ship-owning companies for 6 voluntary sales but none for the forced sale of mv “Pretty Scene” in December 2017 and sale of mv “PTI Phoenix” (formerly mv “Pretty Time”) in December 2018. Mr Man SC submitted Ds’ contentions had particular force as it was P’s case that Ds would try their utmost to prevent P from having any recourse for the Awards.

(b)  P’s contentions

293.I summarise below P’s headline responses to Ds’ contentions as follows:

(c)  General observations

294.Mr Man SC submitted that any inability by P to make good any aspect of the aforesaid causal chain would spell the end of P’s claim, and it was Ds’ case that none of the aforesaid propositions was correct. On the other hand, Mr Yu SC submitted Ps did not have to prove anything as it had pleaded a reasonable cause of action based on either undisputed facts or documentary evidence, not least of which was the evidence that the 17 Vessels in D1’s control sailed to South Africa on the 59 Occasions between April 2009 and March 2017, which (Mr Yu SC argued) provided clear factual foundation for P’s claim that it would have arrested such vessels but for Ds’ wrongful conspiracy.

295.In my view, for the Striking Out Application, the burden fell on Ds to show it was plain and obvious that P’s case on causation/loss was amenable to be struck out, including whether D1 could have diverted vessels under his ownership/control from South African ports and/or whether D1 would not have to put up security for arrested “associated” vessels. But for the Continuation Application, it was for P to make out a good arguable case. Given the abundance of evidence and submissions by both parties, the real dispute was not so much on the burden of proof but on whether the threshold standards as explained in paragraphs 233-241 above were met.

296.Further, in my view, this was not a mere case of defective pleading as I have found there were sufficient pleas of causation/loss on the face of the ASoC to satisfy a reasonable cause of action that would have survived the Striking Out Application if it were a mere pleading issue (see paragraph 277 above). But that was not the end of the matter because Mr Man SC asked this court to consider the different affidavit evidence asserted by both parties on the basis that it would become instantly apparent upon such scrutiny that P’s propositions as to the causal chain were incorrect/implausible, and hence P not only failed to establish any good arguable case on causation/loss but its claim should also be rejected on the striking-out standard (see paragraphs 278-279 above). It was said that in such circumstances, looking at the plausibility of affidavit evidence would be a legitimate exercise.

297.Mr Man SC made an attractive argument, but this court is mindful of the threshold standards for the Striking Out / Continuation Applications, and in the debate over affidavit evidence the court cannot lose sight of the caution that pleadings/claim should only be struck out when it is plain and obvious, and the court has to keep in constant alert not to descend into a trial on affidavits in considering whether there was a triable issue or good arguable case.

298.In this regard, Mr Yu SC submitted that Ds’ assertions were unsubstantiated ex post facto excuses and little credence could be given at this stage to D3’s assertion as to what D1 told him when the Chua Judgment held neither of them were trustworthy witnesses, and that it was unnecessary and indeed inappropriate for this court to make any factual findings at this stage, so the fact there were arguments/evidence both ways would merely go to show P had a good arguable case let alone one that could not be said to be impossible to succeed.

(d) “Black hole” argument

299.Mr Man SC submitted that a central part of P’s case on causation/loss was the idea that the South Africa maritime jurisdiction was what he colourfully described in his submissions as a “big ball of gravity”, “a black hole” or “a Bermuda Triangle” that even had D1 tried (and Shaw maintained Ds did set their hearts against payment of the Awards) the vessels he owned/controlled via ship-owning companies (eg the Pretty Fleet) sooner or later would have sailed irresistibly to South Africa. Mr Man SC submitted P put forward such “bizarre thesis” of South Africa being a “black hole” in order to maintain the contention that had P discovered the truth about D1’s de facto control of the arbitration debtor Parakou SG (which Ds concealed), it would have lied in wait with writs of summons in rem and warrants of arrest to make “associated” arrests of vessels owned/controlled by D1 as they unavoidably sailed to South Africa, and then to secure/enforce the Awards out of a sufficient fund built up with equity from sales of the arrested vessels or with security put up to forestall such sales. But Mr Man SC submitted such “black hole” argument was implausible and in any event would not amount to any good arguable case on causation/loss because (a) South Africa was no “black hole” or it could have been entirely avoided, and (b) even if the “black hole” argument was made out, it still caused P no loss.

300.Despite the pleasing simplicity of Mr Man SC’s representation of P’s case as the so-called “black hole” argument, I do not find it useful as it appeared to be premised on an over-simplified principle that vessels either could or could not avoid South Africa, but in fact P’s case was more nuanced. As evident from the affidavit evidence discussed below, whether a particular vessel could or could not avoid South Africa depended on the factual matrix at the material time, and even for the same vessel it might be different on different charterparties and/or at different times. The fact some vessels under D3’s ownership/control could avoid South Africa in/after 2016 did not necessarily mean all 17 Vessels under D1’s common ownership/control would have been able to avoid South Africa on all 59 Occasions between April 2009 and March 2017. As seen from the analysis below, I agree with Mr Yu SC that at least at this summary stage there was good arguable basis to support the contention that the different control/ownership, timing, vessel type, fleet-size, charterparties, sailing routes, bunkering stops, commercial destinations, market condition and overall circumstances (collectively, “Circumstances”) had to be considered/assessed before coming to any definitive view, which matters would be for trial and not for striking out. In my view, these very considerations also lent weight to the view that P had put forward a good arguable case on causation/loss.

(e) “Associated” arrest under the AJR Act

301.Mr Man SC submitted at the outset that in scrutinising P’s case on causation/loss to see if it met the striking-out threshold or the good arguable case requirement, it must be remembered that the “associated” arrest procedure under the AJR Act was a very significant departure from ordinary subject/sister ship arrests based on the same corporate personality. That might well be so, and I am even prepared to accept for present purposes such “associated” arrest regime was not replicated in maritime jurisdictions in the vicinity of South Africa. But I cannot see how South Africa’s “associated” arrest regime being uniquely different would so undermine the vitality of P’s case on causation/loss based on Ds’ asset-thwarting as to persuade this court to strike out P’s claim. As Mr Yu SC submitted, damage was a question of fact, and since there was no suggestion that such head of loss was not recoverable damage for conspiracy at law, the fact that the damage might be felt in one place in the world (ie South Africa) mattered not as long as P did or arguably did suffer that damage at that place. Anyway, there was sound arguable basis that the “associated” arrest regime in South Africa was well-known and oft-used (see paragraph 57 above), and indeed Parakou SG adopted this method to effect the JF Arrest to obtain security for the HK Proceedings (see paragraph 68 above), which proceedings were ultimately struck out as being an abuse of process (see paragraph 69 above).

302.In any event, there was no factual dispute that P could/did resort to the South African “associated” arrest procedure (eg PT/PS Arrests) and/or that had such arrests been effected and stood P could have asked for sale of the arrested “associated” vessels in D1’s common ownership/ control. In my view, whether or not there would have been any realisable proceeds from such sales or security put up to forestall such sales against which P could have secured/enforced the Awards was a separate question from the uniqueness of the “associated” arrest provisions in the AJR Act.

(f)  mv “Pretty Time”

303.To counter what he described as the “black hole” argument, Mr Man SC first turned to mv “Pretty Time” which was the 1^st vessel P arrested pursuant to South Africa’s “associated” arrest procedure. The PT Arrest in 2009 was eventually discharged by Levinsohn AJP who accepted the in limine argument that P’s founding papers incorrectly stated that Parakou SG’s ACRA records showed D1/D2 to be its shareholders at the material time when the 18/2/09 ACRA Report exhibited to van der Merwe’s founding affidavit revealed Parakou SG’s then shareholders were in fact D3/Yang with D3 as the majority shareholder (see paragraphs 58 and 156 above). Levinsohn AJP discharged the PT Arrest on this ground alone (see paragraphs 59-60 and 156 above), but went on to consider, in case he was wrong, whether there was any need to have an oral hearing as to whether or not mv “Pretty Time” was an “associated” vessel (see paragraph 61 above). On such basis, Mr Man SC submitted it was incredible for P to suggest the PT Arrest would have been maintained had Ds not presented allegedly false evidence before Levinsohn AJP.

304.But Mr Yu SC submitted there was a good arguable case on the causative link between Ds’ giving false evidence and the setting aside of the PT Arrest. In my view, Levinsohn AJP’s reasons (on the assumption that his foregoing conclusion in relation to the in limine argument was incorrect) for rejecting P’s application for an oral hearing to consider whether or not mv “Pretty Time” was an “associated” vessel were of interest. A major basis for the learned judge’s decision to decline an oral hearing was his conclusion from Pretty Time Shipping SA’s answering affidavits, which affidavits the learned judge read but which P did not have the chance to traverse in an oral hearing (see Levinsohn Judgment §24), that the probabilities did not favour P as such evidence pointed to “one direction only and that is that [D1] divested himself of control of [Parakou SG]” (see paragraph 61(b) above), and even though “there were a number of surrounding features and circumstances which create the suspicion that [D1] still exercised control”, he was “not persuaded that these features are of such a nature that they disturb the direct evidence that is adduced by the respondents” (see Levinsohn Judgment §25 and paragraph 61(b) above).

305.The evidence in the answering affidavits of Ds, Yang, Yeung and Hartwell (which were not tested at any oral hearing but which Levinsohn AJP found to be quite compelling as they all pointed in one direction) were essentially the 17/3/08 Resolution and the confirmation as to the legitimacy of transfer of shares/control of Parakou SG from D1/D2 to D3/Yang in 2008. But it subsequently transpired from findings in the Chua Judgment that (a) D1 remained a shadow director and key decision-maker in the affairs of Parakou SG after his resignation as director in 2008, (b) the 17/3/08 Resolution was a non-contemporaneous fabrication, and (c) there was no restructuring plan prior to Parakou SG’s repudiation of the Charterparty to support the transfer of shares/control. On such basis, there was plainly a good arguable case that Ds tried to mislead and were successful in misleading the SA Court into believing the probabilities favoured Ds’ propositions that D1 was not in control of Parakou SG, that the “associated” arrest provisions did not bite mv “Pretty Time”, and that the evidence was so compellingly in one direction that the “surrounding features and circumstances which create the suspicion that [D1] still exercised control” should be discounted.

306.But the true question on causation in the present action was what the SA Court would have done had such false evidence not been presented for the application to set aside the PT Arrest, and in particular whether the SA Court would have reached the same conclusion or whether it would have allowed an oral hearing and/or maintained the PT Arrest. Mr Wragge SC’s opinion in the Wragge 1^st Memo (see paragraph 100 above) suggested that looking at the matter realistically Levinsohn AJP might have directed an oral hearing in which case the relevant findings (eg the falsity of the 17/3/08 Resolution, the absence of any restructuring plan, D1’s continued role in Parakou SG as de facto director and key decision-maker) might have been revealed under cross-examination which in turn might have led to the PT Arrest being upheld, and Mr Wragge SC’s opinion in the Wragge 2^nd Memo reiterated such views after posing and discussing 4 possible scenarios.[137] The MacWilliam 1^st Memo did not directly engage on such matters, but questioned how P would have been able to place the “true facts” assembled by the Liquidator and presented to the SG Court that formed the basis of the Chua Judgment (some 8 years after the PT Arrest) before the SA Court, and further opined Levinsohn AJP would have vacated the PT Arrest even with oral hearing because mv “Pretty Time” was released due to P’s failure to establish a prima facie case for the PT Arrest (ie the in limine argument) rather than on the basis of any act on the part of Ds.

307.I pause to note Mr Man SC’s reminder that the role of a foreign law expert is to inform this court of the relevant contents of the foreign law and the foreign court’s approach to their construction rather than to give the ultimate answer on an issue, and if the foreign law’s concept is not so different from Hong Kong law, the HK Court is entitled to apply its knowledge of the common law and of the rules of statutory construction.[138] In Shenzhen Development Bank Co Ltd v New Century International (Holdings) Ltd,[139] DHCJ Lam (as he then was) explained that even in the context of an Order 14 application, the court is not bound to accept that the views of an expert are credible, and the court is entitled to examine the views of the expert against the primary source of foreign law bearing in mind that at that stage the defendants only had to show that the evidence of their expert is believable, such that “if [the court feels] that there are any aspects in the expert evidence which could only be resolved by cross-examination or further investigation, it would not be right for [the court] to grant summary judgment on the basis of the expert evidence of one side”. In my view, these observations apply mutatis mutandis to the Striking Out / Continuation Applications albeit on different threshold tests.

308.Having carefully considered the Wragge 1^st/2^nd Memos and the MacWilliam 1^st Memo, I find the question as to what would have happened had the false evidence not been presented to the SA Court must be triable. In my view, this issue was not one that demanded direct application of foreign law, and instead was one that required consideration of all the relevant circumstances to come to a conclusion, which must therefore be eminently suitable for trial rather than summary determination. In my view, if the false evidence were not adduced before the SA Court (ie there was no direct evidence that pointed in one direction in favour of Pretty Time Shipping SA’s contentions), at the very least there would be a good arguable case that in 3 out of the 4 scenarios put forward in the Wragge 2^nd Memo (see footnote 137 above) the surrounding features/circumstances that created suspicion D1 still exercised control as put forward by P in the answering affidavits for the application to set aside the PT Arrest under the PT Arrest Proceedings might have persuaded the SA Court to direct an oral hearing, which in turn might have elicited evidence under cross- examination that would have confirmed D1’s de facto control of Parakou SG. In this respect, I bear in mind that most of the Challenged Transactions happened in the compressed period from November 2008 to January 2009 (see paragraph 51 above) which facts might have been elicited by sufficient cross-examination and might have raised query over the reliability of the alleged transfer of control of Parakou SG. As the Shaw 3^rd Aff reminded, cross-examination in the SG Proceedings that led to the findings in the Chua Judgment was not confined to instances of D1’s directions and decision-making after April 2009, and D1/D3 were actually cross-examined on inconsistences in their affirmations/affidavits in the PT Arrest Proceedings (see paragraph 158(c) above). Further, Chua J’s findings as to the influence exercised by P after he resigned from his directorship at and transferred his shares of Parakou SG were not limited to matters after April 2009 (see footnote 69 above). In my view, there was a good arguable case that P might have elicited evidence that D1 remained a key decision-maker (see Chua Judgment §35(a)-(b)) and still in de facto control of Parakou SG had Ds not told lies to the SA Court.

309.Further, at this interlocutory stage, I am not persuaded the in limine argument (which Levinsohn AJP accepted) that the PT Arrest should not have been ordered in the first place due to error in P’s founding papers that misconstrued the 27/11/08 ACRA Return and 18/2/09 ACRA Report could be taken too far on the question of what the SA Court would have done had it not been presented with the false evidence. The learned judge’s reasons for acceding to such in limine argument also made interesting reading. It was said that since P did not put forward any alternative case in the founding papers “to suggest that [D1] notwithstanding that he did not control [Parakou SG] by virtue of his shareholding nevertheless was still the puppet master pulling the strings and controlling the company as well”, it had made its bed by relying on the aforesaid ACRA record/report “and is forced to lie on it”. It therefore begged the question whether the SA Court would have explored the “alterative case” referred to above to see whether D1 was in de facto if not de jure control of Parakou SG had (a) Ds not put forward the false evidence in the answering affirmations for setting aside the PT Arrest in the PT Arrest Proceedings, and (b) P put forward an alternative case that rested on “a number of surrounding features and circumstances which create the suspicion that [D1]” was “still the puppet master pulling the strings and controlling the company as well” (which might have led to an oral hearing and possibly different outcome).

310.But even if P would not have raised such “alternative case” in the PT Arrest Proceedings themselves, there was still a good arguable (let alone triable) case that this would have been explored if P took steps to re-arrest mv “Pretty Time” and Pretty Time Shipping SA applied again to set aside such re-arrest. After all, as noted in the Wragge 2^nd Memo §16, mv “Pretty Time” was still at a South African port when the Levinsohn Judgment was handed down on 30 April 2009 and did not sail until 9 June 2009, so even if Levinsohn AJP set aside the PT Arrest on the in limine argument, P could have made another application for “associated” arrest of mv “Pretty Time” on an amplified founding affidavit with correction of the technical error (as Mr Man SC recognised in paragraph 312(b) below) and inclusion of the “alternative case” based on materials set out in P’s answering affidavits for the setting aside application under the PT Arrest Proceedings. Indeed, the SAFC Judgment §§93-94 held as follows:

“[93]  Where there is no arrest, whether set aside by the court or no security in place, there is no arrest. The second arrest is permissible where the court sets aside the arrest on the basis of failure to make out a prima facie case. Great River Shipping Inc v Sunnface Marine Limited states that where the initial arrest has been set aside on the basis that the claimant failed to make a prima facie case in respect of the causes of action on which it relied for that arrest, the second arrest, was permissible. Where there has been an arrest and no provision of security is made it is permissible to re-arrest save in circumstances under s 5(2)(d).

[94]  The legal authorities are in agreement in that the prohibition operates only where the claimant is in possession of valid security, given in respect of the maritime claim and given for the purposes of securing the release of the vessel from arrest or to prevent the arrest.” (my emphasis)

311.In the circumstances, I agree with Mr Yu SC that had the false evidence not been adduced before the SA Court, it was reasonably arguable that (a) the available evidence before the SA Court (when viewed in light of the suspicion cast by P’s answering affidavits by van der Merwe and Mok) would not have been regarded as “uncontroverted evidence” of D1 having divested himself of control over Parakou SG and would not necessarily have been regarded as rational/probable explanation for D1’s actions such that the SA Court would necessarily have declined an oral hearing, and (b) had there been an oral hearing it would have been open for P to take the points available in 2009 that were elicited in cross-examination in the SG Proceedings which the Chua Judgment relied on in concluding D1 remained as shadow director and key decision-maker after end of December 2008 and in discrediting the alleged restructuring as a reason for the transfer of Parakou SG’s shares in late December 2008 whereupon there might have been reasonably arguable basis to consider that D1 remained in control of Parakou SG despite formal transfer of shares to D3/Yang. In my view, these were fit matters for trial, and certainly not so plain and obvious that the causative link was broken to justify the Striking Out Application. I go further to say P had shown a good arguable case as regards such causative link.

312.At the 1^st Hearing, Mr Man SC submitted the intellectual fervour generated in the legal memoranda put forward by the parties as to the correct reading of Levinsohn Judgment and the likelihood of the PT Arrest being maintained had Ds’ false evidence[140] not been adduced before the SA Court was not of much assistance, and the crux of the matter was still the vitality or otherwise of the so-called “black hole” argument. He premised such proposition on the following bases:

313.I agree that South African legal opinion on the issues referred to in the above paragraph was not particularly useful because ultimately the matter in dispute was not so much as the precise ratio decidendi of the Levinsohn Judgment but whether there was sufficiently arguable basis to say the deponents of the replying affidavits (eg Ds, Yang, Yeung and Hartwell) acted concertedly to raise common contentions that falsely pointed in one direction to conceal D1’s de facto control of Parakou SG which thereby deterred P from arresting the 17 Vessels that called at South Africa on the 59 Occasions and to cause P to only apply for warrants of arrest against inter alia mv “Pretty Scene” in 2015 on a different basis (subject to discussion in Part XVIII(g)-(h) below). Mr Yu SC suggested that but for the conspiracy perpetrated by Ds and the asset-thwarting lies they placed before the SA Court which led to the Levinsohn Judgment and the aforesaid intended effect on P, there was no commercial/common sense reason for P not to pray in aid the “associated” arrest regime to secure/ enforce the outstanding Awards. In my view, these would be matters for trial, and there was a good arguable case on the causative link that P contended.

(g)  Sailing to South Africa

314.The D3 3^rd Aff claimed the only way P stood any chance of recovering funds from the Pretty Fleet was that if it had been able to arrest and sell all Pretty Vessels (see paragraph 163 above). Mr Man SC submitted this highlighted the importance of the so-called “black hole” argument to P’s case, ie South Africa was such a critical destination for the Parakou/Pretty Fleet that it would have been impracticable for D1’s “associated” vessels (including the Pretty Vessels) to avoid South Africa, and one by one such “associated” vessels would have sailed to South Africa for P to arrest/sell them to build up a fund to satisfy the Awards in full. As alluded to above, it was Mr Man SC’s contention that the so-called “black hole” argument was incredible/implausible. Mr Man SC submitted it was incumbent upon P to put forward a rational case for D1 to have sailed his “associated” vessels to South Africa, and Mr Man SC asked rhetorically why D1 would do so if he knew they would be arrested under the “associated” arrest regime. Mr Man SC argued such logic was reflected in the scenario after the PS Arrest in 2016 when D3 did not sail the vessels he controlled to South Africa, so P’s case on causation/loss did not stand up to rational analysis and could not be supported.

315.First, D3 said D1 had discussed with and told him that “other vessels in the [Pretty Fleet] would not have sailed to South Africa after that [ie if P had succeeded in maintaining the PT Arrest based on D1’s de facto control of Parakou SG]” (see D3 3^rd Aff §§41, 106 and see paragraph 161 above). But at this interlocutory stage, I am unable to say it was so plain and obvious that D3’s self-serving and hearsay assertion of what D1 told him would show P’s case on causation/loss was so incredible/implausible as to justify striking out P’s claim, especially in light of (a) the analysis below in relation to the different affidavit evidence adduced raised by P and Ds against the threshold standards for the Striking Out and Continuation Applications, and (b) the concerns expressed in the Chua Judgment as to the credibility of D1 and D3 as witnesses in the SG Proceedings. The fact D1 passed away and was unavailable to personally give evidence and be cross-examined made it even more important for the factual circumstances to be assessed/weighed at trial before coming to a definitive view. Moreover, as a matter of fact, the 17 Vessels under D1’s ownership/control did call at South African ports on the 59 Occasions between April 2009 and March 2017. Mr Man SC submitted such visits to South Africa did not reflect the pertinent scenario under consideration (ie if the PT Arrest were upheld) and hence did not detract from Ds’ contentions, but the discussion below showed that at the very least this supported a good arguable case let alone a triable one in respect of P’s claim on causation/loss.

316.Secondly, P effected the PT Arrest in 2009 based on belief as to D1’s common control of (a) Pretty Time Shipping SA as the ship-owner of mv “Pretty Time” via Parakou IL and (b) Parakou SG as the arbitration debtor at the time when the maritime cause of action arose (based on the founding affidavit of van der Merwe – see paragraph 57 above), but P applied for writs of summons and warrants of arrest in 2015 against “associated” Pretty Vessels (including mv “Pretty Scene”) based on belief as to D3’s common control of (i) the PTI Fleet (at least the 8 Pretty Vessels that were transferred to D3’s control in 2014) via Parakou TI and (ii) Parakou SG as the arbitration debtor at the time when the maritime cause of action arose (based on the replying affidavits by Ds, Yang, Yeung and Hartwell presented to the SA Court in the PT Arrest Proceedings in 2009 that D3 was the majority shareholder) (see paragraph 58 above).

317.Mr Man SC reminded that when P issued the writs of summons and warrants of arrest on 16 April 2015 for mv “Pretty Scene” and 7 other Pretty Vessels of the PTI Fleet, P applied for confidentiality protection on the strength of Reddy’s affirmation that referred to concern over vessels not calling at South Africa should Parakou TI have had notice of P’s application for such writs/warrants (see paragraph 74 above), and Mr Man SC suggested the SA Court seemed to agree by granting the confidentiality orders pursuant to P’s application. Shaw and D3 confirmed such writs/warrants (and presumably the corresponding confidentiality protection) were renewed until April 2018 but no further (see paragraphs 74 and 229 above).

318.Mr Man SC submitted that what he described as the “black hole” argument did not sit well with P’s application for the aforesaid confidentiality protection made on the basis that otherwise “steps would be taken …… to ensure that the vessels in question did not call at South African ports” (see paragraph 74 above), and he complained that even though the D3 3^rd Aff shouted such contradiction, Shaw/Reddy did not explain why the aforesaid sworn evidence in support of P’s application for confidentiality protection should not be a complete answer to the so-called “black hole” argument.

319.Mr Man SC further argued that the fact there was no further extension for such writs/warrants after the 2-year extension from April 2016 to April 2018[141] also undermined the so-called “black hole” argument. Although all 8 Pretty Vessels in the PTI Fleet were sold in 2016-2018, under The Monica S principle P relied on (see paragraph 219 above), such disposals (apart from mortgagee sale of mv “Pretty Scene” that was subject to the PS Arrest at that time although such arrest was eventually set aside) would not have mattered, and P would have been able to execute such writs/warrants whether before or after such disposals if such vessels called at South Africa during the 3-year validity period (2015-2018) or subsequent renewal (if any) of such writs/warrants. Mr Man SC submitted that in such circumstances P should have requested further extension of the validity of the writs/warrants after April 2018, and the fact there was no such extension (either because P did not apply or its application failed) was likely due to (a) the fact that the PTI Fleet had not entered South African waters after the PS Arrest and (b) the prediction that the PTI Fleet would not do so in the foreseeable future, so P and/or the SA Court saw no justification for a 2^nd extension of the writs/warrants. Mr Man SC pointed out that in reality none of the 7 Pretty Vessels were arrested and P recovered nothing, so the same course of events would also have occurred had the PT Arrest been upheld in 2009, and P would not have suffered any loss. In light of the above, Mr Man SC said P should have updated/informed the court about the non-renewal of such writs/ warrants that had lapsed since 2018, and should not have objected to Ds’ application to place such relevant information before the court via the Draft Geiser 4^th Aff.

320.P had 3 answers to the above proposition. P’s first point as alluded to in paragraph 300 above was that Ds’ perception of P’s case, ie the so-called “black hole” argument, appeared to rest on a golden principle that the Pretty Vessels in the PTI Fleet either could or could not have avoided South Africa, but in fact P’s contentions were more nuanced, ie whether a particular vessel could or could not have avoided South Africa depended on consideration of the Circumstances (see paragraph 300 above).

321.In my view, the ownership and fleet-size in 2009 were arguably quite different from that in 2015/2016. The Shaw 3^rd Aff §77(6) said that in 2008 Ds were the beneficial owners of 16 vessels, which expanded to 35 in 2009 and stood at 26 in 2017, which reflected a 10-ship increase in fleet-size (see footnote 73 above). Further, D1 had ownership/control of (a) all 12 Pretty Vessels (tankers and bulkers) via Parakou IL / Pretty Entities until 8 Pretty Vessels (all tankers) were moved to Parakou TI in July 2014, and (b) other vessels included in the 17 Vessels held via Parakou HK and Parakou IL. On the other hand, D3 had control over the 8 Pretty Vessels (all tankers) of the PTI Fleet after July 2014.

322.Mr Man SC submitted there was no material distinction between the factual scenarios in 2009 and 2016 because the avalanche of the Baltic Dry Index in 2008 (which led to Parakou SG’s repudiatory breach of the Charterparty) showed the shipping market was not good at that time (se paragraph 48 above), and he reminded it was P’s case that the shipping market suffered severe downturn in 2016 (see paragraph 183 above), so there was no rational explanation why as from 2009 onwards South Africa became a “black hole” from which a vessel could not have sailed away. However, I note the Baltic Dry Index for bulkers did not necessarily reflect the market condition for tankers. There was evidence from the Shaw 3^rd Aff §74(4) that at the time of the PT Arrest in March 2009 the monthly price index of the Baltic Dirty Tanker Index was moving upwards and “[subsequently] in June 2009 the market peaked at around 66 points above the yearly average” (which fact D3 also relied - see paragraph 207 above). I also note that Ds had the largest fleet in 2009 as compared with the fleet in pre- and post-2009 (see the above paragraph). In my view, the factual issue as to the market condition at different times cannot be resolved on affidavit evidence.

323.In my view, the question of whether D1 as ultimate owner and person in control of the Pretty Fleet and other “associated” vessels held via Parakou HK and Parakou IL in 2009-2014 (bearing in mind that 9 out of the 17 Vessels that visited South Africa in 2009-2014 on the 48 Occasions were tankers and the other 8 were bulkers – see paragraphs 192-194 above) would have acted in the same way as D3 as ultimate owner and person in control of the 8 Pretty Vessels of the PTI Fleet (all tankers) in/after 2016 was plainly one of fact/inference to be ascertained at trial from all the Circumstances (as discussed in paragraph 300 above) in respect of these 2 such different universes. Having considered the matters in paragraphs 321-322 above and the matter of the nature/terms of the charterparties discussed below, I find P had put forward credible basis to say such differences would likely inform the exercise of ascertaining what D1 would have done had the PT Arrest stood (see also discussion in paragraph 324 below).

324.Following from the above, Mr Yu SC raised his second point that even if some vessels under D3’s ownership/control could have avoided South Africa in/after 2016, it did not follow all 17 Vessels under D1’s ownership/control would necessarily have been able to avoid South Africa on all 59 Occasions between April 2009 to March 2017 (or at least on all 48 Occasions up to 2014). In my view, the facts/inferences gleaned from the different universes in respect of these 2 different periods of time had impact on what D3 did in 2015/2016 and would have impact on what D1 would have done in 2009-2014, and this again showed the matter was for trial rather than for summary determination. I bear in mind that by 2016 D3 via Parakou TI had caused 4 out of 8 Pretty Vessels (all tankers) then of the PTI Fleet to be sold, and of the remaining 4 Pretty Vessels in the PTI Fleet mv “Pretty World” was committed to be sold and mv “Pretty Scene” was under PS Arrest, so the scenario in 2016 with 2 vessels remaining in the PTI Fleet in a market downturn with business pressure to sell/downsize in order to maximise sale value before prices fell much further (see paragraph 183 above) would arguably be quite different from the 12-ship Pretty Fleet (both bulkers and tankers) with an encouraging Baltic Dirty Tanker Index that was moving upwards in 2009 and peaking in June that year.

325.Mr Man SC reminded that Reddy’s affirmation in support of the application for confidentiality protection covered 8 and not 2 Pretty Vessels. But it must be remembered the confidentiality protection was secured before the PS Arrest, and as explained above, at this interlocutory stage, it was at least questionable whether P’s concern as to how D3 would have reacted over the 8 Pretty Vessels in the PTI Fleet in a severe market downturn or in a market approaching severe downturn (see paragraphs 183 and 322 above) if D3 had notice of the PS Arrest or of such writs/warrants would directly/exactly show how D1 would have reacted in an earlier period with a different-sized fleet in a more encouraging tanker market as reflected by the Baltic Dirty Tanker Index as explained above, and it was the latter consideration that would be important.

326.The third point was an example cited by Shaw as illustration. Shaw noted mv “PTI Volans” called at South Africa on 20 June 2009 and stayed for 5 days, and he claimed that had the PT Arrest been upheld, Ds would not have been able to divert mv “PTI Volans” from South Africa in time (see paragraph 168 above). On the other hand, D3 said the Levinsohn Judgment was handed down on 30 April 2009, so if the PT Arrest were upheld at that time, there would have been more than enough time (almost 2 months) for D1 to divert mv “PTI Volans” away from South Africa (see paragraph 168 above). Such contradictory affidavit evidence plainly showed that whether a vessel could be diverted from South African ports must be a matter of fact/inference which could not be resolved on affidavit evidence. In the case of mv “PTI Volans”, whether or not her visit to South Africa in June 2009 could have been avoided would turn on the Circumstances pertaining to such vessel, including inter alia the nature/terms of her charterparty, her sailing route, her bunkering stops and her commercial destinations at the material time, but these matters were for trial and not summary determination, especially when Ds did not disclose the relevant charterparty.

327.Thirdly, D3 by the D3 6^th Aff disagreed with the Shaw 3^rd Aff §47(2) that South Africa was a common calling port, particularly for bulkers trading in coal and iron ore, and more generally for other vessels for bunkering or refuelling purpose due to its geographical location and proximity to, say, the FE/SA Route that required vessels to take on bunkers, and the port facilities available in South Africa (see paragraph 154(b) above), and instead D3 contended South Africa was only a bunkering port for refuelling and re-positioning and not an indispensable stop in the trading routes for the Pretty Vessels (see paragraph 172 above).

328.Mr Yu SC submitted this was one of the reasons which brought about the 1^st Aff Summons, ie if Ds had confined their protest against what Mr Man SC described as the “black hole” argument by relying on D1’s hearsay statement to D3 (ie had the PT Arrest stood D1 would not have allowed the Pretty Vessels to sail to South Africa), P would have been content to meet such argument by relying on submissions as to D1’s/D3’s credibility and on the actual reality that the 17 Vessels under D1’s ownership/control did sail to South Africa on the 59 Occasions between April 2009 and March 2017 (or on the 48 Occasions in the period up to 2014). But D3 went further to raise factual matters in the D3 6^th Aff to dispute the so-called “black hole” argument that Mr Man SC submitted was P’s case, so P had to factually respond by the Shaw 4^th Aff. However, Mr Man SC argued that the D3 3^rd Aff §§41, 106 already made the suggestion that since South Africa was primarily used as a bunkering (refuelling) port it would have been easy for D1 to have diverted vessels to other jurisdictions for such purpose, so there was no reason why Shaw could not have dealt with the matters in the Shaw 4^th Aff as set out in paragraphs 192-194 above in the Shaw 3^rd Aff when he already made the point he did in the Shaw 3^rd Aff §47(4)-(5) (see paragraph 165(a)-(b) above).

329.In my view, it was clear from the D3 3^rd Aff (especially in §106) that D3 asserted South Africa was primarily a bunkering port to explain why D1 had told him D1 would have caused the other Pretty Vessels not to sail to South Africa if the PT Arrest were upheld. But in the D3 6^th Aff, D3 put this forward as his own contention as to why as a matter of fact a vessel could have avoided South Africa as a bunkering port and went on to give factual explanations as to inter alia sailing routes and status of nearby bunkering ports in order to debunk the so-called “black hole” argument. In my view, fairness required that P be allowed to make factual response to such factual assertions.

330.The Shaw 4^th Aff (a) disagreed that South Africa was a mere bunkering port and/or the 17 Vessels that called at South Africa were for bunkering purpose (since 32 out of the 59 Occasions were for more than 24 hours which was more consistent with cargo operations rather than bunkering), (b) asserted that in any event there was dearth of bunkering ports in the vicinity area, and (c) claimed that even if the 59 Occasions were for bunkering purposes (as on Ds’ case), it would have supported the view that it was not easy to divert vessels from South Africa (see paragraphs 192-194 above).

331.In my view, even without the matters raised by the Shaw 4^th Aff set out in paragraphs 192-194 and 330 above, the question whether the 17 Vessels that called at South Africa between 2009 and 2014/2017 did so for bunkering purpose or for cargo operations must be a factual matter for trial (with need to consider inter alia the nature of the vessels, the nature/terms of the charterparties, the number/duration of the visits, the relevant sailing routes, the need or otherwise for re-positioning and the availability of other suitable bunkering ports) and was not a matter amenable for determination on summary basis. The matters raised in the Shaw 4^th Aff lent further weight to such conclusion.

332.Fourthly, Mr Yu SC went on to submit that the tanker-bulker distinction was another reason why P needed leave to adduce the Shaw 4^th Aff to make factual response to D3’s assertions in the D3 6^th Aff. The D3 6^th Aff claimed the 17 Vessels that called at South Africa between 2009 and 2017 were tankers (trading in liquid petroleum) and not bulkers (trading in coal and iron ore) (see paragraph 172 above). The Shaw 4^th Aff said this was misleading, and explained that only 9 out of the 17 Vessels were tankers but the rest were bulkers as seen in Annex B of the ASoC and confirmed by the relevant Lloyd’s List Intelligence reports (see paragraph 192 above). Mr Man SC submitted the information was already in the ASoC, but if P wished to put forward affidavit evidence in this regard, it could have done so in the Shaw 3^rd Aff when P already knew Ds disputed whether the Pretty Fleet would have called at South Africa had the PT Arrest been maintained (eg the D3 3^rd Aff §106 already said the Pretty Vessels could have called into any other port for bunkering purpose).

333.In my view, quite irrespective of the Shaw 4^th Aff, the dispute as to whether the Pretty Vessels were tankers or bulkers could not be resolved on affidavit, but the nature of the vessels must be a material matter that would go into the matrix of factors for determining whether or not it would have been possible for a particular vessel to have avoided South Africa at a particular time/period. This is for trial and not for summary determination. Turning to the evidence in the Shaw 4^th Aff, P indicated it would have been content to rely on the information in Annex B of the ASoC but for the positive assertion on affirmation in the D3 6^th Aff §29 that the Pretty Vessels that called at South Africa were tankers and not bulkers. In such circumstances, P could not be faulted in seeking leave to make factual response by affidavit. What was said in the Shaw 4^th Aff in this regard lent weight to the view that the dispute could not be resolved on summary basis.

334.Fifthly, D3 fairly acknowledged that avoiding South Africa altogether would have affected the trading value of the Pretty Fleet, but he claimed it would still be commercially manageable (see paragraph 165(b) above). The D3 6^th Aff asserted that (a) depending on the economics of the particular voyage it might have been possible for the Pretty Vessels to have avoided the FE/SA Route altogether by sailing via the Panama/Suez Canal (see paragraph 172 above), and (b) 4 Pretty Vessels were “recently” chartered on the basis that South Africa was excluded (see paragraph 165(b) above), so in those circumstances D3 disagreed the charterers would have expected a substantial discount to market rates or that it might not have been possible to fix the vessels at all.

335.Mr Yu SC submitted this again was another reason why leave was required to adduce the Shaw 4^th Aff in response to the factual assertions raised by D3. But Mr Man SC argued that the point was already made in the Shaw 3^rd Aff §47(5) that the charterers would have demanded substantial discounts if the Pretty Fleet were unable to call at South Africa (see paragraph 165(b) above), so Shaw could have raised but did not raise in the Shaw 3^rd Aff the point made in the Shaw 4^th Aff about potential breaches of pre-existing charterparties (see paragraph 195(b)-(d) above). Mr Man SC suggested the real purpose of the Shaw 4^th Aff appeared to be for injecting credibility by citing various named sources (see paragraph 195 above) following the challenge raised in the D3 6^th Aff against Shaw’s unnamed source in the Shaw 3^rd Aff (see paragraph 165(b) above).

336.In my view, even though it would have been theoretically possible for P to have addressed these matters at an earlier stage, there was no obvious necessity for P to do so until the D3 6^th Aff brought the pre-existing charterparties into question by referring to the matters outlined in paragraph 334(a)-(b) above. I agree D3’s factual allegations in this respect reasonably called for factual response, and the Shaw 4^th Aff §6(2)-(3) explained that (a) the Pretty Vessels would have been obliged to call at South African ports if so required by the charterers unless such ports were excluded in the charterparties, which would have been unusual for bulkers on long-term charters, (b) it would have been breach of the charterparties if the chartered vessels were directed to sail to South Africa on chaterers’ instructions but Ds were to direct them away, and (c) it appeared from various shipping industry documents that 9 of the 17 Vessels were likely to have been on long-term (ie 6/10-years) time charters made before October 2008 as at the time of the PT Arrest in April 2009 (see paragraph 195 above).

337.In respect of paragraph 334(b) above, D3’s bare assertion that 4 Pretty Vessels of the PTI Fleet were on “recent” charterparties that excluded South Africa was unsupported by disclosure of the relevant charterparties that must have been in D3’s possession/power. But even if such assertion were correct, it was still quite arguable (for reasons discussed above) that such 4 Pretty Vessels (all tankers) of the PTI Fleet (under D3’s control) on such “recent” charterparties (but it was unclear whether they were long-term time charters or short-term spot charters[142]) were quite different from the charterparties of the Pretty Vessels of the Pretty Fleet under D1’s control (a significant proportion of which were bulkers and/or likely to be on long-term time charters entered into in a different time/market – see paragraph 323 and footnote 78 above), and it did not necessarily follow that the 17 Vessels that actually sailed to South Africa on the 59 Occasions (or at least on the 48 Occasions) would have been able to have avoided South Africa altogether. So even if D3 could have managed the commercial impact of excluding South Africa in the “recent” charterparties of 4 Pretty Vessels in the PTI Fleet, it would not necessarily mean D1 would have found the commercial impact of such exclusion for a different fleet (ie 8 of the 17 Vessels were bulkers, 9 of the 17 Vessels were likely to be on long-term time charters, and 32 of the 59 Occasions were likely for cargo operations) at different time (particularly before July 2014 in respect of the 8 Pretty Vessels) manageable. In my view, much would depend on the Circumstances at the material time as well as the commercial realities (see also discussion in paragraph 340 below).

338.In respect of paragraph 334(a) above, I note the parties were at odds over whether charterers would have expected substantial discounts to market rates of hire and/or whether it would have been possible to fix the vessels if the charterers’ ability to sail chartered vessels to South Africa was crimped. As alluded to above, the parties were also at odds over whether excluding South African ports from charterparties newly entered into would have significant adverse impact on the commercial value of the vessels in the chartering market (see Shaw 3^rd Aff §47(5) (see paragraph 165(b) above), D3 6^th Aff §§34-40 (see paragraph 165(b) above) and Shaw 4^th Aff §5(3) (see paragraph 192 above)).

339.In my view, resolution of such disputes would involve factual enquiry at trial rather than review of affidavit evidence upon summary determination, especially when P did put forward credible evidential basis to show a reasonable proportion of the 17 Vessels were bulkers and/or on long-term charters, which suggested it would have been the charterers rather than the ship-owners who would determine the economics of any particular voyage and who would dictate the sailing routes and calling ports. Actually, the D3 6^th Aff stated as follows:

“The true position is that, while a decision by [D1] to stop sending the ‘PRETTY’ vessels to South Africa would have had an impact on the trading value of those vessels, the extent of that impact would have varied between charterers and depended on whether the particular charterer traded into South Africa ports. For example, in the case of charters trading petroleum products (ie the usual characters of the ‘PRETTY’ vessels), the impact would have been limited because South Africa is not a major exporter or importer of petroleum products.” (my emphasis)

Plainly, D3 accepted whether South African ports could have been avoided “depended on whether the particular charterers traded into South Africa ports” and also on the economics of the particular voyage (see paragraph 334 above).

340.But Mr Man SC argued there was no inherently probable reason (if the PT Arrest in 2009 had stood) for a charterer of any Pretty Vessel with unfettered control of the destinations of the vessel to insist on sailing into South Africa for such vessel to be arrested and to remain arrested. In my view, if one were to consider inherent probability (as Mr Man SC asked me to), the charterer’s choice of calling ports (including South African ports) might also be constrained by its own commercial realities, including the shipping market, customers’ orders, commercial commitments, sailing routes and cargo destinations. In this respect, I note Ds had not disclosed the charterparties of the 17 Vessels that visited South Africa on the 48 Occasions between 2009 and 2014 (eg to show whether South Africa was excluded under the charterparties). In my view, it would be inappropriate to summarily conclude without exploration of these matters that the commercial impact of excluding South Africa would have been manageable, especially when the risks of hire rate discount and inability to fix vessels upon such exclusion probably would have caused greater commercial impact in 2009-2014 in view of the heavier mortgage loan of about US$250,000,000 and the need for funding stream for operation of the full Pretty Fleet (see paragraph 62 above) than in/after late July 2014 in view of the refinanced mortgage loan of about US$136,000,000 for the 8 Pretty Vessels in the PTI Fleet (see paragraph 162(d)(iii) above) which progressively dwindled with gradual sale of such vessels and partial releases of the mortgages.

341.Mr Yu SC also referred me to the observations of the Federal Court of Canada in Banco do Brasil SA v The owner and all others interested in the ship Alexandros G Tsavliris and the ship Alexandros G Tsavliris that a vessel could not be diverted easily having regard to the practicalities and the “enormous” adverse impact on the owner’s reputation.[143] In my view, I am quite unable to say P’s contentions were incredible/implausible at this interlocutory stage. On the contrary, I find its contentions raised a good arguable case.

342.Sixthly, Mr Man SC submitted that in considering the parties’ counterfactuals for ascertaining what would have happened if the alleged conspiracy had not been committed and the PT Arrest had stood, one had to take a common sense of the “relevant facts”. Mr Man SC emphasised that in ascertaining the “relevant facts”, it would have been far better to consider what actually happened, ie “how people would conduct themselves” in the period after the 1^st PS Arrest was effected in June 2016, than to engage in speculation as to what might have happened, and what actually happened from the time when mv “Pretty Scene” was first arrested in June 2016 until it was sold by the Mortgagee in December 2017 (see paragraph 205 above) was that (a) none of the Pretty Vessels of the PTI Fleet sailed to South Africa and (b) some such vessels were chartering on the express basis that South Africa would be excluded (see paragraph 165(b) above).

343.Mr Man SC complained it was only after the D3 3^rd Aff raised such point that P revised and further revised the evidence in relation to the 59 Occasions that the 17 Vessels being D1’s “associated” vessels sailed to South Africa during the period from 2009 to 2017 (see the Shaw 3^rd Aff §47(4) at paragraphs 162(b) and 165(a) above and the ASOC §67(3) at paragraph 107(c) above).[144]Mr Man SC argued that had the PT Arrest stood, D1 would have been aware of the risk of “associated” arrest in South Africa and would not have let his “associated” vessels sail there, so such visits by the 17 Vessels to South Africa would not have supported the so-called “black hole” argument because they were made on the basis that South Africa posed no further risk for D1 after the PT Arrest was set aside, hence such scenario could not have been the “relevant facts” and could not have reflected how D1 would have behaved if there had been a successful arrest. Rather, Mr Man SC suggested the “relevant facts” would have been the scenario after the 1^st PS Arrest in 2016 which showed South Africa was not an inevitable “black hole” and D1 (like D3) would not have been pressured to sail the “associated” vessels to South Africa or to put up security for the “associated” vessels (including mv “Pretty Time” if the PT Arrest had not been set aside).[145]

344.Mr Yu SC submitted that as a matter of fact D1’s “associated” vessels including some Pretty Vessels under the Pretty Fleet did call at South African ports between April 2009 and March 2017 (or at least up to July 2014), and even though the D3 3^rd Aff §§109-110 suggested there were some errors in the schedules put forward in the Shaw 3^rd Aff and SoC (later ASoC) (see paragraphs 107(c), 162(b) and 165(a) above), it remained reasonably arguable (as I have found in Part XVII above) that P had put forward sufficient pleadings and evidential basis to show that after release of the PT Arrest the 17 Vessels that sailed to South Africa on the 59 Occasions in 2009-2017 (see Annex B of the ASoC) or on the 48 Occasions in 2009-2014 (see Shaw 4^th Aff §5(6)) escaped “associated” arrest due to Ds’ conspiracy (including Ds’ asset-thwarting such as placing false evidence about D1’s ownership/control of Parakou SG before the SA Court) which resulted in the Levinsohn Judgment and observations therein that deterred P from making such arrests.

345.As seen above, whether a particular vessel of the 17 Vessels on any of the 48 or 59 Occasions would have sailed to or could have been diverted from South Africa involved finding of fact/inference to be made in light of the Circumstances at the material time, so D3’s stance in the post-2016 scenario might well be a factor in the basket of “relevant facts” to be considered/weighed, but it would not have been the only or necessarily the definitive consideration to the exclusion of all other facts/matters that together would form the contextual matrix in the post-2009 period if the PT Arrest had been maintained. Other pertinent Circumstances that reflected the commercial realities would include the nature and terms of the charterparties to which the 17 Vessels were subject. In my view, these matters cried out for discovery, investigation and trial. Ultimately, whether a particular vessel could have avoided South African ports was factual issue (rather than any other cut and dried golden principle that South Africa either was or was not a “black hole”) that depended on the Circumstances, including the commercial economics/realities of whether she was there to pick up a cargo as opposed to taking on fuel and/or whether she was on long-term charter with the charterer (rather than vessel owner) in control of the vessel and deciding where to go. Moreover, Ds’ assertions that (a) the Pretty Vessels were tankers which did not have to call at South Africa, (b) the Pretty Vessels sailed to South Africa for repositioning and not as part of their trading routes, and (c) South Africa was just a bunkering port for the Pretty Vessels which could easily have been diverted to other ports for such purpose were hotly contested by P (see paragraphs 165(a), 172 and 192-194 above).

346.In my view, the above analysis showed P’s case ought not be struck out as a mere “black hole” theory. I go further to say P did put forward a good arguable case for its claim of being cheated of its right to security/enforcement when P was deterred from arresting D1’s “associated” 17 Vessels that sailed to South Africa on the 59 Occasions (or 48 Occasions) as a result of precedent formed by Levinsohn AJP’s views that the false evidence adduced at the PT Arrest Proceedings pointed in one direction and provided rational/probable explanation of actions taken by Ds (see paragraph 61(b) above) at/about the end of 2008 to purportedly divert D1’s ownership/control of Parakou SG when in fact D1 remained in de facto control.

(h)  Realisable value upon sale

347.As alluded to above, Mr Man SC argued that even if the PT Arrest were maintained and not set aside, P suffered no loss because it would not have recouped any monies to secure/enforce the Awards. It is useful at this juncture to remind that as a matter of law, damages for conspiracy are at large, so for the Striking Out Application this court only had to consider whether the pleaded heads of pecuniary loss gave sufficient notice for Ds to appreciate what evidence P would in due course adduce to prove its loss bearing in mind that quantified loss did not directly equate to the pleaded heads of loss. It was for Ds to advance argument to undermine P’s case, but even if Ds were able to identify arguments/evidence in their favour, the very existence of reasonable arguments/evidence going both ways that called for need to weigh/assess the same would suggest that triable issue or even good arguable case that would defeat the Striking Out Application and support the Continuation Application.

348.It was said that if the PT Arrest were maintained and mv “Pretty Time” were ordered to be sold, no part of the proceeds would have gone to P because such vessel was then subject to a fleet-wide cross-collateralised mortgage of US$246,000,000 and further mortgages of up to the lower of US$30,800,000 and 10% of the aggregate market value of the Pretty Fleet on the relevant delivery date (see paragraph 62 above),[146] and P’s claim ranked after the Mortgagee’s claim to the sale proceeds of mv “Pretty Time” (or indeed the sale proceeds of any Pretty Vessel that could have been arrested) (see paragraphs 160 and 162(d) above).

349.Ds argued that since the net market value of mv “Pretty Time” in 2009 was about US$35,000,000-US$40,000,000 (according to P – see paragraph 107(b) above) or US$30,000,000-US$35,000,000 (according to Ds – according to paragraph 162(d)(iv) above), which was significantly less than the outstanding mortgage loans, P would not have received any security for its claims, which contention the Shaw 1^st Aff appeared to have accepted (see paragraph 107(b) above). So Mr Man SC submitted that the position in relation to mv “Pretty Time” was not in dispute in view of Shaw’s evidence and the ASoC §67(2).

350.Mr Man SC reminded there was affidavit evidence that the other Pretty Vessels were also subject to the cross-collateralised mortgages in the same terms and for the same amounts as for mv “Pretty Time” (see paragraph 62 above), so even if South Africa were indeed a “black hole” and the entire Pretty Fleet were arrested, P would still have had no joy from the sale of such arrested vessels because the Mortgagee would have applied the entire sale proceeds to discharge the entire fleet-wide mortgages.

351.But P complained that Ds failed to produce the relevant mortgages (even though they were exclusively in their possession/power). Mr Yu SC submitted the non-production of such mortgages and other related documents meant there was no objective evidence to show the amount of outstanding mortgage loan(s) at any given time, the vessels that secured which loan(s) and/or the other terms of the mortgages (eg whether the Mortgagee could/would attribute part of the outstanding mortgage loan(s) to a particular vessel and allow partial release of the mortgage(s) upon settlement of the attributed portion of the mortgage loan(s) with any surplus sale proceeds paid to the relevant ship-owner), which were critical information that went to the question of whether there would have been some remaining equity upon sale of each “associated” vessel under D1’s common control that might have been arrested in South Africa had the PT Arrest stood.

352.As Mr Yu SC and Ms Sit SC further submitted, notwithstanding the cross- collateralisation of the mortgage(s) over the Pretty Fleet, it was an undisputed fact that when 6 Pretty Vessels in the PTI Fleet were sold in 2016/2017, the sale proceeds went to repay the amount of the mortgage loan(s) attributed to and/or secured by those vessels (but not the entire cross-collateralised mortgage loans) with (a) partial release of such mortgages upon the sale of each such vessel and (b) surplus that varied from about US$5,200,000, US$2,500,000, US$3,900,000 and US$3,100,000 for the ship-owning company (see paragraph 205 above) even though 2016 was a particularly dismal/challenging year for the shipping industry in the midst of a severe downturn with falling prices for 2^nd hand bulkers and pressure from banks (see paragraph 183 above). Mr Yu SC submitted that the availability of such surplus proceeds was further supported by the D3 6^th Aff which underlined D1’s good relationship with the Mortgagee who would not have threatened to foreclose on the fleet-wide mortgages even if a vessel was arrested/sold (see paragraph 167(b) above). In my view, the partial releases of the cross-collateralised mortgages upon sale of the 6 Pretty Vessels of the PTI Fleet gave good arguable basis for saying the Mortgagee would not have insisted on repayment of the entire mortgage loans (as opposed to the amount attributable to and secured over the particular vessel) and there would have been some equity left for P upon sale of arrested “associated” vessels under D1’s common ownership/control for satisfying the Awards (even if no security was offered to release such vessels).

353.Further, as Mr Yu SC noted, the visits to South Africa by the 17 Vessels from 2009 to 2014 were fairly spread out, so there was reasonably arguable basis to say that had the PT Arrest been maintained and had P secured “associated” arrests of such vessels calling at South Africa, those vessels (which Ds themselves valued at US$30,000,000-US$35,000,00 each in 2009 – see paragraph 162(d)(iv) above) if sold around that time (ie when the Baltic Dirty Tanker Index was encouraging) would have fetched sale prices higher than those for the 6 Pretty Vessels in the PTI Fleet sold in 2016/2017 (ranging from US$20,400,000 to US$14,880,000) and consequently would have realised more surplus. This highlighted the significance of the difference in timing pre-September 2017 (particularly in the earlier period in 2009-2014) and post-September 2017, ie before and after the sale of 6 Pretty Vessels. At this interlocutory stage, I can see the force of Mr Yu SC’s submissions that for Ds to argue there was no surplus left after sale of the 2 Pretty Vessels in 2017/2018[147] was not comparing like with like, so it did not necessarily follow that P would not have been able to obtain some security out of the sale proceeds (see paragraphs 183 and 205-206 above) from which it could have built up a fund against which the Awards could have been satisfied.

354.But Mr Man SC countered by saying D3’s evidence as to voluntary sales of the 6 Pretty Vessels under D3’s ownership via Parakou TI would have been different from forced sales of such Pretty Vessels pursuant to successful “associated” arrests in South Africa based on D1’s common control, and P failed to recognise the fundamental distinction between voluntary sales and forced sales (see paragraph 206 above). D3 claimed that in the former case he had good relationship with the Mortgagee who (a) never pressed for security to be put up for release the PS Arrest, (b) would not have insisted on its full right to apply the entire sale proceeds to discharge the total mortgage loans, and (c) might have redistributed part of the proceeds (ie leaving some equity) to the the relevant Pretty Entities upon such voluntary sales (see paragraphs 167(b) and 205 above), but in the latter case it would have been in Ds’ interest to let the Mortgagee have all the proceeds as opposed to leaving something to satisfy the Awards (especially when P’s central case was that Ds were trying their utmost to thwart enforcement of such Awards), and there would not have been any commercial reason for the Mortgagee to leave any part of the sale proceeds to be taken up by P as arbitration creditor. On such basis, it was said that voluntary sales of the 6 Pretty Vessels in the PTI Fleet in 2016/2017 were of a different universe and would not detract from Ds’ contention that if the PT Arrest were maintained, then no part of the sale proceeds of mv “Pretty Time” and other arrested “associated” vessels would go to P.

355.Mr Man SC submitted this was borne out by what actually happened in the case of mv “Pretty Scene” as explained in the Lopes Judgment handed down after the 1^st Hearing, which he said contradicted P’s arguments but was consistent with Ds’ counterfactuals. After the PS Arrest, the Mortgagee gave notice of default, demanded immediate payment of the mortgage loan, and brought an action in rem against mv “Pretty Scene” which led to eventual auction sale of such vessel for about US$12,000,000 (and US$288,282.21 for bunkers on board) that was inadequate to discharge the entire outstanding refinanced mortgage loan of US$24,073,453.78, which superior ranking effectively wiped out P’s claim to the proceeds (see paragraph 199 above). P mounted an unsuccessful root-and-branch challenge to the Mortgagee’s claim to such proceeds by casting serious doubts as to its validity/legitimacy, but in the end P failed to recover any part of the proceeds under the Lopes Judgment save for some interlocutory costs unrelated to the Awards (see paragraphs 200-201 above). Mr Man SC submitted there was clear and material distinction between forced sale and voluntary sale, which explained why there was a surplus from the 6 voluntary sales in 2016/2017, but none for the forced sale of mv “Pretty Scene” by the Mortgagee (see paragraphs 205-206 above). He went on to submit this showed that what most likely would have happened if the PT Arrest stood and P made further arrests of “associated” vessels under D1’s common control would be that (a) the Mortgagee would enjoy priority over P’s claim over sale proceeds from forced sale of any arrested “associated” vessel (see paragraph 201 above), and (b) Ds would not have put up any security for release of the PT Arrest and/or other “associated” arrests (see paragraphs 202-203 above). It was said P would have had no joy from the “associated” arrest regime, and consequently P would have suffered no loss such that its claim would be unsustainable, and the 1^st/2^nd Orders as varied up the amount of the Cap Sum could not be supported (see paragraph 202 above).

356.Bearing in mind the interlocutory nature of Striking Out / Continuation Applications, I agree with Ms Sit SC that it was necessary to have a clear perspective of what issues the Lopes Judgment[148] was said to be relevant to, and the role/significance of such issues to the present applications. The Lopes Judgment was said to be relevant to 2 matters that Ds relied upon to undermine P’s claim: (a) whether P could have realised any value from vessels arrested under the “associated” arrest regime or, to put in another way, whether the sale proceeds would have been wholly absorbed by repayment of mortgage loan(s) that ranked ahead of P’s claim, and (b) whether D1 would have put up security for release of the “associated” vessels that would have been subsequently arrested. These 2 issues concerned how the Mortgagee and D1 (who passed away on 6 May 2017) would have reacted to a hypothetical state of affairs, ie if the PT Arrest stood and P arrested more of D1’s “associated” vessels between 2009 and 2017 (see ASoC §§66-67).

357.But as seen above, the Lopes Judgment actually concerned the different universe in/after September 2017 with different fleet-size (2 Pretty Vessels left), different ownership/control (ie by D3 and not D1), and different market condition (ie by 2016 ship-owners were selling vessels with falling prices in a market downturn but in 2009-2014 Ds were growing the Parakou fleet with encouraging Baltic Dirty Tanker Index). More importantly, the Lopes Judgment was handed down after P had made clear to this court and Ds what its arguments on causation/loss were. In short, Ds relied on ex post facto facts to inform what would have happened at an earlier time if the PT Arrest were not set aside. Thus, the Lopes Judgment or even D3’s evidence as to what was or was not done in/after 2016/2017 had to be viewed through the prism of that different universe when the “relevant facts” concerned D1 with a full Pretty Fleet in an encouraging tanker market with need for funding stream from fleet-wide collateralised mortgages, and before Ds came to know the basis of P’s claim for loss as a result of their alleged conspiracy.

358.2 matters were of note. First, the Lopes Judgment §3 described the factual situation before the PS Arrest as follows:

“Throughout the duration of the loan agreement up until the [PT Arrest], the one-ship companies were astute to ensure that as the group experienced financial difficulties, the ships in the one-ship companies were sold. They did not default on their due payments to [the Mortgagee]. That is the reason that [the Mortgagee] relied upon the failure of Pretty Scene Shipping to obtain the release of the ship as an event of default, entitling [the Mortgagee] to call up the loan and apply for the sale of the ship. The proceeds of all the sales were paid directly into the account of [the Mortgagee] and, after balancing the debts, various amounts were paid back to the one-ship companies.”

This was also borne out by D3’s own evidence in the Draft D3 7^th Aff that this was what happened (and the Lopes Judgment said this was so even the Parakou Group experienced financial difficulties) except for the last 2 Pretty Vessels.

359.I am firmly of the view that the issue in paragraph 356(a)-(b) above involved a hotchpot of counterfactuals from both parties which would have to be assessed at trial and which could not be definitively resolved on interlocutory/summary basis, especially where there was no direct evidence from the Mortaggee and/or D1 but only inference to be drawn from D3’s evidence, which necessarily had to be done against the contextual matrix to be canvassed at trial. Even the voluntary/forced sale distinction which Mr Man SC heavily relied on could only be a factor to be weighed/assessed amongst other contextual factors as discussed above before the court could come to any firm view on how the Mortgagee/D1 would have reacted in the aforesaid scenario. Whilst I agree Ds’ intended reliance on the Lopes Judgment to suggest how the Mortgagee/D1 would have reacted to any arrests of “associated” vessels between April 2009 and March 2017 (the relevant period P relied upon in the ASoC) might be a relevant consideration, its significance and weight when viewed against all other considerations were clearly factual issues that had to be tried, and this would not detract from P’s good arguable case. In any event, it was not so plain and obvious that there was no sustainable case on causation/loss. Rather, there was a good arguable case that had the PT Arrest stood and had there been “associated” arrests of mv “Pretty Time” and/or other D1’s “associated” vessels (eg the 17 Vessels), there would have been realisable equity from sale of such vessels for P to secure/enforce the Awards.

360.Secondly, Ds referred to ex post facto facts arising after P (a) commenced the present action against Ds on 9 March 2017, (b) obtained the 1^st/2^nd Orders against them on the same day, and (c) filed Mr Yu SC’s / Ms Sit’s written submissions for the 1^st Hearing that detailed analyses/ arguments on issues of causation/loss. In my view, there was a respectable argument, as Ms Sit SC submitted, that the state of affairs engendered by Ds after they acquired knowledge of the above matters might not have been the “relevant facts” for assessing how D1 would have reacted before this dispute erupted and before P’s arguments came to light, and for assessing whether the Mortgagee would have accelerated the mortgage loan(s). There was no evidence from the Mortgagee, and no correspondence with the Mortgagee during the relevant period was disclosed.

361.Ms Sit SC in her written submissions set out the following chronology as elicited from the Lopes Judgment:

362.The above facts showed that (a) during the relevant period between 2009 and March 2017 whenever a Pretty Vessel was sold the Mortgagee would only apply the sale proceeds towards repayment of the sum actually advanced to that specific one-ship company and returning the surplus to such company notwithstanding the mortgages were cross- collateralised for the total refinanced mortgage loan of US$136,000,000, (b) even after mv “Pretty Scene” was twice arrested and multiple notices of default were issued in 2016 the Mortgagee took no action to accelerate repayment of the entire outstanding mortgage loan(s) despite lapse of the stipulated time frame to cure the breach set out in its own letters, (c) then suddenly on 12 September 2017 (ie the 1^st day of the 1^st Hearing after Ds had sight of Mr Yu SC’s / Ms Sit’s written submissions lodged on 7 September 2017) the Mortgagee accelerated the entire outstanding mortgage loan(s) on the basis of failure to remedy the event of default (ie release of mv “Pretty Scene” from the PS Arrest) within 7 days of 14 November 2016, so the Mortgagee was purporting to take action 8½ months outside its own stipulated deadline. In my view, there was at least credible basis for Ms Sit SC to suggest that the distinction was not because the sale of the 2 Pretty Vessels in the PTI Fleet in 2017/2018 were forced sales, but because it was the result of (a) D3’s/Mortgagee’s reaction upon awareness of P’s contentions in the present action (which were arguably irrelevant) or (b) the dynamics of selling a dwindled fleet with different mortgage loan(s) in a different market in 2016 as compared with the scenario in 2009-2014. In my view, this court should not resolve these issues at this stage. Rather they showed there was no conclusive factor/ consideration, so all these allegations would have to go to trial.

(i) Putting up security

363.P next argued that in the event of successful arrests, D1 / ship- owners would have to put up security for the release of mv “Pretty Time” and/or other arrested “associated” vessels before any order for sale was made in order to avoid having the Mortgagee foreclose on the fleet-wide mortgages. But Mr Man SC submitted it was incredible to say Ds would have put up security of over US$60,000,000 for release of mv “Pretty Time”, which was worth only US$35,000,000-US$40,000,000 (according to P) or US$30,000,000-US$35,000,000 (according to Ds) when doing so would put P in a far better position than if mv “Pretty Time” were ordered to be sold. Mr Man SC said again the best proof was what actually happened, ie the Mortgagee did not put pressure on D3 or Pretty Scene Shipping SA (who did not put up any security at all) to resolve the PS Arrest (see the Lopes Judgment and paragraphs 199 and 201-203 above). On such basis, Mr Man SC submitted it was not inevitable that D1 would have to put up security in the total amount of the Cap Sum.

364.But P contended the ship-owners would not have wanted to put the entire fleet at risk of the Mortgagee accelerating payment of the entire mortgage loan(s) upon event of default for the sake of 1 creditor, and would have put up some security for the release of the arrested vssel. At this interlocutory stage, such commercial sentiment, including possible adverse effect on the owner’s reputation otherwise, could not be ignored. In my view, this was reasonably arguable, especially when the Lopes Judgment §3 made clear that even when “the group experienced financial difficulties” and “the ships in the one-ship companies were sold”, the one-ship Pretty Entities were astute to ensure “[they] did not default on their due payments to [the Mortgagee]” (see paragraph 358 above). Further, the commercial pressure felt in 2009-2014 was arguably quite different from that experienced in the period at/after the PS Arrest in 2016 for a different-sized fleet with different mix of vessels with different charterparties in different market condition. As Mr Yu SC and Ms Sit SC pointed out and I have found, there was at least reasonable argument that D1 would have sailed “associated” vessels into South Africa, and hence there was also reasonable argument that P’s ability to arrest and sell such “associated” vessels to answer its Awards might constitute commercial pressure on D1 and the ship-owning companies to put up security in the relevant period when it was operating a full fleet and had need for funding stream. Whilst the factual circumstances existing in 2015/2016 in relation to mv “Pretty Scene” of the PTI Fleet might well be part of the matrix of facts to be considered, it was at least arguable that it might not be quite correct to simply extrapolate and apply such scenario to the 17 Vessels that visited South Africa on the 59 Occasions under different ownership/control under different Circumstances. I also note with interest that in 2009 GSI put up security in excess of US$44,000,000 for release of the JF Arrest even for a spurious claim under the HK Proceedings, which conduct could only be explained by commercial pressure (see paragraph 68 above).

365.In my view, given that there was dispute between the parties with each party putting forward their own reasons (see Shaw 3^rd Aff §77(3)-(5) and D3 6^th Aff §§41-47), there was plainly a triable/arguable issue, and it would not be right at this stage (a) to simply accept D3’s protestation that D1 would not have succumbed to pressure without examining the contemporaneous “relevant facts”, or (b) to accept the fact that D3 had not put up security for all the time when mv “Pretty Scene” was under the PS Arrest correspondingly meant D1 would not have done so even if P were able to arrest “associated” vessels that would have traded into South Africa. Anyway, as explained above, if security were not put up then the arrested vessels would have been sold, and there would be a credible argument that P would have received surplus from the sales to build up a fund to satisfy the Awards as explained above.

(j)  Sale of the fleet

366.The Shaw 4^th Aff §8(2) suggested the “associated” arrest regime no longer applied for vessels under D1’s common control after D1 passed away because the personal representative of D1’s estate was regarded as different form D1 (see paragraph 197(b) above). By the 1^st Aff Summons, P sought leave to adduce the Shaw 4^th Aff, which was considered de bene esse at the 1^st Hearing in view of Ds’ opposition to its admissibility. At the 1^st Hearing, to answer such point raised on de bene esse basis, Mr Man SC submitted it would follow from such legal proposition that had the PT Arrest stood, D1 would not have to keep the Pretty Fleet, and could have sold the Pretty Vessels before P made any further “associated” arrest to ensure P would have recovered nothing (which was the essence of P’s alleged conspiracy).

367.Mr Man SC submitted this was actually what happened after the PS Arrest. According to D3 5^th Aff §12, D3 caused 4 Pretty Vessels of the PTI Fleet to be sold in 2016/2017 (see paragraph 183 above) whereupon such vessels would be free of the South African “associated” arrest provisions which do not bind third parties. Mr Man SC submitted that likewise D1 could have sold the Pretty Fleet rather than to have sailed such “associated” vessels to South Africa or to have put up security for their release (or at least to have put up security in excess of US$60,000,000). He reminded that even a vessel subject to charterparty could be sold, eg mv “PTI Sextans” was sold whilst on long-term charterparty (see footnote 78 above).

368.At the 2^nd Hearing, Mr Man SC built on his earlier submissions by saying the best evidence was what happened as recorded in the Lopes Judgment, ie 7 Pretty Vessels of D3’s PTI Fleet had been sold, part of the proceeds for 6 such vessels were redistributed to their respective ship-owners, and P did not pocket anything from such proceeds. Mr Man SC submitted this clearly demonstrated that what actually happened after the 1^st Hearing was entirely consistent with Ds’ counterfactuals and contradicted P’s arguments, and had the PT Arrest stood D1 would most likely have sold the Pretty Fleet and P would have had no recourse to any part of those proceeds, so P would have had no joy from the “associated” arrest regime and would have suffered no loss. Then merely for completeness and to put the Lopes Judgment in its proper context, the Draft D3 7^th Aff (for which Ds sought leave to adduce) provided a table which summarised the sales of all 8 Pretty Vessels in the PTI Fleet (including the forced sale of mv “Pretty Scene”) with dates of sale, total sale proceeds, and “surplus” proceeds received post-completion by the ship-owners from the Mortgagee (see paragraph 205 above). There was no surprise because the 1^st 4 sales had been disclosed in the D3 5^th Aff and the 6^th/7^th sales had been disclosed in the Lopes Judgment. Mr Man SC submitted that leave ought to be granted for Ds to adduce the Draft D3 7^th Aff given the relevance of such evidence to the issues in dispute.

369.On the other hand, Ms Sit SC submitted it was Ds’ case at the 1^st Hearing that would define the issues in disputes before this court and that would provide the benchmark for determining whether new evidence to be adduced was directly relevant to such issue. Ms Sit SC complained this aspect of the Draft D3 7^th Aff sought to introduce evidence to support a new argument not raised at the 1^st Hearing, ie had the PT Arrest stood D1 (not D3 who made such assertion) would have sold all the Pretty Fleet (of which 8 Pretty Vessels had been transferred from Parakou IL to Parakou TI in July 2014).

370.Ms Sit SC submitted that prior to the 2^nd Aff Summons and 2^nd Hearing, it was Ds’ contention that P would not have received anything by invoking the South African “associated” arrest regime: (a) between 2009 (PT Arrest) and 2014 (Parakou IL transferred 8 Pretty Vessels to Parakou TI) D1 would have procured the “associated” Pretty Vessels to avoid South Africa, (b) between 2009 and 2014 D1 would not have put up security for release of vessels arrested under the “associated” arrest regime, (c) in 2016 (PS Arrest) D3 himself did not put up security, (d) after 2016 D3 himself did not allow his vessels sail to South African ports, and (e) any sale by D3 / Parakou TI of their vessels since 2016 were due to legitimate commercial reasons in the shipping market (see D3 5^th Aff §§11-13 and paragraph 183 above) and not any cynical attempt to defeat P’s claim. For these propositions D3 relied on hearsay evidence as to what D1 told him but there was no mention that D1 ever said to him D1 would have sold the Pretty Fleet.

371.Ms Sit SC argued it was only after P disclosed the following arguments that Ds raised this new contention that was not raised at the 1^st Hearing or in the affirmation evidence Ds previously filed: (a) many Pretty Vessels were on long-term time charters in 2008-2009 which gave D1 less/little say over the choice of calling ports, and (b) even D3 agreed the ship-owners received some equity from sale of the 4 Pretty Vessels of the PTI Fleet in 2016/2017 despite cross-collateralisation of the fleet-wide mortgages. Ms Sit SC submitted this was Ds’ impermissible attempt to expand the scope of arguments for the P’s/Ds’ Summonses and to have a second bite of the cherry long after the 1^st Hearing. Ms Sit SC therefore urged this court not to grant leave for Ds to adduce such evidence and submissions.[149]

372.But Mr Man SC submitted such argument was nothing new. He reminded that at the 1^st Hearing he had already made oral submissions to the effect that what the Shaw 4^th Aff said about the “associated” arrest regime was not applicable to vessels transferred to third parties which:

“immediately put paid to the notion that [D1] would, on their thesis, be forced to keep the entire vessel.  Because if the associate arrest provisions, as they say, doesn’t bind the third party, the easiest thing for [D1] to do, if indeed even South Africa was a black hole, was to sell the ships to somebody else.  And to realise the market value of the ships, pay off the mortgagees and get whatever equity is left. Because the associate arrest provision simply wouldn’t bind a third party, as Mr Shaw now tells us”.

But Ms Sit SC argued this was merely counsel’s argument not grounded on fact/evidence, and what the 2^nd Aff Summons sought to do was to impermissibly sneak in the Draft D3 7^th Aff to provide factual basis for counsel’s argument.

373.I disagree with Ms Sit SC’s submisions. It must be remembered that at the 1^st Hearing Ds had to face P’s attempt to introduce the Shaw 4^th Aff shortly before such hearing. Although P’s attempt was justified, it left Ds without opportunity to adduce countervailing affirmation evidence. Mr Man SC’s submissions on possible sale of the Pretty Fleet by D1 was Ds’ de bene esse answer to the Shaw 4^th Aff which raised the de bene esse point about the “associated” arrest provisions not affecting vessels that fell into D1’s estate. Mr Man SC’s contention in this respect was premised not on factual evidence (eg it was not based on what D1 had told D3 before he passed away) but on what D1 could plausibly have done (ie sell the Pretty Fleet) based on what was stated in the Shaw 4^th Aff if the PT Arrest were upheld, and such submissions by Mr Man SC at the 1^st Hearing did not draw any criticism by Mr Yu SC. I do not believe Ds could be faulted for taking this de bene esse point at the 1^st Hearing. By the time of the 2^nd Hearing, there would not have been any surprise in Mr Man SC revisiting this point, not least because it was the subject of his oral submissions at the 1^st Hearing, but also because the sale of the 7 Pretty Vessels of the PTI Fleet in 2016/2017 was already recorded in the Lopes Judgment (the admissibility of which P did not object). Indeed, had Mr Man SC not raised such point at the 1^st Hearing, the undisputed fact set out in the Lopes Judgment would itself have allowed Ds to raise this point at the 2^nd Hearing. So this point would have been before this court even without the Draft D3 7^th Aff §§31-34 which, as Mr Man SC said, only gave details of sale of the 8 Pretty Vessels of the PTI Fleet for completeness. I cannot say this aspect of the Draft D3 7^th Aff was irrelevant to the issues canvassed at the 1^st Hearing, and I cannot see how P would have been surprised or unfairly prejudiced given the way the 2^nd Aff Summons unfolded, ie P was granted liberty to put in de bene esse affirmation response, and P did seize such liberty to lodge the Draft Shaw 5^th Aff that raised The Monica S point, ie the right of arrest in rem against a vessel would survive a change of ownership if the writ in rem was issued before the change of ownership. I disagree P was not given opportunity to deal with the evidence in the Draft D3 7^th Aff.

374.As explained above, since I consider Ds should be allowed to run the argument about selling the Pretty Fleet, P sought leave to file the Draft Shaw 5^th Aff to introduce The Monica S principle in answer. The Draft Shaw 5^th Aff §§7-16 (a) explained The Monica S was widely regarded as applicable under South African law between April 2009 and March 2017, which remained the case at least in the SA Court (where mv “Pretty Time”was arrested) up to the time of the Draft Shaw 5^th Aff  (see paragraphs 220-222 above), and (b) explained why, if D1 had sold vessels he owned/controlled to third parties, in the face of writs in rem that remained valid notwithstanding sale to such third parties, such third parties would very likely have put up security to secure the release of the vessels (see paragraph 223 above). But the latest development in respect of The Monica S point was the SASCA Judgment, and the Wragge 3^rd Memo and the MacWilliam 4^th/5^th Memos dealt with The Monica S point and/or the SASCA Judgment. I see no reason why the fullness of such legal views should not be placed before this court.

375.Mr Man SC submitted that P’s reliance on The Monica S principle in the Draft Shaw 5^th Aff was wrong as confirmed by the recent SASCA Judgment which held that since 1983 The Monica S principle had no application in South Africa, so the issue of a writ in rem gave no protection to a plaintiff against an intervening and bona fide change of ownership in the vessel (see MacWilliam 5^th Memo §§2-3). Mr Man SC submitted that the SASCA Judgment represented South African law on this issue at all material times because (a) the SASCA only explained what the statute always meant with no change since 1983, and (b) leave to appeal against the SASCA Judgment to the Constitutional Court was refused (albeit on the ground that the new constitutional point came too late rather than on the basis of no arguable point of law) (see MacWilliam 5^th Memo §§4-8). On such basis, Mr Man SC asked this court to disregard the Wragge 3^rd Memo that suggested the SASCA Judgment should be reversed. It was said when there are foreign judicial decisions directly on point, there is no room for legal experts to give evidence to determine the likely outcome of the foreign court applying the foreign law (subject to certain qualifications eg when there are conflicting decisions), and the court should apply such decisions.[150]

376.The issue of causation/loss as pleaded in the ASoC §§66-67, ie whether P would have sustained any loss as a result of its inability to arrest/secure between 2009 and 2014/2017 due to Ds’ unlawful acts as pleaded in the ASoC §63(2)-(4), required the court to inquire into factual events known to the parties (including the state of South African law) between 2009 and 2014/2017 so as to address the factual question of whether P would have obtained monetary recourse for the Awards if the PT Arrest were maintained. Both Mr Wragge SC and Mr MacWilliam SC by reference to legal texts and case law were of the view that there were 2 schools of thought at the time with The Monica S principle supported by some legal texts and adopted by some judges, even though there were other judges who concluded otherwise. Indeed, Mr MacWilliam SC considered the law at the time was “the subject of some controversy” (see MacWilliam 3^rd Memo §§20-21). Although Mr Man SC submitted the SASCA Judgment was declaratory of the law as it always had been, the crux of the issue was not the legal interpretation of the relevant statute but what D1 would have done in the factual matrix in 2009 to 2014/2017 had the PT Arrest stood. When viewed against the historical reality of there being different schools of legal thought on whether The Monica S point was applicable and given the uncertainty in academic writing at the time, I find there was clearly good arguable basis to say that this point as understood at the time was not settled, and such conflict should be taken into account amongst other factors in considering how D1 would have reacted had the PT Arrest been upheld. In my view, the SASCA Judgment being recent pronouncement of The Monica S principle as it always had been would not have altered the reality of the judicial/academic uncertainty and debate before such definitive ruling. The court’s role at trial would be to assess against the factual matrix as known to the parties at that time (including such controversial state of South African law) whether causation could have been established, and such recent pronouncement of South African law of itself would not define that assessment. In any event, such assessment could/should not be made on interlocutory basis as mere reference to the outcome of the SASCA Judgment would not take the matter further.

377.In my view, P’s contentions did not meet the striking-out standard, and I find P’s good arguable case remained unshaken.

(k) Actual vs hypothetical

378.Mr Man SC submitted that the measure of damages in tort is the difference between P’s actual position now (say, the portion (if any) of the Award Sum which it can recover now) and the hypothetical position it would have been in if the wrong had not been committed (say, the Award Sum which it would have recovered if false evidence was not deployed),[151] so unless P could show a good arguable case that its actual position in terms of recovery via the South African “associated” arrests of mv “Pretty Scene” and D1’s/D3’s other “associated” vessels was nil, it would not have any sustainable case on loss/damage or at the very least it would not have been able to sustain a good arguable case on loss/damage to support the 1^st/2^nd Orders as varied up to the amount of the Cap Sum. Mr Man SC complained that although there was some analysis in Shaw’s affidavit evidence and the Alder Submissions about the hypothetical situation, there was scant analysis as to P’s actual position. Mr Man SC submitted it had not been shown whether on the striking-out threshold or Mareva standard that P had a claim for loss/damage up to the level of the Award Sum / Cap Sum.

379.Mr Man SC submitted the hypothetical position was that had the conspiracy not been committed P would have been able to accumulate a fund to secure/satisfy the Awards up to the amount of the Award Sum because D1 would have sailed his vessels into South Africa, such vessels would have been arrested, and then they would have been sold for accumulation of equity into a fund or commercial pressure would have caused Ds to put up security to release the arrests for satisfying the Awards. Mr Man SC submitted that (as alternative to Ds’ primary case) if South Africa were indeed a “black hole” that the Pretty Vessels could not have avoided and further Pretty Vessels under D3’s control were arrested after the PS Arrest, then P’s actual position would have been no different because (a) P should still have been able to arrest D3’s “associated” vessels  that just had to sail to South Africa, especially when there was no suggestion of any change to South Africa’s “black hole” status between 2009 and 2016, and (b) Ds would still have to either offer security to release the PTI Fleet under D3’s control from such arrests or allow such arrested vessels to be sold to recoup some equity to satisfy the Awards. Mr Man SC submitted that P’s case thus analysed showed it should have been able to achieve the same result now as it would have done if it had been able to maintain the PT Arrest in 2009, or at least P would have serious difficulty in showing any good arguable case it would have recovered loss up to the level of the Award Sum to justify the Cap Sum for the Mareva relief. But P insisted it did suffer loss, this would mean the “black hole” argument would not withstand scrutiny.

380.Mr Yu SC / Ms Sit SC disagreed the actual/current position showed P suffered no loss and/or there was no need for the 1^st/2^nd Orders as varied. First, whilst the vitality of the PS Arrest was uncertain at the time of the 1^st Hearing, it was set aside by the SAFC by the time of the 2^nd Hearing. Secondly, there was little prospect of further “associated” arrests going forward as (a) D3 had stated he would not permit any vessels of the PTI Fleet (owned/controlled by him) to sail to South Africa, and (b) it was no longer possible to make “associated” arrests of vessels owned/ controlled by D1 after he passed away since his personal representative was regarded as a different person for the “associated” arrest regime under the AJR Act. Thirdly, the Shaw 4^th Aff §8(1) noted the significant drop in the market since 2016 as alleged in the D3 5^th Aff §9 and queried whether there would be any or any significant value left (after discharging any mortgage liabilities) which P could have utilised towards satisfying the Awards even if other vessels controlled by D3 were now arrested and sold.

381.Mr Yu SC submitted that if in future P were able to arrest/sell a Pretty Vessel with equity recovered from such sale, Ds could apply for the court to take into account such changed circumstances and then seek to adjust/reduce the Cap Sum for the 1^st/2^nd Orders as varied, but until then P had demonstrated good arguable basis for its prima facie loss up to the amount of the Cap Sum in not being able to arrest the 17 Vessels on the 59 Occasions of their visits to South Africa and (taking into account the mortgage(s) but noting the returned surplus for vessels sold for market value which was higher in 2009/2010 than in 2016) to obtain equity/security from sale or threatened sale of such vessels. Mr Yu SC submitted it was intrinsically wrong to say P could not have arrested Ds’ vessels to secure/satisfy the Awards as a result of the alleged conspiracy, but P suffered no loss because Ds now took steps to put their vessels outside P’s reach. Mr Yu SC submitted there was no case for strike out.

382.Mr Man SC argued P’s 3 “answers” did not come anywhere near to show P’s present/actual position was worthless, and reminded that D3 or Pretty Scene Shipping SA did not put up any security throughout the period of the PS Arrest. Mr Man SC suggested that P’s such assertion in paragraph 380(a) above contradicted its central contention on loss/damage that had Ds not committed the alleged conspiracy and had the PT Arrest been upheld, D1 would have sailed the Pretty Vessels to South Africa which could not have been avoided, and this would be sufficient to end any argument that the actual/current position was unsatisfactory because P could not blow hot and cold by alleging D3 could have diverted his vessels from South Africa. As for the assertion in paragraph 380(b) above, Mr Man SC submitted P’s argument that P could not have arrested vessels that remained in D1’s control due to lack of commonality of control because the personal representative of D1’s estate was regarded as a person different from D1 as an individual in control of the arbitration debtor Parakou SG at the time when the maritime claim arose did not make sense. As for the assertion in paragraph 380(c) above, Mr Man SC submitted it was not substantiated and should not be accepted at face value. Mr Man SC reminded that the D3 2^nd Aff showed Parakou TI including its subsidiaries (wholly owned by D3) had a net asset value of about US$72,000,000, and since Parakou TI was the parent company of the one-ship Pretty Entities that owned the Pretty Vessels transferred from Parakou IL in 2014, its substantial worth should reflect such vessels’ worth net of the outstanding mortgages, which suggested those vessels would not have nothing left in them, “so therefore it is plain that it just can’t simply, by virtue of [the Shaw 4^th Aff §8(1)] which asserts a questionability as to whether there’s any significant value left to demonstrate a case, or even a good arguable case that the actual position is zero.”

383.Notwithstanding the attractive simplicity of Mr Man SC’s argument on (c) above, I agree with Mr Yu SC and Ms Sit SC that such contention elided P’s pleaded case on loss premised on pre-2016 events (ie it could not have arrested D1’s “associated” vessels in that period) with ex post facto facts that followed the PS Arrest in June 2016 to feed Ds’ arguments of P not having suffered loss.

384.In the historical 2009-2014 period (from the PT Arrest until the transfer of the 8 Pretty Vessels from Parakou IL to Parakou TI), the entire Pretty Fleet was under D1’s ownership/control, and at trial the parties would have to adduce evidence of the market condition, outstanding mortrgage loan, applicable law and/or other Circumstances etc to establish/counter the matter of causation/loss[152] had the PT Arrest been upheld, and the court would make findings upon assessment of evidence and drawing of inference at trial. Thus, whilst the PS Arrest (including not putting up security after such arrest) and the Lopes Judgment would be considered, it was at least reasonably arguable they would not be conclusive and/or definitive. As discussed above, it was questionable whether D3’s position of not sailing Pretty Vessels of the PTI Fleet to South Africa meant D1 would not have done so in an earlier period (particularly in 2009-2014) with different market condition and Circumstances as explained above.

385.I note that even on D3’s own evidence, the D3 5^th Aff §§9, 14 made clear that 2016 suffered a severe downturn in the shipping industry, and “there is also very little equity in the vessels after the mortgage debt for each vessel has been repaid”. This was borne out by the sale of the 8 Pretty Vessels over the years. At the outset, each Pretty Vessel was valued at US$35,000,000-US$40,000,000 (by P) or US$30,000,000- US$35,000,00 (by Ds) in 2009 and US$25,000,000 in 2014. In October 2016 2 Pretty Vessels in the PTI Fleet were sold for US$20,400,000 each, and in April 2017 2 Pretty Vessels in the PTI Fleet were sold for US$16,500,000 each. Then in June and August 2017, mv “Pretty World” and mv “PTI Volans” were sold for US$16,200,000 and US$14,880,000 respectively. On 2 October 2018, mv “PTI Phoenix” (formerly mv “Pretty Time”) which was then not under PT Arrest was sold for US$12,240,000. There was no suggestion the sale of “PTI Phoenix” was a court-ordered sale. This plainly showed that prices for 2^nd hand tankers progressively deceased which was unsurprising given (a) the severe downturn in the shipping industry since beginning of 2016, and (b) other shipowners were selling 2^nd hand vessels in the shipping market at that time, eg Jinhui Holdings sold 11 vessels in 2016/2017. This also suggested that in 2016/2017 D3 was downsizing his fleet in the market downturn and “as the group experienced financial difficulties” (see paragraph 358 above), but D1 had a full fleet from 2009-2014 with an encouraging Baltic Dirty Tanker Index. In light of such objective facts that emanated from D3’s evidence, I am not persuaded the inferential extrapolation Mr Man SC suggested in paragraph 382 above would have summarily demonstrated that P suffered no loss.

386.Mr Man SC submitted the market downturn in 2016 had no relevance because it would not inform what D1 would have done if he knew his vessels could have been arrested at South Africa had the PT Arrest been maintained. But in my view, there was a good arguable case against such contention given the different commercial realities at the earlier period, and whilst the market downturn in 2016 would not have impact on the hypothetical position at the earlier period, it might arguably have impact on the more recent actual position. I am persuaded there was a good arguable case that P suffered loss by comparing the hypothetical with the actual positions, and the evidence did not detract from the vitality of P’s argument that its loss was up to the Award Sum.

(l)  Settlement Sums

387.P must establish not only a good arguable case for injunctive relief, but also a good arguable case for injunctive relief in the amount sought. Mr Yu SC and Ms Sit SC submitted that damages for conspiracy were at large and not limited to what was quantifiable in the ASoC, and that the pleaded heads of damage only gave notice to Ds of the nature of the loss for which the claim was based, but the court was entitled to take into account all relevant circumstances in assessing damages. Here, the pleaded loss in the ASoC made reference to the Awards and Expenditure, and had the PT Arrest stood, it was said P would have been able to accumulate a pool of security from which P would have been able to satisfy the Awards. There was no disagreement between senior counsel that the Cap Sum being the amount of the 1^st/2^nd Order was based on the Awards which were the pleaded loss that was quantifiable and which did not take into account the Expenditure that was not yet quantified. This was also evident from the Alder Submissions §46 which explained to the ex parte judge that the Cap Sum was an “underestimation”. On such basis, it was said the Cap Sum was a reasonable upper limit for the 1^st/2^nd Orders especially when the Alder Submissions §53 fairly stated P would be prepared to vary the injunctions if Ds would to put forward proposals that would result in P being sufficiently protected pending trial, but Ds did not avail themselves of this option offered by P.

388.In February 2019, Ds tendered the Settlement Sums of about US$14,800,000 to the Liquidator. Since P accepted it had to give credit for any recovery that it made from the SG Proceedings, Mr Man SC suggested that, even if the court were to continue the 1^st/2^nd Orders as varied, the Cap Sum should be reduced by the portion of the Settlement Sums to which P as the largest third party creditor of Parakou SG would be entitled. Thus, it was said the matter of the Settlement Sums could not be said to be not material. After all, the Liquidator recovered significant sums in the SG proceedings, and P would also recover to a certain extent. Mr Man SC submitted it was no answer that P had not yet received its entitled share in the Settlement Sums because there was no risk that any judgment obtained in the present action would go unsatisfied to the extent of P’s entitled portion since they were in the hands of the Liquidator. Mr Man SC said it was also no answer that part of the Settlement Sums might have to be returned if the Liquidator elected account of profits over equitable compensation and the profits were less than the Settlement Sums because it would be right to assume the Liquidator would elect equitable compensation if the Settlement Sums exceeded the profits to be disgorged, so refund of any portion of the Settlement Sums was unlikely.

389.As for the quantum of P’s entitled share, Mr Man SC submitted Ds were not in a position to assess the same as they had no access to the necessary information (eg Liquidator’s expenses), but suggested P must be privy to this information because under the Deed of Indemnity the Liquidator was under a duty to inform P of all developments in or in connection with the SG Proceedings, and the Liquidator needed P’s approval before he could incur any costs in the SG Proceedings. Mr Man SC noted all P said was that it did not know how much it would actually pocket because the Liquidator’s costs/expenses had to be ascertained/deducted, but submitted P should have given its best estimate of its entitled share, which P failed to do.

390.Mr Man SC reminded that litigants are under a duty to adduce new evidence to inform the court that a state of affairs represented in the original evidence has been altered, and this duty exists until judgment is handed down. In  Vernon v Bosley (No 2),[153] Stuart-Smith LJ stated that “[it] is the duty of every litigant not to mislead the court or his opponent. He will obviously mislead the court if he gives evidence which he knows to be untrue. But he will also do so if, having led the court to believe a fact to be true, he fails to correct it when he discovers it to be false. This duty continues in my opinion until the judge has given judgment. ……” Mr Man SC submitted that in relation to the matters in paragraphs 388-389 above P had breached and continued to breach this duty despite repeated reminders from Ds, and P should not have opposed Ds’ application to adduce the Draft D3 7^th Aff by the 2^nd Aff Summons.

391.Ms Sit SC submitted that Ds’ attempt to rely on the Settlement Sums paid to the Liquidator to reduce the Cap Sum in the 1^st/2^nd Orders as varied was clearly without basis. I agree. First, for the purpose of the 1^st/2^nd Orders as varied, it would not be right to regard P and the Liquidator as one and the same or to regard the Liquidator as P’s agent. As Ms Sit SC submitted, the Liquidator did not hold the sums on trust for P and was under no obligation to account the same to P save in accordance with the insolvency regime for which it was not disputed that (a) the Settlement Sums were not yet treated as recoveries by the Liquidator (since the Liquidator had yet to elect between his remedies under the Chua/SACA Judgments) let alone P, (b) the Liquidator was entitled to first deduct the legal costs and expenses/disbursements that he had incurred but that had not happened (quantum of such expenses remained unknown to P despite inquiry raised with the Liquidator), and (c) the Liquidator had not declared any dividend in the liquidation of Parakou SG.

392.I also accept that in the absence of concrete information from the Liquidator, Ds were not even able to articulate how much of the Settlement Sums would be paid to P if at all. I bear in mind that upon P’s inquiry, the Liquidator’s Singaporean lawyers by letter dated 28 November 2018 confirmed there had been no distribution to Parakou SG’s creditors and the Liquidator was then “unable to ascertain what [P’s] estimated recovery might be from the [Settlement Sums] …… In any event, any distribution(s) which [P] receives will not be equivalent to the [Settlement Sums]” because distribution would be on pari passu basis, and the sums would first be utilised to pay (a) the Liquidator’s costs and legal fees/ disbursements incurred over the last 7 years that Parakou SG had been in liquidation, and (b) the additional (including legal) costs that the Liquidator will incur in the future, but the Liquidator was unable to even estimate such costs because (i) it was not yet in a position to elect between remedies since Ds had not disclosed relevant documents for that exercise and (ii) “[the] Liquidator’s future costs are difficult to predict as it is in part dependent on [Ds’] conduct (which has necessitated the incurrence of substantial costs in the past) and is out of the Liquidator’s control”.

393.As regards the suggestion that P being the major creditor who funded the SG Proceedings under the Deed of Indemnity should have known from the Liquidator and/or estimated all relevant costs, expenses and disbursements and not hide behind alleged ignorance, I note that under such deed the Liquidator was only required to keep P informed about the SG Proceedings (including costs), but did not go so far as to cover overall costs, expenses and disbursements of the liquidation and/or probable distribution to creditors. I am not persuaded P deliberately held back material information, and Ds had not even begun to show by what amount it would have been appropriate to reduce the Cap Sum when P obviously would not receive the entirety of the Settlement Sums. Given the Liquidation is now in its 8^th year which was not a short period of time, the Liquidators’ investigations in Singapore and Hong Kong with collation/ review of relevant documents and interviews of key players to unravel concealment, forgery and corporate manoeuvres, and the Liquidator’s indication that Ds’ past conduct “has necessitated the incurrence of substantial costs in the past”, any reduction at the stage would be guesswork and not evidence-based. But as and when distribution is made (or when more concrete information is available) to P, then P will (or will have to) give credit upon which there will be basis for reducing the Cap Sum. But P presently had received nothing and had no idea whether and when it would receive monies from the liquidation, so there was no over-security at this stage for adjusting the Cap Sum downwards.

394.For completeness, P argued that as a matter of principle, in the context of conspiracy there is no restriction in law that each of the conspirators cannot be restrained up to the amount of the damages claimed. This was because a conspiracy only required combination between 2 or more individuals, and in the case of 3 alleged conspirators there was always the risk of finding at trial of the combination as between 2 conspirators, so that enforcement of any award of damages would be against the assets (and where necessary assets frozen under the Mareva injunction) of the 2 conspirators as found. P claimed at this interlocutory stage the court clearly would not be able to form a view as to which alleged co-conspirators would be liable, so there was nothing objectionable to impose Mareva restrictions on all alleged conspirators unless the facts/ circumstances of a particular case clearly called for a different order.

395.This was not a point taken by Mr Man SC, so I do not have to deal with this. Further, since P’s Injunction Summons has yet to be argued/ determined, I refrain from dealing with this point save to say I can see the force of P’s contentions. Although A Chan J in his decision to discharge the 1^st Order as varied against D2 queried how it could be right for P to be entitled to the 1^st/2^nd Orders as varied that froze cumulative assets of Ds that exceeded the value of its claim (see paragraphs 23-25 above), it must not be forgotten that the Court of Appeal was minded to grant leave to appeal against the learned judge’s decision but for the undertaking given by Ds.

(m)  Dissipation and balance of convenience

396.On the basis of the above discussion, and bearing in mind the findings by Chua J (largely upheld by the SGCA Judgment) including findings concerning various Challenged Transactions, offer of false evidence before the SA Court to thwart the PT Arrest and deliberate/ abusive prosecution of the HK Proceedings and other steps arguably taken to avoid further arrests of other Pretty Vessels, I find the requirements of good arguable case and risk of dissipation were made out. Subject to the discussion below, I would have continued the 1^st/2^nd Orders as varied against D1/D3 up to the amount of the Cap Sum until trial of the present action or further order of the court notwithstanding the Liquidator’s receipt of the Settlement Sums as aforesaid (albeit not get as recoveries under the liquidation).

XIX.  LIMITATION OF ACTION

397.Section 26(1) of the LO is set out in paragraph 252 above. To invoke the exception in such provision, P had to show either (a) the action is based on the fraud of the defendant or (b) any fact relevant to the plaintiff’s right of action has been deliberately concealed from him by the defendant.

398.The fraud exception under section 26(1)(a) of the LO only applies when fraud is an essential/necessary element in order to constitute the plaintiff’s cause of action.[154] Mr Man SC submitted that since it was not necessary to plead fraud for conspiracy to injure by unlawful means, this exception would be inapplicable. In my view, such submissions over- simplied the matter. In this respect, I refer to the useful observations by Yuen J (as she then was) in China Everbright – IHD Pacific Limited v Ch’ng Poh as follows:[155]

“22.  I have been referred to the case of Beaman v. ARTS Limited [1949] 1 KB 550 which at page 558 said that where one makes a claim for ‘fraudulent conversion’, that does not make it a claim based on fraud, because fraud is not a necessary allegation to constitute the cause of action of conversion.

23.  Similarly, fraud is not a necessary allegation to constitute a conspiracy, in the sense that one can have a conspiracy to do lawful acts which is still actionable because of a pre-dominant intention to injure.

24.  However, if one says that there has been a conspiracy to do unlawful acts by unlawful means, one looks to see what are the unlawful means alleged, and in my view, as I have indicated, the way I would read paragraph 6(1) is that the unlawful means have been confined to the contravention of Section 48, concealment of the contravention of Section 48 and conversion.

25.   Therefore in my view of the pleading of paragraph 6(1), I would agree with Mr Strachan that fraud is not one of the unlawful means constituting the cause of action of conspiracy as pleaded under 6(1). Mr Griffiths has not made any application to amend and so I say no more on that debate.”

399.In my view, one has to look at the pleaded elements in the cause of action for unlawful means conspiracy to see if fraud is one of the alleged unlawful means. If it is, then I see no reason why the fraud exception is inapplicable. Further, in Barnstaple Boat Co Ltd v Jones,[156] Waller LJ (with whom Moore-Bick and Moses LLJ agreed) held that the phrase “the plaintiff has discovered the fraud” in the English statutory provision equivalent to the tailpiece in section 26(1) of the LO refers to knowledge of the precise deceit which the claimant alleges has been perpetrated on him. So knowledge of a fraud in a more general sense is not enough to start the limitation period running under section 26(1) of the LO.[157]

400.Here, it was plain that P relied on “fraudulent” thwarting of the PT Arrest that “fraudulently” created incorrect precedent that in turn precluded further “associated” arrests as a result of the “fraudulent” application to set aside the PT Arrest by “forging” the 17/3/08 Resolution and deploying the false evidence that “fraudulently” portrayed the Challenged Transactions as genuine corporate restructuring (see the ASoC §§62-63). Plainly, “fraud” was a major aspect of the unlawful means constituting the cause of action of conspiracy as pleaded.

401.For the fraud exception, there is no need to show any deliberate concealment as in section 26(1)(b) of the LO, and the only remaining issue would be when P “discovered the fraud …… or could with reasonable diligence have discovered”. I will discuss this tailpiece provision in section 26(1) of the LO below, but suffice to say here that since the relevant knowledge for the limitation period to run was that of the precise deceit said to have been perpetrated on P rather than fraud in a more general sense, I find Mr Man SC’s contentions in paragraphs 407-409 below insufficient to establish that P had discovered the precise fraud perpetrated by Ds against P by March 2011. At best, it amounted to suspicion of fraud in a general sense that was insufficient even to establish a prima facie case.

402.The 3 limbs in section 26(1)(a)-(c) of the LO are in the alternative, so it is not necessary for me to deal with the concealment exception in section 26(1)(b) of the LO, but I do so for completeness. In Lee Tsan Sum v David Wong Pui Hon,[158] Fok J (as he then was) explained the relevant principles as follows:

“39.  A number of matters were common ground between the parties in respect of s.26(1)(b) of the Ordinance, namely:

(a)  Concealment within the subsection means a deliberate concealment of relevant facts and the six-year period provided in the section starts to run from the date on which the concealment is discovered ……

(b)  The burden rests on a plaintiff to establish that there has been a relevant concealment …… Similarly, the burden is on a plaintiff to show that he could not have discovered the concealed facts without exceptional measures which he could not reasonably have been expected to take ……

(c)  A fact relevant to a plaintiff’s cause of action is an act without which the cause of action would be incomplete.  It is not relevant that a defendant may have concealed a fact which, if known, would merely go to strengthen an existing case ……

(d)  The words ‘any fact relevant to a plaintiff’s cause of action’ are to be given a narrower rather than wider interpretation: what must be concealed is something essential to complete the cause of action and it is not enough that evidence that might improve the claim is concealed, provided that the claim can be properly pleaded without it ……

(e)  The section does not provide that the right of action must have been concealed from a plaintiff: it provides only that a relevant fact should have been concealed ……

(f)  Although in most cases where the section applies, a defendant will have known the fact that he concealed was relevant, it is not essential to show the defendant must have known the fact was relevant to the right of action ……

(g)  The section requires only that any fact relevant to the right of action is concealed and does not require that all facts relevant to the right of action are concealed ……”

403.So the fact that is concealed must be one necessary for the cause of action in contra-distinction to a fact that may improve one’s case or a matter which is useful in terms of proof of a particular fact, or to put it in another way, it has to be a fact the claimant has to plead as opposed to a fact he may wish to have by way of evidence. This is sometimes referred to as the “statement of claim” test, ie one has to ask whether the claimant already knows (actually or constructively) facts which, by themselves, would enable him to produce an adequate statement of claim,[159] or facts which are essential for a claimant to put forward a prima facie case.

404.P claimed the facts relevant to its right of action would be the core unlawful acts including the forgery of the 17/3/08 Resolution, and the falsity of the replying affirmations by Ds, Yang, Yeung and Hartwell that confirmed the legitimacy of the share transfer and group restructuring that was deployed in the PT Arrest Proceedings for setting aside the PT Arrest. Plainly, the very acts of adducing forged document and deploying false evidence on material matters before the SA Court were matters of fraud. But in my view, it was also reasonably arguable there was deliberate concealment to pull wool over the eyes of the SA Court so that the true facts (ie the 17/3/08 Resolution was forged and D1 still had de facto control over Parakou SG notwithstanding formal transfer of Parakou SG’s shares to D3/Yang in 2008 which transfer was in fact not for restructuring purpose) were concealed from P. The forgery of board resolution and falsity of sworn evidence by themselves suggested deliberate concealment. So the question was whether the concealed facts were “relevant facts” within the meaning of section 26(1)(b) of the LO.

405.Mr Man SC disagreed Ds’ conspiratorial acts were capable of constituting facts relevant to P’s right of action, and further disagreed the forgery of the 17/3/08 Resolution constituted a “relevant fact” without which P’s cause of action would be incomplete by August 2009 (hearing of the application to set aside the PT Arrest). Mr Man SC reminded that in Ng Fui v Kam Chi Ming I cited the observations by Bokhary JA (as he then was) in ADS v Wheelock Marden & Co Ltd[160] that the pleader had to plead at least one overt act which is the act of all the alleged conspirators or, failing that, a number of overt acts which include at least one act on the part of each conspirator, and the overt act(s) must show that each and every defendant had conspired together.[161] Mr Man SC argued P had knowledge of 1 overt act by Ds sufficient to plead a cause of action in conspiracy based on the Asset Thwarting Exercise, ie giving of false evidence by Ds (as explained in paragraphs 407-409 below), so even though P might have preferred to be able to rely on further unlawful acts, they were merely facts that would strengthen the same conspiracy claim rather than facts that gave rise to its existence. On such basis, Ds claimed P discovered (“發覺”) or with reasonable diligence could have discovered the relevant facts required to plead a sustainable statement of claim.

406.In my view, the relevant state of knowledge was at 9 March 2011, ie 6 years before the WoS that was issued on 9 March 2017, and the focus was on the elements needed for the conspiracy to defeat the enforcement of the Awards by trying to pull wool over the eyes of the SA Court that resulted in the discharge of the PT Arrest in 2009 otherwise P would have secured a fund to satisfy such Awards.

407.Mr Man SC submitted that by August 2009 when the setting aside application under the PT Arrest Proceedings was heard, P “actively contended, stated their belief as to, and therefore knew or could have known with reasonable diligence the following”: (a) D1 remained in control of Parakou SG notwithstanding the transfer of his shares to D3/Yang, (b) the transfer of D1’s shares to D3 was not for the purpose of restructuring, and (c) Parakou SG had taken steps to make itself “judgment-proof”. Mr Man SC submitted these matters formed the thrust of the evidence given on oath in the answering affidavits by van der Merwe and Mok that P filed in response to affidavits adduced by Ds for setting aside the PT Arrest (see paragraph 58 above). By advancing the position at that stage (supported by some evidence) that the transfer of D1’s shares in Parakou SG to D3/Yang was not for restructuring purpose and that D1 still remained in de facto control of Parakou SG (see paragraph 58 above and Levinsohn Judgment §25), Mr Man SC argued the common sense view must be that they were not mere matters of suspicion but P had discovered (“發覺”) the concealed fraud or “relevant facts” for its cause of action in conspiracy. Mr Man SC further submitted that it followed from P’s knowledge of the facts in (a)-(c) above that P would also have known (i) Ds had given false evidence in their affidavits adduced before the SA Court in that they falsely swore that D1’s control over Parakou SG had ceased and there was a genuine restructuring, and (ii) Ds were taking steps to denude P of its ability to enforce its forthcoming Awards against mv “Pretty Time” which led their counsel Mr Shaw at the PT Arrest Proceedings to challenge whether D1 was really no longer exercising control over Parakou SG.

408.Mr Man SC submitted the above matters, which P actually contended in 2009 would justify oral examination in the PT Arrest Proceedings, would suffice for P to plead its claim for conspiracy, and given the sworn evidence filed on P’s behalf, the alleged concealed fact of D1’s control over Parakou SG would be something P discovered or with reasonable diligence could have discovered in 2009 for P to commence proceedings on that state of knowledge and to plead a sustainable claim.

409.Mr Man SC submitted that whether P had knowledge of a concealed fact should not be conflated with whether it would be able to prove that concealed fact in court, and that it was necessary to distinguish between (a) discovery of the concealed relevant fact and (b) evidence to prove P’s case on the balance of probabilities, and there was no repugnancy between Ds having concealed a relevant fact and P with reasonable diligence having discovered the concealment (which scenario was envisaged in the tailpiece in section 26(1) of the LO). Lord Hoffmann in Peconic Industrial Development Ltd reminded that the LO was to be applied without any presumption against the person who had been guilty of fraud or concealment.

410.On the other hand, Mr Yu SC submitted all Ds could say was that P suspected Ds’ stance at the PT Arrest Proceedings for setting aside the PT Arrest was incorrect and told the SA Court so in the answering affidavits of van der Merwe and Mok by referring to a number of surrounding features/circumstances that created suspicion D1 might have exercised de facto control of Parakou SG, but at that stage P had not discovered and even with reasonable diligence could not have discovered the fraud or relevant “facts”. According to P, the earliest it could have discovered the fraud and conspiracy was once the Liquidator had commenced its investigations into Parakou SG in 2014 when he had access to relevant documents, had the opportunity to interview key individuals, and when he relayed information P (see Shaw 1^st Aff §161).

411.In the Shaw 3^rd Aff §53(1), it was said that even when P applied for the writs/warrants against the 8 Pretty Vessels in April 2015 (ie a year before the trial in the SG Proceedings), all P “could go on were the statements made in [PT Arrest Proceedings] by [D3] himself, that [D3] was the owner and controller of [Parakou SG] in 2009 when [P’s] cause of action arose. In particular that by virtue of his shareholding, [P] was the controller of [Parakou SG] at the relevant time …… Whilst we did not believe their story that [D1] had divested himself of control, we could not at that stage (with reasonable diligence) have discovered the extent of the false evidence placed before the [SA Court] in 2009 nor could we have persuaded the [SA Court] otherwise in light, inter alia, of the [Levinsohn Judgment] ……” In the Levinsohn Judgment §§24-25, the learned judge in declining oral examination on the “association” issue (on the assumption that he might be wrong in acceding to the in limine argument based on error in P’s founding papers) found the replying evidence deployed by Pretty Time Shipping SA went one way and was basically uncontradicted:

“[24]  On the assumption that my foregoing conclusion is an incorrect one I proceed now to consider briefly Mr Shaw’s submission that the application be referred for the hearing of oral evidence [on the issue of whether the vessel is an associated ship]. This submission is obviously made on a conspectus of all the affidavits that are before the Court. …… In my view [P] has not discharged the onus on the papers. It is not surprising therefore that in these circumstances [P] seeks a referral for the hearing of oral evidence on the disputed issues.

[25]  …… In the instant case the probabilities do not favour the applicant. The direct and basically uncontradicted evidence of [D3] supported by the registry documents points in one direction only and that is that [D1] divested himself of control of [Parakou SG]. The evidence adduced by the respondents provide a rational, and on the face of it, probable explanation for the actions taken by [D1]. Mr Shaw has however argued that there were a number of surrounding features and circumstances which create the suspicion that [D1] still exercised control. I am not persuaded that these features are of such a nature that they disturb the direct evidence that is adduced by the respondents. ……” (my emphasis)

412.A few matters were evident from the Levinsohn Judgment: (a) notwithstanding the “surrounding features and circumstances which create the suspicion that [D1] still exercised control” set out in the answering affidavits of van der Merwe and Mok, Ds succeeded in pulling wool over the eyes of the SA Court such that the court thought everything was coherent and rational, ie it thought Ds’ evidence was “direct and basically uncontroverted evidence” pointing to only one direction that D1 had divested himself of control of Parakou SG (but Chua J later found he remained as de facto director and key decision-maker) for the rational and probable explanation put forward (which no doubt referred to the restructuring plan that Chua J found to be false), (b) notwithstanding such “surrounding features and circumstances which create the suspicion that [D1] still exercised control” as set out in the answering affidavits of van der Merwe and Mok, Levinsohn AJP did not consider there was even a prima facie case pointing in the other direction that D1 had not divested himself of control of Parakou SG and/or that the reason for D1’s actions was not for group restructuring and therefore questionable, and (c) the Levinsohn Judgment drew clear demarcation between factual evidence (as deployed in Ds’ replying affidavits which was all one way but false) and suspicion (as hinted in P’s answering affidavits but rejected by Levinsohn AJP as insufficient to raise even a prima facie case). Indeed, a review of Mok’s affidavit showed it was long on assertions and short as facts (see paragraph 188(a)-(c) above).

413.In my view, it was quite plain that the plaintiff did not have the evidence and therefore did not have the knowledge, as opposed to suspicion, of the fraud and concealed relevant fact (ie the forgery of the 17/3/08 Resolution as well as the falsity of Ds’ affidavit evidence), which matters remained unexposed in 2011. As Mr Yu SC said, the proof of the pudding is in the eating, and the Levinsohn Judgment showed that P’s case built on “surrounding features and circumstances which create the suspicion that [D1] still exercised control” marshalled in P’s answering affidavits in 2009 and rejected by the SA Court in face of the forged/false evidence deployed by Ds was quite insufficient for P to raise even a prima facie case to support any adequate or sustainable statement of claim on unlawful means conspiracy to go forward since the core conspiratorial agreement/understanding to perpetrate the forgery and falsity was unknown and even with reasonable diligence could not have been discovered at the time. This is particularly important in dealing with the tailpiece in section 26(1) for the fraud exception. As explained in paragraph 253 above, the intent of such provision is to ascertain whether the claimant with reasonable diligence could have discovered the fraud, and suspicion of fraud in a general sense could not start time running. The necessary knowledge was knowledge of the fraud which was alleged to have been perpetrated, and it was not sufficient that the claimant knew there had been some unspecified deception.[162]

414.In my view, the fraud and concealed relevant facts to be uncovered were that D1 was still in control of Parakou SG and the 17/3/08 Resolution was forged and backdated. It was evident from the Chua Judgment §35 that in finding D1 to have remained as a shadow director and key decision-maker after December 2008, Chua J relied on various emails (which P did not have access to in/before 2011) and other facts that emerged from investigation by the Liquidator and trial of the SG Proceedings. Thus, Mok’s answering affidavit was long on assertions and short on facts. I find force in P’s contention that it could not have reasonably discovered the fraud and concealed relevant facts prior to meaningful investigations by the Liquidator into the affairs of Parakou SG and also the SG Proceedings. I am not persuaded by Ds’ limitation argument.

415.Nevertheless, the Sanger 1^st Aff §§80-85 marshalled criticisms vis-à-vis the presentation of the time bar issue at the ex parte application for the 1^st/2^nd Orders, saying that P did not quite point out that the affidavits of van der Merwe and Mok deployed in PT Arrest Proceedings as early as in April 2009 to oppose the release of the PT Arrest already contended D1 remained in control of Parakou SG and the transfer of shares in December 2008 did not come with transfer of control. Sanger also made reference to the summary of P’s contentions in the Levinsohn Judgment and to a confidential investigative report commissioned/produced in October 2010 that was referred to in one of the affidavits filed on behalf of P. Mr Man SC reminded that the relevance/materiality of the facts/matters that constituted material non-disclosure was to be decided by the court rather than by the parties, so these materials ought to have been placed before the ex parte judge with explanation of the limitation issue being that in 2009 P was already making the same contentions as they are making now about the falsity of Ds’ evidence on control of Parakou SG.

416.However, I agree with Mr Yu SC that there was adequate treatment of the limitation point in the ex parte materials. In the Shaw 1^st Aff §157, Shaw particularly drew attention to “the question of possible statutory limitation of [P’s] claims in this Court”, and went on to say in §§158-161 that the 1^st Award was obtained more than 6 years ago but any claim for damages based on unlawful conspiracy in thwarting enforcement of the 1^st Award would not be time-barred as any limitation period would not run from the date of the Awards but from the time that the conspiracy could have been reasonably discovered by P. Mr Alder then drew attention to sections 4(1) and 26(1) of the LO, and went on to say as follows:

“160.  [P] contends that its cause of action is based upon (i) the conspiracy of [Ds], and (ii) the fact that the [17/3/08 Resolution] deployed before the [SA Court] was a forgery and thus unlawful means in the form of fraud was used, and (iii) both the conspiracy and the fraud were concealed from [P]. [P] contends that in circumstances where its cause of action is based upon the fraud of the [Ds] and/or that the fact that the [17/3/08 Resolution] was a forgery was concealed from [P] until at the latest the [Chua Judgment] of February 2017, its claim is not out of time.

161.  Further, the earliest date that [P] could have discovered the fraud and conspiracy was once the Liquidator had commenced its investigations into [Parakou SG] in 2014; at which time the Liquidator was granted access to relevant documents and had the opportunity to interview key individuals. Until such information was relayed to [P], there was no way in which [P] could have formed reasonable suspicions of the conspiracy. For these reasons, the cause of action would still be well within time.”

Mr Yu SC submitted that even though one might take slight issue with the words “reasonable suspicion”, the Shaw 1^st Aff §131(4) fairly quoted the Levinsohn Judgment §25 that noted P’s counsel Mr Shaw did argue “that there were a number of surrounding features and circumstances which create the suspicion that [D1] still exercised control” and laid such fact before the ex parte judge. I disagree with Mr Man SC’s contention that it amounted to material non-disclosure for P to say as set out in the Alder Submissions.

417.Mr Man SC complained that notwithstanding the reference to the Levinsohn Judgment §25 in the Shaw 1^st Aff, the Alder Submissions §§36-39 made no reference to this when dealing with the limitation point, and the ex parte judge could not be expected to pick out these disparate elements. But in my view, Shaw’s affidavit evidence did flag the limitation point and explained P’s position that it could only have discovered the fraud after the Liquidator commenced investigation, and the Alder Submissions also canvassed the limitation issue.

418.In light of my views of the time-bar issue above, I am not persuaded that either Shaw or Mr Alder were incorrect and reticent in dealing with this issue in the evidence or submissions. As Mr Yu SC said, the court would have expected no more.

XX.  DOUBLE ACTIONABILITY

419.Ds claimed the place of commission of the tort was in South Africa, but P claimed it was in Hong Kong.

420.Mr Man SC accepted there was no straightforward or hard and fast legal formula for deciding this question, and much depended on the substance of the tort and where its centre of gravity was. Mr Man SC submitted the alleged tortious/unlawful acts took place not only in Hong Kong and London but also in Singapore and South Africa where same/similar assertions were the subject of litigation. Mr Man SC argued that (a) given the emphasis on the Arrest Thwarting Exercise the centre of gravity must be in South Africa and not in Hong Kong, and (b) even if (as P suggested) the 17/3/08 Resolution and D1’s/D2’s false replying affidavits were prepared in Hong Kong, on P’s case the most significant overt act and hence the substance of the alleged conspiracy was the presentation of such false evidence in the PT Arrest Proceedings to pull wool over the eyes of the SA Court, which eventually affected Levinshohn AJP’s decision and thwarted pursuit of “associated” arrests or intended “associated” arrests (and it mattered little where the conspiratorial agreement was hatched). Mr Man SC also argued the place of P’s loss/damage as constituted by the inability or lost opportunity to arrest mv “Pretty Time” and the Pretty Fleet was in South Africa, so the inability to extract security/proceeds to secure/satisfy the Awards must also be in South Africa, which factor must be given weight since damage had been said to be “an essential element of the tort of conspiracy, the gist of the cause of action”.[163] Mr Man SC submitted there was no loss/damage in Hong Kong in the absence of local “associated” arrest provisions.

421.Mr Man SC submitted P must have recognised the alleged conspiracy was a foreign tort because the Alder Submissions §35 sought to explain why the double actionability rule was satisfied, but he suggested such submissions were not correct because the conspiracy could not satisfy the 1^st limb of the rule, ie an act done in Country A is an actionable tort in Country B only if it is both actionable as a tort according to the law of Country B (or if the act if done in Country B would be a tort). It was said the arrest provisions in Hong Kong had no equivalent for “associated” ship arrests under sections 3(6)-(7) of the AJR Act,[164] so had the events that underlied the Arrest Thwarting Exercise occurred in Hong Kong P would have no right to arrest mv “Pretty Time” as Parakou SG was not its full beneficial owner, so P’s loss suffered as a result of not being able to maintain the PT Arrest would not have been actionable under Hong Kong law. Mr Man SC therefore submitted it was incorrect for the Alder Submissions §35 to posit the over-simplified and abstract question of whether unlawful means conspiracy was actionable in South Africa and in Hong Kong when the true question was whether, if the acts performed in South Africa were performed in Hong Kong, they would be actionable in Hong Kong, and the answer must be “no” as there would have been no loss if those acts were committed in Hong Kong.

422.Both Mr Yu SC and Mr Man SC agreed the substance test was relevant to ascertaining where the tort occurred. Such test was explained by the Privy Council in Distillers Co (Biochemicals) Ltd v Thompson as follows:[165]

“…… In a negligence case the happening of damage to the plaintiff is a necessary ingredient in the cause of action, and it is the last event completing the cause of action. But the place where it happens may be quite fortuitous and should not by itself be the sole determinant of jurisdiction. …… It is manifestly just and reasonable that a defendant should have to answer for his wrongdoing in the country where he did the wrong. …… It is not the right approach to say that, because there was no complete tort until the damage occurred, therefore the cause of action arose wherever the damage happened to occur. The right approach is, when the tort is complete, to look back over the series of events constituting it and ask the question, where in substance did this cause of action arise?”

On this test, if the substance of the tort was committed within a jurisdiction, then it may be right to say that is the relevant jurisdiction. In respect of a conspiracy to injure, Lord Wright in Crofter Hand Woven Harris Tweed Company, Limited & ors v Veitch & anor[166] noted a conspiracy consists not merely the intention of 2 or more but an agreement of 2 or more to do an unlawful act or to do a lawful act by unlawful means, but such civil right of action is not complete unless the conspirators do acts in pursuance of their agreement to the damage of the plaintiffs. It was said as follows:

“In this sense the conspiracy is the gist of the wrong, though damage is necessary to complete the cause of action. …… The rule may seem anomalous, so far as it holds that conduct by two may be actionable if it causes damage, whereas the same conduct by one, causing the same damage, would give no redress. In effect the plaintiff’s right is that he should not be damnified by a conspiracy to injure him, and it is in the fact of the conspiracy that the unlawfulness resides. ……” (my emphasis)

423.P’s pleaded cause of action was unlawful means conspiracy against Ds as the conspirators, and part of the unlawful acts relied upon was false evidence sworn by D1/D2 before notary public in Hong Kong. There was no direct evidence as to where the 17/3/08 Resolution was prepared. Mr Man SC submitted there was no basis to deduce the alleged conspiracy was masterminded in Hong Kong because D1/D2 resided here, and reminded that the 17/3/18 Resolution being the singularly most important document for P recorded that the directors’ meeting took place in Singapore, and even though Chua J held this was not a contemporaneous document he made no finding on the veracity of the meeting’s purported venue. Mr Man SC suggested there was no reason for D1/D2 to have lied about the venue.

424.I disagree. In my view, the assertion in the 17/3/18 Resolution that the meeting venue was in Singapore carried no weight since (a) Chua J found such resolution was backdated and there was no such directors’ meeting (Chua Judgment §44), and (b) Chua J had reservations about the veracity of D1 as witness in the SG Proceedings that canvassed such matter. On the contrary, there was evidence that the Liquidator found out the 17/3/08 Resolution was allegedly created on Andy Ng’s computer which was subsequently reformatted (see paragraph 72 above), and Andy Ng (Parakou SG’s then internal accountant) was interviewed by the Liquidator in April 2012 in Hong Kong (see Shaw 1^st Aff §87). Bearing in mind also that the Chua Judgment found D1 was a de facto director and key decision-maker of Parakou SG even after December 2008 and D1/D2 who signed the forged 17/3/08 Resolution lived in Hong Kong (and only visited Singapore several times a year), there was reasonably arguable basis to infer the 17/3/08 Resolution was created in Hong Kong. Further, there was nothing to detract from such reasonably arguable inference as Ds had not come forth to say one way or the other where such resolution was created. Ds in their affirmation evidence also did not condescend upon particulars of any positive defence case. I also refer to the discussion in paragraph 450 below that it appeared D1/D2 ran the Parakou business out of Hong Kong, so there was plainly evidence that pointed to the conspiracy being hatched here.

425.Although Mr Man SC submitted that loss/damage occurred in South Africa, I note that damage from the Asset Thwarting Exercise was not the only loss/damage P claimed. In fact, P also claimed against Ds for the Expenditure, and “the investigation of the unlawful acts, pursuit of security and enforcement of the [Awards]” in various parts of the world that led to such cost/expenditure must have been coordinated by P in Hong Kong through agents elsewhere.

426.Slade LJ in Metall und Rohstoff AG v Donaldson Lufkin & Jenrette Inc & anor[167] said at page 446 as follows:

“In our judgment, in double locality cases our courts should first consider whether, by reference exclusively to English law, it can properly be said that a tort has been committeed within the jurisdiction of our courts. In answering this question, they should apply the now familiar ‘substance’ test previously applied in Distillers Co (Biochemicals) Ltd v Thompson [1971] AC 458 …… If on the application of this test, they find that the tort was in substance committed in this country, they can thenceforth wholly disregard the rule in Boys v Chaplin [1971] AC 356; the fact some of the relevant events occurred abroad will thenceforth have no bearing on the defendant’s liability in tory. On the other hand, if they find that the tort was in substance committeed in some foreign country, they should apply the rule and impose liability in tort under English law, only if both (a) the relevant events would have given rise to liability in tort in English law if they had all taken place in England, and (b) the alleged tort would be actionable in the country where it was committed.”

The Alder Submissions §34 made clear that P would contend at trial that the conspiracy took place in Hong Kong and Hong Kong law would apply. In light of the discussion above and bearing in mind that the conspiracy was the gist of the wrong even though damage was necessary to complete the cause of action, there was cogent basis to say the conspiracy in question being the gist of the wrong was masterminded in this jurisdiction, so Hong Kong was the relevant jurisdiction even though some unlawful acts took place elsewhere. In my view, it was difficult to see any basis for alleging material non-disclosure on the part of P in respect of its application for the 1^st/2^nd Orders.

427.But even if the alleged tort was committed partly in Hong Kong and partly elsewhere such that one would have to consider the question of double actionability (which scenario was also canvassed in the Alder Submissions), Mr Yu SC submitted the approach advocated by Mr Man SC (ie P claimed it suffered loss in South Africa from inter alia the asset-thwarting presentation of false evidence/forged document to the SA Court but there was no actionable damage in the absence of any “associated” arrest regime in Hong Kong – see paragraph 421 above) was wrong. In dealing with such contention, it would be necessary to return to the basic concept of the double actionability rule as explained in Johnston, The Conflict of Laws in Hong Kong[168] as follows and as referred to in the Alder Submissions §34:

“…… Historically, Hong Kong courts have applied a rule of ‘double actionability’ in tort cases, whereby, in order to found an action in a Hong kong court, a tort must be actionable both under Hong Kong law and under the law of the place where the tort was allegedly committed.” (para.5.075)

“…… The general rule is that, in order for tortious liability to be established, the matter must be actionable both under the lex fori and under the lex loci delicti. This is often referred to as the rule of double actionability.” (para.5.078)

428.I agree with Mr Yu SC that here the tort in question was the unlawful means conspiracy and not the South African “associated” arrest. Such tort is plainly actionable in Hong Kong. If the tort were in fact committed in South Africa, then the double actionability rule required the claimant to show one could sue for unlawful means conspiracy in South Africa. So whilst the uniqueness of the “associated” arrest regime in South Africa underlied the asset-thwarting act that P relied (ie one of the unlawful means), it was not the tort for consideration of the double actionability rule. In any event, even though there was no distinct tort of unlawful means conspiracy in South Africa, the South African law of delict would recognise a claim equivalent to such English law claim (and by the same token under common law equivalent to such Hong Kong law claim) in respct of a tort of unlawful means (see Wragge 1^st Memo §§50-57 and MacWilliam 1^st Memo §60 – see paragraph 469 below). In all the circumstances, I find myself unable to accept the challenge based on the double actionability rule.

XX.  ASSET STRIPPING EXERCISE: CAUSATION AND LOSS

429.Given P’s stance on its pleaded causation/loss as explained in Part XVII above, Mr Man SC accepted this aspect was no longer of significance, but he reserved arguments on the principle of no reflective loss as part of Ds’ complaint of material non-disclosure on the part of P in its application for the 1^st/2^nd Orders.

XXII.  1^ST AFF SUMMONS

430.According to the Tang Aff, upon receipt of the D3 6^th Aff and Sanger 2^nd Aff P appreciated new factual matters were raised and certain factual matters were incorrect, so P immediately took steps to identify the relevant factual materials in response. It was said Shaw promptly compiled a draft reply to address those matters, and swore the Shaw 4^th Aff on 4 September 2017, but P did not give notice to Ds of its intention to adduce further affirmation evidence until the Shaw 4^th Aff was ready. P provided a copy of the Shaw 4^th Aff to Ds on the following day, and enquiry was made as to whether Ds would consent to have the Shaw 4^th Aff filed. In my view, given that the 1^st Aff Summons was taken out 4 business days before the 1^st Hearing and 1 day before the time prescribed for lodging written skeleton submissions, the application must be regarded as late, especially when there was no prior intimation to Ds of such intended application.

431.Mr Man SC opposed the 1^st Aff Summons, and noted P required double indulgence from the court for leave under the Lai Order (a) to adduce the Shaw 4^th Aff and also (b) to make such application out of time. The Lai Order provided the application in (a) above should be made 28 days before the substantive hearing, but the parties had various extensions of time to file their prescribed affirmation evidence, so there were less than 28 days between the D3 6^th Aff / Sanger 2^nd Aff and the 1^st Hearing, which necessitated the application in (b) above in any event. Thus, the true question concerned (a) above. At the 1^st Hearing, the Shaw 4^th Aff was received de bene esse as Ds did not seek to adduce further affidavit evidence to traverse the Shaw 4^th Aff.

432.Mr Man SC referred to Wise Union Industries Limited v Hong Kong Science and Technology Parks Corporation in which A Cheung J (as he then was) reminded there is a high threshold for introduction of new evidence in the post-CJR era given the unenviable position of the innocent party who has to face the dilemma (and hence prejudice) of either asking for an adjournment (even if it is to be paid for by the other side) and thereby losing a hearing date, or not asking for the adjournment and thereby having to meet the new evidence as best as he can within the limited time available.[169] Mr Man SC submitted the dilemma would be amplified in the present case because the 1^st/2^nd Orders as varied were likely to be continued during any adjournment.[170] But whilst this court must consider the potential prejudice to Ds in the balancing exercise when considering whether to grant indulgence, this court also has to bear in mind the primary aim in exercising the powers of the court, which is to secure the just resolution of disputes in accordance with the substantive rights of the parties (see Order 1A rule 2(2) of the Rules of the High Court (“RHC”)).

433.Mr Man SC disagreed the Shaw 4^th Aff was in response to “incorrect or misleading” matters in the D3 6^th Aff so as to give the court a correct picture of facts, and suggested it merely supplemented points already made in the Shaw 3^rd Aff (especially by hearsay information that lacked any credible source) or raised points that could/should have been made in the Shaw 3^rd Aff. But as discussed above, I have found it appropriate/necessary for P to make the following factual responses to corresponding matters in the D3 6^th Aff:

The Shaw 4^th Aff §7 addressed a further issue, ie D1 would not have been able to divert mv “PTI Volans” in time during its 5-day stay at South Africa if the PT Arrest were not set aside. Mr Man SC said the Shaw 3^rd Aff §77(4) already stated “if the [PT Arrest] had been upheld I believe that it is unlikely that [Ds] would have been able to divert the ‘PTI VOLANS’ in time”, so there was no reason why the further reasons in the Shaw 4^th Aff §7 were not included in the Shaw 3^rd Aff. But I note the further reason given for not being to divert mv “PTI Volans” from South Africa was that her 5-day stay in South Africa was likely to be for cargo operations at the behest of the charterer rather than for bunkering purpose, in which case it was put forward as an example of the factual response in the Shaw 4^th Aff for the issue in (c) above rather than to patch up what Shaw had said about mv “PTI Volans” in the Shaw 3^rd Aff.

434.In my view, the contents of the Shaw 4^th Aff were materially relevant, and I agree with Mr Yu SC that P should be given the opportunity to respond to the factual matters raised by D3 in the D3 6^th Aff. Having heard Mr Man SC’s spirited submissions in relation to the Shaw 4^th Aff, I am not persuaded Ds would be unfairly prejudiced by this court receiving such affidavit as evidence, but it would be unfair to shut out the Shaw 4^th Aff.

435.There is a further consideration in persuading this court to grant leave to admit the Shaw 4^th Aff. In the absence of affirmation evidence to traverse the Shaw 4^th Aff at the 1^st Hearing, Mr Man SC skilfully made use of Shaw’s evidence in the Shaw 4^th Aff (ie the personal representative of D1’s estate was regarded as separate and distinct from D1 himself for the purpose of “control” under the AJR Act) to submit that D1 could have sold the Pretty Fleet before any further “associated” arrests, which paved the way for Ds’ 2^nd Aff Summons for leave to adduce inter alia section C of the Draft D3 7^th Aff that set out the New Developments in relation to the sale of the 8 Pretty Vessels. Should I refuse to grant leave for the Shaw 4^th Aff in this respect, Mr Man SC’s oral submissions received de bene esse at the 1^st Hearing on sale of the Pretty Fleet would have fallen away, leaving little basis to admit section C of the Draft D3 7^th Aff. In my view, given Ds’ own 2^nd Aff Summons that sought leave to adduce the Draft D3 7^th Aff and Mr Man SC’s submissions on sale of the Pretty Vessels which I have accepted as having been reasonably raised on de bene esse basis at the 1^st Hearing, it wass difficult to see how Ds could maintain objection to the Shaw 4^th Aff that gave rise to such submissions. In all the circumstances, I grant leave for P to adduce the Shaw 4^th Aff.

XXIII.  2^ND AFF SUMMONS AND DRAFT AFFS

436.Ms Sit SC submitted P only wished to place the Related Judgments before this court, but Mr Man SC argued the parties should have leave to adduce all Draft Affs for the purpose of Ps/Ds’ Summonses. Ms Sit SC reminded that the court’s discretion to admit new evidence post-hearing should not be lightly exercised, especially in light of the public interest in efficient conduct of litigation, fairness to the parties, and avoidance of inconvenience to the court and other litigants.

437.Legal principles Keen Lloyd Energy Limited v Bank of China (Hong Kong) Limited highlighted 2 different approaches to adducing evidence after hearing but before judgment:[171]

“5.  ……  Mr Chow, for the Bank, relies on the English decision in Secretary of State for Trade and Industry v. Paulin [2005] 2 PCLC 667, where the English Court of Appeal said that :

‘ The principle applicable to an application to admit fresh evidence after hearing but before judgment is handed down is no more instructive than would be applied by the Court of Appeal on appeal from a judge.’

6.  Mr Yuen, SC for Keen Lloyd, contends that the proper test is whether or not the interests of justice are better served by allowing or rejecting the application.  In that connection, he relies on a number of authorities in Australia.”

Poon J (as he then was) found he did not have to come to any definitive view as to which approach was correct because both counsel agreed the main consideration was whether the new evidence was relevant to the application and whether it would have an impact on the outcome of the application.

438.The approach explained by Sir Andrew Morritt VC in Secretary of State for Trade and Industry v Paulin[172] envisaged the 3 Ladd v Marshall conditions[173] also apply to cases involving new evidence after hearing but before judgment. As for the different approach adopted in various Australian authorities, it was said the threshold should be lower in cases involving new evidence before judgment as opposed to after judgment. The rationale appeared to be that whilst it is in the public interest for disputes between litigants be brought to finality by judgment of the court, subject only to the normal appeal process which ordinarily does not entail reception of further evidence,[174] where the litigation process which is intended to lead to the finality of judgment is still in progress, regard should be had to another public interest consideration which is to decide the rights of the parties. If there is no deliberate decision not to conceal material on the part of the applicant, it was said the primary consideration should be that of embarrassment or prejudice to the other side. “The essential principle is that the court should do justice as between the parties. Within that concept, of course, must be the cogency or relevance of the material sought to be adduced on the application to reopen.” [175] I note in Ample Source International Ltd v Bonython Metals Group Pty Ltd & ors (No 6),[176] the Federal Court of Australia disapproved the approach adopted in Reid v Brett[177] and EB v CT (No 2),[178] which followed the Ladd v Marshall approach.

439.But recently in Hong Kong, Lisa Wong J applied the Ladd v Marshall conditions to an application to adduce new evidence before judgment in a striking out application in Balram Chainrai v Kushnir Family (Holdings) Limited & ors.[179] The learned judge referred to the approach adopted in Charlesworth v Relay Roads Ltd[180] concerning an application to admit new evidence after judgment has been handed down but before the order has been drawn up, which recognised the Ladd v Marshall conditions were applicable “but with flexibility”. Such flexibility would inform the exercise of discretion to admit new evidence at a late stage of the proceedings, and would require “balancing the competing interests of the parties and the court”, in the particular circumstances of each case in a way best designed to achieve justice.

440.However, the Australian approach was not cited to the learned judge, so Mr Man SC suggested Balram Chainrai would not preclude this court from adopting the Australian approach that applied a less stringent threshold which was said to be particularly pertinent to continuation of Mareva relief because “even if the Court has delivered judgment, if there are matters arising which call for reconsideration of whether the injunction should be continued or varied, the Court would consider them”.

441.But Ms Sit SC submitted it would not be necessary to resolve whether the English or Australian approach should be adopted, and she invited this court to approach this by (a) referring to the criteria in Ladd v Marshall to be applied “with flexibility”, (b) having regard in particular to matters of relevance and impact on the outcome, and (c) bearing in mind the exercise of discretion should take account of the underlying objectives in Order 1A of the RHC including cost-effectiveness, expedition as reasonably practicable, proportionality and procedural economy, fairness between parties, and fair distribution of court’s time/resources.

442.Ms Sit SC submitted the burden was on Ds to justify that the evidence was not only directly relevant to the issues raised but would probably have an important impact on the outcome whilst keeping in mind the nature of and threshold standards for P’s/Ds’ Summonses, P’s pleaded case in the ASoC, and the evidence at the 1^st Hearing. Ms Sit SC argued it would be wrong to just point to the interlocutory nature of P’s/Ds’ Summonses as basis to adduce evidence of new changes on the ground in the twilight period between hearing and judgment.

443.Upon careful consideration of senior counsel’s submissions, I am not persuaded the parties’ respective stance was so different, and like Poon J (as he then was) in Keen Lloyd Energy Limited, I find it unnecessary to choose between the English / Hong Kong and Australian approaches. Here, both Mr Man SC and Ms Sit SC recognised (a) the contents of the Draft Affs concerned New Developments that emerged after the 1^st Hearing, so there was no question of deliberately withholding such evidence at such hearing, and (b) irrespective whether or not the Ladd v Marshall considerations are to be adopted as a starting point the considerations under both approaches are similar in that the court should consider admitting evidence on the New Developments that were material and/or directly relevant to P’s/Ds’ Summonses by examining the cogency/relevance of the new evidence, whether it would have an impact on the outcome,[181] the public interest to do justice by deciding the rights of the parties, and the underlying objectives in Order 1A of the RHC.

444.Discussion  Apart from supplementing the Related Judgments with necessary background information, the Draft Affs essentially raised 2 New Developments as seen in the Draft D3 7^th Aff: (a) sale of the 8 Pretty Vessels of the PTI Fleet (but sale of 7 such vessels was already referred to in the Lopes Judgment albeit without particulars), and (b) payment of the Settlement Sums of S$19,639,528.77 by Ds to the Liquidator in February 2018 for the SG Judgment Debt.

445.As discussed above, these matters were relevant to Ds’ contentions at the 1^st Hearing that events in/after 2016 in relation to the PTI Fleet under D3’s control would show as a matter of actual fact what Ds submitted would likely be how D1 would have reacted had the PT Arrest been upheld. In particular, I have also found the New Developments in (a) above were not any impermissible attempt to introduce a new defence not raised at the 1^st Hearing or to re-open arguments already concluded at such hearing. Even though I was not persuaded by Ds’ arguments in the end, I cannot say such New Developments would not have an impact on the deliberations that influenced the Striking Out / Continuation Applications.

446.Further, Ms Sit SC submitted that whilst P did not object for the SAFC Judgment that set aside the PS Arrest to be adduced, P claimed it had no relevance to the P’s/Ds’ Summonses (save for the purpose of updating the Court) because it was evident from the pleas in the ASoC that P’s cause of action in conspiracy (and any associated issue of causation/loss) was based on matters concerning mv “Pretty Time”, and matters concerning mv “Pretty Scene” was only referred to “for completeness”. But Mr Man SC reminded that the SAFC Judgment was referred and annexed to the Wragge 3^rd Memo, so it was Mr Wragge SC who updated the court and introduced the SAFC Judgment.

447.In all the circumstances, I consider it appropriate to grant leave for Ds to adduce the Draft D3 7^th Aff, and to consequentially allow the parties to adduce the Draft Shaw 5^th Aff, Draft Geiser 2^nd, 3^rd and 4^th Affs and Draft Keoy Aff as well as the Wragge 3^rd Memo and McWilliam 3^rd, 4^th and 5^th Memos in relation to the New Developments.

XXIV.  FORUM NON CONVENIENS

448.For the present action, Ds were served in this jurisdiction as of right, ie D1/D2 were Hong Kong residents and even though D3 was resident in Singapore he acknowledged service through Hong Kong solicitors, so the burden was on Ds to show South Africa would be a clearly or distinctly more appropriate forum than Hong Kong (see paragraph 248 above).

449.The starting position is that prima facie the natural forum would be the place of commission of the tort (see paragraph 249 above). For a conspiracy that reaches various jurisdictions, one should consider its centre of gravity in assessing the natural forum, and if there are alleged tortious features in various places and subject to litigation elsewhere, it will be a relevant contextual factor that may merit departure from the starting point (see paragraphs 249-250 above). Further, apart from historical factor being the place of commission of the tort, the question of clearly and distinctly appropriate forum also brings into the equation the question of conveniens, ie what are or what are likely to be the issues between the parties which require determination at any trial and/or the overall shape of any trial. This appeared to be the common approach by both Mr Man SC and Mr Yu SC.

450.Here, D1 (key decision-maker and father of D3) and D2 were residents in Hong Kong. As discussed in paragraph 424 above, it appeared likely that any decision/agreement on what actions to take vis-à-vis P would have been made in Hong Kong with D1/D2 visiting Singapore only several times a year and no suggestion that Ds ever visited South Africa. The Parakou Group had Hong Kong / Singapore companies and corporate special purpose vehicles such as Panamanian companies, but no South African companies. From the above, it appeared D1/D2 ran their business from Hong Kong even though they have branched out to, say, Singapore (which was unsurprising given they were engaged in the shipping industry). Also, P (albeit incorporated in Liberia) was headquarted in Hong Kong, and the main offices and place of business of the Jinhui Group were in Hong Kong (see paragraph 5(a) above). It therefore appeared both antagonists in the present action largely ran their businesses from Hong Kong.

451.There were other factors that showed connection to Hong Kong. There was little if anything in Ds’ evidence to suggest the discussions/decisions leading to the actions complained of in the present action were taken outside of Hong Kong. Mr Man SC argued this was of little relevance because D1 had passed away, and there would not be any viva voce evidence from him at any trial. Nevertheless, I have found it strongly arguable that Hong Kong was the place of the alleged conspiracy even though Mr Man SC suggested the finishing element of damage occurred in South Africa (see paragraph 420 above). I have also pointed out the forged 17/3/08 Resolution was likely to have been made in Hong Kong, and Andy Ng, whose computer produced such backdated document, was interviewed by the Liquidator in Hong Kong. Thus, there appeared to be potential witness/evidence in Hong Kong who might not necessarily be amenable to any long-arm jurisdiction of the SA Court.

452.In my view, Ds could not complain that these matters were speculative for they had chosen not to reveal any positive defence case or to particularly identify facts/evidence of their defence that would point out why in the interest of justice South Africa rather than Hong Kong was the correct and appropriate forum in their affirmation evidence to substantiate the Stay Application.

453.In張才奎所託管中國山水投資有限公司股份相關員工 & ors v 張才奎 & anor,[182] G Lam J in the context of Order 11 of the RHC explained as follows:

“48.  While the principles are well established, there are two aspects to which I should draw attention here.  First, although the legal burden lies on a plaintiff who seeks leave to serve out of the jurisdiction to show that Hong Kong is clearly or distinctly the appropriate forum for the trial of the dispute, it has been said that it is incumbent on the defendant to identify the issues concerned and how they arise or may arise in the proceedings.  Clarke LJ put it in the following terms in Limit (No. 3) Ltd v PDV Insurance [2005] 1 CLC 515 at §72:

‘It is to my mind important that, in general, where a defendant wishes to set aside an order for permission to serve out of the jurisdiction on the basis that the action involves or may involve issues which it would be appropriate should be tried in a court or courts outside the jurisdiction, it is incumbent upon him, so far as possible to identify the issues concerned and to state as clearly as possible how they arise or may arise in the proceedings. That is so even though, on such an application, the burden of proving that England is the more appropriate forum for the trial of the action is on the claimant. It is not appropriate for a defendant merely to speculate as to the issues which might arise.’

See also VTB Capital plc v Nutritek International Corporation [2013] 2 AC 337, at §36 per Lord Mance and at §192 per Lord Clarke. 

49.  In VTB Capital plc, Lord Neuberger, recognising that a defendant is in principle ‘entitled to keep his powder dry’, stated at §91:

‘91.    However, if the defendant chooses to say nothing, then it would be quite appropriate for the court to proceed on the basis that there is no more (and no less) to the proceedings than will be involved in the claimant making, or trying to make, out its case. … [I]f he is wholly reticent about his case, he can have no complaint if the court does not take into account what points he may make, or evidence he may call, at any trial. …’

50.  What I think is clear from the authorities is that despite the burden is on the plaintiff, a defendant is expected to inform the court in outline what his case on the merits is so that the court can form a view of what the issues may be that arise for trial.  Often not every element of a plaintiff’s case requires trial; only the disputed matters have to be tried.  At the stage when a jurisdictional challenge is raised, which is almost invariably before the defendant has filed a defence, neither the plaintiff nor the court will know from any pleading what will be in dispute.  If the defendant does not reveal any positive case then the court assumes there is none and proceeds on the basis that the trial will involve no more and no less than the plaintiff trying to make out his case.” (my emphasis)

454.Although Ds were prepared to proceed on the basis of the findings in the Chua/SGCA Judgments for present purposes, it was unclear whether at any trial Ds would challenge all/any aspects of the alleged conspiracy and/or unlawful acts. But as far as the 3 points discerned from the D3 3^rd Aff for asserting there was no conspiracy (see paragraph 191 above), there was little dispute that (a) D1/D2 formally transferred their shares in Parakou SG to D3/Yang in December 2008 (as found by Chua J), (b) arrest of “associated” Pretty Vessels would only be possible in South Africa due to the unique “associated” arrest regime under the AJR Act, and (c) the PS Arrest in 2016 rested on D3’s common control via shareholdings in Parakou SG and Parakou TI in 2015/2016 and not D1’s common control via indirect control of Parakou SG and Parakou IL (which was the premise for the PT Arrest in 2009), so these uncontroversial matters would not have assisted in showing why South Africa would be a clearly and distinctly more appropriate forum than Hong Kong. Although some evidence might have derived from the Liquidator’s investigations, Ds no longer sought to put forward the SG Court as the appropriate and convenient forum. In the circumstances, even though there were features in both Singapore and South Africa, I have found the centre of gravity or the substance of the tort, ie the alleged unlawful means conspiracy, was in Hong Kong, which would also be the natural and proper forum.

455.Mr Man SC submitted that even though Ds’ affirmation evidence did not conveniently list out the connecting factors to South Africa, the wealth of affidavit evidence that debated the merits (and the legal memoranda by the parties’ South African legal experts) identified 2 connecting factors of particular importance to show South Africa was the clearly and distinctly more appropriate forum. I have dealt with Mr Man SC’s 1^st connecting factor being the place of commission of the subject tort, and I am not persuaded it detracted from Hong Kong being the natural and appropriate forum.

456.Mr Man SC’s 2^nd connecting factor was that difficult South African legal issues were involved in this case so there was an appreciable risk that justice would not be done if the HK Court were to try the matter. It was said that whilst the HK Court would have experience in dealing with shipping matters with international dimension, it was unlikely that such experience would assist in understanding/applying the unique “associated” arrest regime under the AJR Act that allowed a party to pierce the corporate veil and to arrest “associated” vessel(s) which was not permissible in Hong Kong. Mr Man SC further suggested the alleged unlawful act being the Arrest Thwarting Exercise involved substantial issues of South African law:

457.Mr Man SC submitted these were difficult South African legal issues compounded by the contrasting views held by Mr Wragge SC and Mr MacWilliam SC as follows:

458.Mr Man SC submitted that these questions concerning the scenario in South Africa had the alleged conspiracy not been perpetrated was different from Hong Kong, and any trial should be in the SA Court as a clearly and distinctly more appropriate jurisdiction to deal with these issues, especially when P’s stance in litigation in South Africa in which it was involved and/or its views on South African law had been rejected in the Levinsohn, Vahed, Lopes, and SAFC Judgments, which judgments showed that the issues in the present action were intertwined with South African legal issues/events.

459.But Mr Yu SC reminded that the starting point was that Ds failed to disclose their positive defence, so they suffered the consequence of not being able to point to any particular aspect of the trial that would require decision in a different jurisdiction. Mr Yu SC further submitted that even though the Asset Thwarting Exercise was in South Africa, a review of the legal memoranda by Mr Wragge SC, Mr Fitzgerald SC and Mr MacWilliam SC showed no dispute over either law or practice/ procedure material to the issues before the court, or at least no disputes of such complexity or novelty to Hong Kong that would require the present action to be tried by the SA Court. Instead, such review would show the South African legal experts were in substantial agreement on the law and practice/procedure, especially once how the legal memoranda came about was properly understood.

460.It started with the Wragge 1^st Memo §§1-17 that set out the background to the PT Arrest Proceedings, and the 3 issues addressed by such memorandum were set out in §19 as follows:

461.In dealing with (a) above, the Wragge 1^st Memo §§37-38 took the view that if D1 did exercise de facto control of Parakou SG, then Pretty Time Shipping SA would have no basis to oppose the PT Arrest and the setting aside application should not have been launched, and had an order been made for referring the “association” issue for oral evidence, there was no reason why oral evidence would have led the SA Court to a result different from that reached in the Chua Judgment, and if so there was no reason why the SA Court would have set aside the PT Arrest (see paragraph 100 above). Even though Ds criticised Mr Wragge SC for representing P in the PS Arrest Proceedings and for not reviewing the evidence in the SG Proceedings, these matters were addressed in the Fitzgerald Memo since Mr Fitzgerald SC did not appear for P in the SA Proceedings but did review the evidence.

462.But rather than putting forward a fundamentally contrary view, MacWilliam 1^st/2^nd Memos did not seriously engage on such issues. The MacWilliam 1^st Memo §28 (a) pointed out the Chua Judgment was handed down some 8 years later and after the Liquidator assembled significant amount of evidence, and (b) warned about transposing Chua J’s findings to the PT Arrest Proceedings to supplement a deficient cause of action. The MacWilliam 1^st Memo §28.2.7 opined that “one cannot begin to determine how a court in 2009 would have exercised its discretion when deciding whether or not it would have referred a further theoretical application for an arrest of the “Pretty Time” or other vessel in terms of Section 3(7) for the hearing or oral evidence, without first establishing exactly what facts [P] would at that time have set out in its Founding Affidavit, over and above those which were set out in its affidavits at that time, if any ……”, and suggested in §28.3.3 that Mr Wragge SC did not explain how P would have been able to place those true facts before the court in 2009 in order to discharge its onus. The MacWilliam 2^nd Memo §§46, 49 also declined to engage on the 4 scenarios postulated in the Wragge 2^nd Memo §5 (see footnote 137 above), and alleged (i) such 4 scenarios were “speculative in nature and relate to possible postulated facts and scenarios which were not before Levinsohn AJP and which have not been ascertained by an appropriate forum”, and (ii) Mr Fitzgerald SC misunderstood the MacWilliam 1^st Memo as Mr MacWilliam SC did not consider the Levinsohn Judgment in the light of the Chua Judgment as he was of the view that the effect of such judgment should be considered only if and when an appropriate forum had determined exactly what the true facts were in relation to the control of Parakou SG in terms of the AJR Act at the relevant time.

463.As Mr Yu SC submitted, the whole point of the exercise was to ascertain the hypothetical rather than actual scenario of what would have happened if the 17/3/08 Resolution and the affidavits by Ds/Yeung (found by Chua J to be false) were not adduced before the SA Court. In this respect, Mr Wragge SC put forward the 4 scenarios as explained in footnote 137 above (eg if the true facts were told and/or the lies were not uttered) and Mr Wragge SC and Mr Fitzgerald SC addressed such 4 scenarios, but as seen in the above paragraph, Mr MacWilliam SC refused to engage by saying they were speculative until the “true facts” (in contra-distinction to legal issues) as to control over Parakou SG were ascertained. On such basis, I tend to agree with Mr Yu SC that the collection of legal memoranda did not mean there was substantial difficulties over South African law which the HK Court could not grapple with and which required attention of the SA Court.

464.Even though Mr Man SC set out a table of South African legal issues and purported disagreements between the parties’ legal experts on such issues, a more detailed scrutiny revealed there was no significant dispute on key aspects of the relevant South African law and practice/procedure. First, it appeared the Wragge 2^nd Memo §13 confirmed agreement with Mr MacWilliam SC’s assessment of the ratio decidendi of the Levinsohn Judgment in the MacWilliam 1^st Memo §6. Indeed, the role of the foreign law expert is to inform the court of the relevant contents of the foreign law, but the HK Court could consider the primary source (ie a judicial decision of a common law court) being the Levinsohn Judgment itself, and apply its knowledge of the common law (see paragraph 307 above).

465.Secondly, Mr Man SC noted the Chua Judgment found as a matter of Singaporean law D1 was a shadow director and key decision-maker of Parakou SG after he resigned as director in December 2008, so there was issue as to he was therefore in control of Parakou SG for the purpose of the AJR Act. But it appeared from the MacWilliam 1^st Memo §15 that Mr MacWilliam SC agreed with Mr Wragge SC’s narrative of the test concerning the control requirement for the purpose of section 3(7) of the AJR Act. I bear in mind that the role of a foreign law expert is to inform this court of the relevant contents of the foreign law rather than the ultimate answer on an issue (see paragraph 307 above). Thus, whilst it was for the South African legal experts to inform the HK Court of the legal requirements for the element of control under the AJR Act, it was not for them to educate the court on the determination of the “true facts of control” upon application of the legal test.

466.Thirdly, the MacWilliam 1^st Memo §13 agreed that Mr Wragge SC correctly summarised in general terms the procedure followed in South Africa on admitting oral evidence set out in the Wragge 1^st Memo §20. In the Wragge 2^nd Memo §20, Mr Wragge SC agreed with Mr MacWilliam SC on the requirements that a claimant should satisfy before reference to the hearing of oral evidence should be allowed (see MacWilliam 1^st Memo §24). In light of such agreement, it was for the HK Court as tribunal of fact to apply such requirement/procedure to determine the counterfactual of whether oral evidence would be admitted in the relevant factual context to be found by the court.

467.Fourthly, on the issue of whether P would have been able to arrest another “associated” vessel to provide security on the basis of amplified affidavits, the MacWilliam 1^st Memo §38 agreed with Mr Wragge SC that a 2^nd arrest of mv “Pretty Time” or other “associated” arrest was not precluded even though Levinsohn AJP set aside the PT Arrest based on the in limine ground. In this respect, we now have the benefit of the relevant South African law as explained in the SAFC Judgment §§91-95.

468.Mr Yu SC reminded that Mr Man SC made submissions at the 1^st Hearing that it was actually not necessary go into these legal memoranda because P could have re-arrested mv “Pretty Time” before she left South Africa after release of the PT Arrest and/or P could have made 2^nd/further arrest of “associated” Pretty Vessels that sailed to South Africa (see paragraph 312 above), so analysis of the Levinsohn Judgment and/or its ratio decidendi would not be particularly helpful, and the key question was whether the Pretty Vessels would have sailed to South Africa, which was a factual rather than legal question. On the other hand, Mr Man SC submitted that the fact he did not rely on such legal memoranda in addressing the Striking Out and Continuation Applications did not mean these legal issues would not have to be addressed in any full-blown trial. But this point would not carry Ds’ argument much further because they failed to condescend upon their positive defence case.

469.Fifthly, Mr Man SC submitted there was disagreement between the parties’ South African legal experts as to whether unlawful means conspiracy was recognised in South Africa. This went to the question of double actionability, and in my view no longer material in light of my conclusions above on this issue. But I nevertheless note that the MacWilliam 1^st Memo §60 agreed with Mr Wragge SC’s opinion that whilst there is no distinct tort of unlawful means conspiracy there were indicators in case authority that the South African law of delict may recognise a claim equivalent to the English law claim in respect of a tort of unlawful means.

470.As for the Lopes/SAFC Judgments concerning the PS Arrest Proceedings, those judgments speak for themselves. In relation to The Monica S principle, we now have the benefit of the SASCA Judgment, and where there are foreign judicial decisions directly on point, the court should apply such decision (see paragraph 375 above). In any event, as explained in paragraph 376 above, the true issue was not the current judicial view of the legal applicability of The Monica S principle, but the historical understanding of the state of the law in 2009-2014/2017 (ie whether there was a single school or two schools of thought that would have affected D1’s conduct had the PT Arrest been upheld). There was, however, common understanding between the parties’ South African legal experts that the law in South Africa in this respect was in controversy in 2009-2014/2017.

471.In light of the aforesaid analysis, I am not persuaded that the foreign law issues were so significant and difficult and/or there were so serious disagreements over the key legal points between the parties’ respective legal experts that would sway me from the view (based on all the circumstances) that the HK Court remained the natural and appropriate forum. Thus, there is no need for me to consider whether P would suffer any legitimate personal/juridical advantage if the present action was tried in South Africa.

472.For completeness, I should add that in coming to the above conclusion I have taken into account the following miscellaneous factors which again were not sufficient to sway me from my conclusion:

473.In the circumstances, the Stay Application should be dismissed.

XXV.  1^ST/2^ND ORDERS: MATERIAL DISCLOSURE

474.Mr Man SC in his submissions complained that the following important points of law were not drawn to the attention of the ex parte judge: (a) the potential application of the rule against reflective loss in respect of the Asset Stripping Exercise, (b) a fair presentation of the time-bar issue, and (c) the correct approach to double actionability.

475.In respect of (a) above, ie the potential application of the rule against reflective loss in respect of the Asset Stripping Exercise, Mr Man SC complained that P’s stance as clarified by Mr Yu SC at the 1^st Hearing (ie if Ds were successful in “knocking off” P’s pleaded conspiracy that relied on the Asset Thwarting Exercise then P’s claim for loss/damages would be confined to the Expenditure) was different from the picture presented to the ex parte judge (ie the Asset Stripping Exercise was independently causative of loss to P for inability to enforce the Awards or at least for US$12,020,000 – see paragraph 150 above), so P should have alerted the ex parte judge about the rule against reflective loss as explained in Landune International Ltd v Cheung Chung Leung,[186] Waddington Ltd v Chan Chun Hoo[187] and Pico North Asia Holdings Limited v Cheung Yuk Ting Linda & anor [188] that not only debars a claim by a shareholder for reflected loss suffered by the company, but also debars a claim by a shareholder who suffers loss in the capacity as a creditor (see Ladune International Ltd[189] and Pico North Asia Holdings Limited at paragraph 34) and arguably a claim by a mere creditor (see observations by Lord Neuberger LJ in Gardner v Parker[190] cited by Yuen JA at page 46 in Landune International Ltd and observations by DHCJ Wilson Chan (as he then was) in Basab Inc & anor v Superb Glory Holdings Limited & ors[191] even though reservations were expressed in Fortress Value Recovery Fund I LLC & ors v Blue Skye Special Opportunities Fund LP (a firm) & ors,[192] Erste Group Bank AG London Branch v JSC “VMZ Red October” & ors[193] and Marex Financial Ltd v Sevilleja[194]).

476.Mr Man SC submitted that failure to disclose such decently arguable matter was an egregious non-disclosure because it concerned a point of complexity, nuance or subtlety about exactly what P was trying to rely on when so much emphasis was laid on the Chua Judgment, and that P should have pointed out the claim for the Cap Sum was arguably reflective. It was not a point of law that P could expect the ex parte judge to worked out for herself. But in paragraphs 284-288 above I have found P did not present any different picture of its case to the ex parte judge as Mr Man SC suggested, so there was no need for P to alert the ex parte judge of any defence argument that loss from the Asset Stripping Exercise would be barred by the rule against reflective loss.

477.Mr Man SC also submitted P should have alerted the ex parte judge it could be argued that to allow the claim for loss from the Asset Stripping Exercise to proceed would undermine the law’s traditionally restrictive attitude towards creditors’ claiming directly against directors in insolvency as (a) any breach of fiduciary duty to consider the interests of the creditors when the company is insolvent (which duty is owed not to creditors but to the company[195]) is not actionable by individual creditors otherwise it will contravene the collective procedure of insolvency, encourage multiplicity of actions by the creditors, open a backdoor to circumvent the pari passu rule and lead to double recovery,[196] and (b) such policy considerations would be equally undermined if P’s claim were to proceed on the basis of Ds’ breaches of fiduciary duty (as part of the Asset Stripping Exercise) that were relied on as unlawful acts of the alleged conspiracy against P.[197]

478.But in my view, the contentions in the above paragraph, like the rule against reflective loss, rested on Ds’ view that the picture of P’s case presented to ex parte judge was different from Mr Yu SC’s explanation of P’s case at the 1^st Hearing. Since I have rejected such view and found it was not P’s case that the Asset Stripping Exercise was independently causative of loss, the contentions in the above paragraph fell away and could not amount to any material non-disclosure.

479.In respect of (b)-(c) above, Mr Man SC complained that the ex parte materials did not give fair presentation of the time-bar issue and the correct approach to double actionability. These matters have been discussed in Parts XIX and XX above, and I shall not repeat them here except to say the discussion showed that these arguments were not made out.

480.The affidavit evidence by Sanger/D3 raised a host of other matters which Ds claimed (but which Mr Man SC did not orally canvass at the 1^st Hearing) had not been fairly addressed before the ex parte judge and which Ds relied on as material non-disclosure, including inter alia (a) the conspiracy claim against Ds only succeeded in relation to 3 Challenged Transactions that were worth only about US$8,002,400 (see paragraphs 137-138 above), (b) P had over-stated the risk of dissipation in relation to the SG Properties which were subject to caveats (see paragraphs 130-131 above), (c) the correct scope of account of profit remedy in the SG Proceedings (see paragraph 128 above), and (d) the uniqueness of the South Africa “associated” arrest provisions which was relevant to whether or not Hong Kong was a suitable jurisdiction for this case at all (see paragraphs 151-155 and 301-302 above).

481.I am not persuaded by such complaints. For (a) above, such contentions rested on the premise that P’s case as presented to the ex parte judge argued that the Asset Stripping Exercise was independently causative of loss. Ds’ complaint fell away since I did not accept such contention (see paragraphs 284-288 above). For (b)-(d) above and other complaints raised by Sanger/D3, Mr Yu SC countered them in the annex to his written submissions for the 1^st Hearing without further oral elaboration. I have carefully reviewed Ds’ complaints and Mr Yu SC’s responses, and do not propose to add length to this judgment by canvassing them here, but suffice to say I agree with Mr Yu SC that there was no material non-disclosure for the reasons set out in the annex to his written submissions and in the foregoing discussion in this judgment.

482.In coming to the above view, I also bear in the mind Fuad JA’s observations in Citibank NA v Express Ship Management Services Ltd & anor as follows:[198]

“While the courts must be vigilant and insist that full and frank disclosure be made in grounding affidavits for ex parte applications for injunctions, ……, it is essential to bear in mind the true principle upon which this rule is based. Unless the courts use the sanctions which the practice gives them only when the non-disclosure is of facts which are relevant to the ex parte judge’s ‘weighing operation’, an impossible burden would be placed upon applicants and their advisers, and affidavits, ex abundanti, will tend to contain all sorts of facts and exhibits which are not really necessary for the proper exercise of the court’s discretion when ex parte relief is sought.”

Cons VP expressed similar sentiment at p 1191, and MacDougall J likewise observed as follows at pp 1191-1192:

“…… it would be unfortunate if it were to be thought that in laying down the very sensible and necessary principles concerning disclosure of all material facts, the courts have intended to give active encouragement to undeserving defendants to search ingeniously for facts which a plaintiff might innocently have failed to disclose, in the hope that a judge may consider them to be material and so discharge the injunction. Commonsense must prevail. The heavy burden cast on a plaintiff must not be allowed to become so onerous as to be intolerable.”

483.I fear the myriad matters that Sanger/D3 alleged to be material non-disclosure fell into the category of facts/matters that were not really necessary for the ex parte judge’s “weighing operation”, and I find P had not breached its duty to make full and frank material disclosure.

XXVI.  JINHUI CONSENT SUMMONS: COSTS

484.By the Jinhui Consent Summons, Jinhui Holdings offered its cross-undertaking in addition to the pre-existing undertakings by P and Jinhui (P’s indirect Bermudan holding company) in support of the 1^st/2^nd Orders as varied, and P offered to pay D costs of the Jinhui Consent Summons, but left outstanding the question whether or not such costs should be paid forthwith and/or on indemnity basis. Ms Sit SC agreed that such costs could be paid forthwith, [199] so the remaining issue was whether such costs should be awarded on indemnity basis. As explained in New Asia Energy Ltd v Concord Oil (Hong Kong) Ltd,[200] it is not the case that indemnity costs are only appropriate where there has been deception / underhand conduct or should be confined to cases which have been brought with an ulterior motive or for an improper purpose. It was said the jurisdiction to order indemnity costs is not to be fettered or circumscribed beyond the requirement that taxation on an indemnity basis must be “appropriate”.

485.There was no dispute that (a) Jinhui was listed on the Oslo Stock Exchange and (b) Jinhui Holdings was Jinhui’s parent company and a Hong Kong listed company, so both Jinhui Holdings and Jinhui were P’s parent companies. It was also common ground that the Jinhui Consent Summons was necessitated by P’s error and Ds were not to be blamed in any way. After all, it was the Shaw 1^st Aff that mis-stated Jinhui as a Hong Kong registered company.

486.Mr Man SC argued that information going to the worth of a cross-undertaking for an ex parte Mareva injunction must be a material fact, non-disclosure of which would justify immediate discharge of the injunction although (where full disclosure was made at the inter partes hearing) the court had a discretion to continue the injunction or to discharge and re-grant substantially the same injunction.[201] Mr Man SC submitted the above mis-statement pertained to basic information that Ds relied on P to get right, so P should not have been gotten it wrong.[202] It was said the error was a serious one because the ex parte judge on reading the Shaw 1^st Aff as a whole would likely have a false impression that Jinhui had presence/assets within the jurisdiction and hence also a false sense of the worth of Jinhui’s cross-undertaking. Mr Man SC submitted such ex parte duty should not be brushed aside because of any late fortification offer,[203] and even if inadvertent the mis-statement was unacceptable, so costs on indemnity basis would be appropriate.

487.In my view, 2 matters were of note. First, P explained the aforesaid mis-statement was due to oversight, and there was no basis (and Ds had not been able to point to any) to say that P deliberately withheld material information from the ex parte judge. I refer to Keith JA’s observations at pp 690-691 in New Asia Energy Ltd that “…… I do not see how the mere failure to disclose material facts on an ex parte application can of itself automatically justify the award of indemnity costs. The non-disclosure may simply be an innocent oversight, not intended to gain an unfair advantage in any way”. In that case, there was no basis to find any element of deliberation about the plaintiff’s failure to disclose material facts, and there was nothing other than that, in the rush to obtain the injunction, facts which ought to have been brought before the ex parte judge’s attention were overlooked, so the Court of Appeal held that costs should be taxed on usual basis.

488.Secondly, as Ms Sit SC submitted, there was no suggestion that would cast doubt on P’s or Jinhui’s financial ability to honour the cross-undertaking by inter alia obtaining financial support from its parent companies. Whilst I agree the principle of full and frank disclosure should not be brushed aside because of a late offer of fortification, I bear in mind that Woo VP in Cheung Kam Wah v Cheung Hon Wah & ors (see footnote 203 above) observed that such late fortification would be a matter to be considered when the court put everything into the balance. Here, once the error was identified, Jinhui Holdings offered to provide additional cross-undertaking to take effect from the grant of the 1^st/2^nd Orders, and P agreed to pay costs to Ds.

489.Taking all of the above matters into account, P must bear costs for rectification of the aforesaid mis-statement, and P did not shy from such responsibility. But for reasons explained in paragraphs 487-488 above, I am not persuaded that in the exercise of my discretion P should bear such costs on indemnity basis.

XXVII.  CONCLUSION

490.In the circumstances, I grant the following orders:

491.For the 1^st Aff Summons, I grant a costs order nisi that (a) save for the cost provision in (b) below, P shall pay Ds costs of and occasioned by the 1^st Aff Summons (including all costs reserved if any) to be taxed if not agreed, and (b) Ds shall pay P costs of and occasioned by its opposition to the 1^st Aff Summons at the 1^st Hearing to be taxed if not agreed.

492.For the 2^nd Aff Summons, I grant a costs order nisi that (a) save for the cost provision in (b) below, costs of the 2^nd Aff Summons in respect of the Draft D3 7^th Aff and of the consequential applications for leave to adduce the other Draft Affs (including all costs reserved if any) be costs in the cause of Ds’ Summonses, and (b) P shall pay Ds costs of and occasioned by its opposition to the 2^nd Aff Summons and to Ds’ applications for leave to file and serve the Draft Geiser 2^nd, 3^rd and 4^th Affs at the 2^nd Hearing to be taxed if not agreed.

493.In respect of the costs of P’s Summons, I grant a costs order nisi that costs of and occasioned by such summons (including all costs reserved, if any) be P’s costs in the cause. In respect of the costs of Ds’ Summonses, I grant a costs order nisi that Ds shall pay P costs of and occasioned by the Striking Out Application and Stay Application (including all costs reserved if any) to be taxed if not agreed.

494.In respect of Ds’ Jinhui Costs Order, I grant the following directions for summary assessment of costs:

495.For all of the costs orders nisi and cost order, there be certificate for two counsel. It remains for me to express my gratitude for the helpful submissions by counsel for both parties.

Mr Benjamin Yu SC and Ms Eva Sit (12-13 September 2017) and Ms Eva Sit SC and Mr Peter Dong (22 July 2019), instructed by Withers, for the plaintiff

Mr Bernard Man SC and Mr Danny Tang, instructed by Herbert Smith Freehills, for the 1^st, 2^nd and 3^rd defendants