Citibank, N.A. v. James S. Lee

Case No.HCA 792/1979

Court

High Court CFI

Date—

Judge—

Case Document

100%Judiciary

HCA000792/1979

1979 No. 792

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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BETWEEN
	CITIBANK, N.A. (formerly known as First National City Bank)	Plaintiffs
	and
	JAMES S. LEE	Defendant

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Coram: Mr. Commissioner Hooper in Chambers.

Date of Judgment: 22nd October, 1980.

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JUDGMENT

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1. This is an application on the part of the defendant before me in Chambers for an order under the inherent jurisdiction of this Court or alternatively under Order 18 Rule 19(1)(b) or (d) of the Rules of the Supreme Court that all further proceedings in this action be stayed or the action struck out on the following grounds:-

	(a)	the Appellate Division of the District Court of Guam having on the 18th August 1980 allowed the defendant's appeal and reversed the very judgment on which the plaintiff in these proceedings is relying and suing upon, it would be vexatious, frivolous and an abuse of process for the plaintiff to continue the present proceedings;
	(b)	the Appellate Division of the District Court of Guam having on the said 18th August 1980 found in favour of the defendan that sums (in excess of the amount in which the principal debtor was allegedly in default) had been misapplied by the plaintiff in breach of its fiduciary duties. the defendant would not and could not be liable under the Guarantee sued upon in the absence of any default even if, which is denied, the Guarantee ever had or has any validity; in the circumstances it would be vexatious, frivolous and an abuse of process for the plaintiff to continue the preset proceedings; and/or
	(c)	the Appellate Division of the District Court of Guam having on the said 18th August 1980 remanded the issue of rescission of the Guarantee and the defendant's liability if any thereunder for trial in the Superior Court of Guam, it would be vexatious and an abuse of process for the plaintiff to proceed with the present proceedings and it would be just and convenient to have this action stayed or struck out;

2. The inter partes summons sought also a further order that, in any event, the injunction order restraining the defendant until further order from leaving the jurisdiction made by the Honourable Mr. Justice Garcia on 29th January 1980 upon the plaintiff's ex parte application, and extended from time to time and continued on 10th April 1980 together with an order or undertaking restraining the defendant's disposal of assets and all or any other restraining order or undertaking made or given in these proceedings be forthwith lifted and discharged and a direction that the defendant's travel documents be forthwith returned to the defendant and for all other consequential directions and for costs.

The Application for Stay or Striking Out

3. This action was commenced on the 26th February 1979 and in the Statement of Claim as it stood at that time the plaintiffs were suing on a Continuing Guaranty in writing dated the 26th September 1975 allegedly made between the plaintiffs and the defendant, whereby the defendant, agreed for the considerations therein set out to guarantee the due payment of all advances made by the plaintiffs to a company called James S. Lee & Co. (Guam) Limited. It was not mentioned in the Statement of Claim that there had been any judgment awarded to the plaintiffs in the Superior Court at Guam.

4. It is however common ground in this case that judgment had been given to the plaintiffs in the Superior Court at Guam and that the Continuing Guaranty upon which the Plaintiffs have sued in the present case is the same Continuing Guaranty as the subject matter of the proceeding between these two parties in the Guam hearing.

5. There were a number of interlocutory proceedings in our jurisdiction including summary judgment under 0.14 which was subsequently set aside, but eventually an amended Statement of Claim was filed on the 1st May 1980. The amended Statement of Claim was in the following terms:-

'	'1. The Plaintiffs are bankers carrying on business at their branch at Agana in the territory of Guam and elsewhere.
	2. At all material times, one James S. Lee & Co. (Guam) Limited (hereinafter called "the Company"), a corporation incorporated under the laws of Guam, c/o Post Office Box 7958 Tamuning, Guam 96911, was a customer of the Plaintiffs' said branch.
	3. On or before 26th September 1975, the Company was indebted to the Plaintiffs in the sum of US$2,250,000.00 Such indebtedness, which was subject to the terms of a Loan and Cross-Collateralization Agreement dated 26th September 1975 made between the Company and the Plaintiffs, is evidenced by a Promissory Note dated 26th September 1975 executed by the Company in favour of the Plaintiffs.
	4. The Promissory Note dated 26th September 1975 provided that the Company for value received promised to pay to the order of the Plaintiffs by instalments and in any event not later than 31st August 1982 the principal sum of US$2,250,000.00 with interest thereon at the rate of 2 per cent per annum above the Base Rate of the Plaintiffs as defined therein. It was further provided in the Promissory Note that the principal indebtedness and accrued interest outstanding would become immediately due and payable should the Company default in the due and punctual payment either of the principal or of the interest.
	5. By a Continuing Guaranty in writing dated the 26th September 1975 (hereinafter called "the said guaranty") and made between the Plaintiffs and the Defendant, the Defendant agreed in consideration of any existing indebtedness to the Plaintiffs of the company as therein set out to guarantee the due payment of all advances made by the Plaintiffs to the Company including all interest, and any and all expenses which might be incurred by the Plaintiffs in collecting such advances and/or in enforcing all or any of the plaintiffs' rights under the said guaranty.
	6. It was an express term of the said guaranty that the Defendant should not be liable for an amount exceeding US$2,250,000.00.
	7. On 31st March 1976, the Company defaulted in the payment of interest in the sum of US$48,652.99 on its indebtedness aforesaid. On 2nd April 1976, the Plaintiffs by their attorneys in pursuance of the terms of the Promissory Note dated 26th September 1975 declared that the sum of US$2,246,962.64 being the principal indebtedness then outstanding together with interest thereon as of 31st March 1976 in the sum of US$48,652.99 and daily interest thereafter at the rate of 2 per cent per annum above the Plaintiffs' Base Rate as set forth in the Promissory Note became immediately due and payable and notice of the same was sent to the Defendant by the Plaintiffs' attorneys.
	8. Despite the matters aforesaid, neither the Company nor the Defendant paid to the Plaintiffs the said sum of US$2,246,962.64 and the interest of US$48,652.99 as aforesaid or any part thereof.
	9. On 30th April 1976, the Plaintiffs as the defendant in the proceedings intituled Civil Case No. 433-76 in the Superior Court of Guam counterclaimed against both the Defendant and the Company for the payment of the sums referred to in Paragraph 8 hereof and sought an order for the foreclosure and sale of the properties listed in the Loan and Cross-Collateralization Agreement dated 26th September 1975 and/or other properties on which the loan of US$2,250,000.00 was secured.
	10. On 14th November 1977, the Superior Court of Guam entered judgment for the Plaintiffs in the sum of US$2,634,079.45 for principal, accrued interest and attorneys' fees computed up to the date of judgment and held that the Defendant was liable to the Plaintiffs in an amount not exceeding US$2,250,000.00 after crediting amounts which would be realized from foreclosure sales of the various motgaged properties. The Superior Court of Guam further ordered the foreclosure of the mortgaged properties and that the same be sold by the Marshall of the Superior Court.
	11. After the sale of the mortgaged properties aforesaid, the Superior Court of Guam on 13th December 1978 held that after the application of the proceeds from such sales of the mortgaged properties towards the judgment debt of US$2,634,079.45, there was a deficiency of US$1,850,920.03 due and owing to the Plaintiffs by the Defendant and the Company jointly and severally.
	12. Neither the Company nor the Defendant has paid to the Plaintiffs the said sum of US$1,850,920.03 or any part thereof.
	13. In the alternative to Paragraphs 2 to 12 hereof, the Plaintiffs say as follows:

	(1)	On 30th April 1976, the Plaintiffs as the defendant in the proceedings intituled Civil Case No. 433-76 filed a Counterclaim against, inter alia, the Defendant in the Superior Court of Guam in the Territory of Guam.
	(2)	The Superior Court of Guam was duly constituted and held in accordance with the laws of Guam, and had jurisdiction in that behalf.
	(3)	On 13th December 1978, the Superior Court of Guam gave judgment in the action in favour of the Plaintiffs and ordered the Defendant to pay to the Plaintiffs forthwith the sum of US$1,850,920.03 and interest thereon at the rate of 6 per cent per annum from 31st October 1978 until payment.
	(4)	The Defendant failed and has failed to pay to the Plaintiffs the sum of US$1,850,920.03 or any part thereof.

AND the Plaintiffs claim:

(1)

Under Paragraph 12 hereof,

	(a)	the sum of US$1,850,920.03;
	(b)	interest at such rate as to this Court shall seem fit.

(2)

In the alternative to (1) above and under Paragraph 13 hereof.

	(a)	the sum of US$1,850,920.03;
	(b)	interest thereon at the rate of 6% per annum from 31st October 1978 until the date hereof and thereafter at such rate as this Court shall seem fit until payment.

	(3)	Further or other relief;
	(4)	Costs. '

6. It will be observed that the plaintiffs were now suing not only on the Continuing Guaranty, but in the alternative were in paragraph 13 suing on the judgment of the Superior Court of Guam.

7. It is common ground that in August this year, 1980, the Appellate Division of the District Court of Guam reversed the judgment of the Superior Court of Guam. This means that the plaintiffs can no longer rely upon that judgment in this Court. It is common ground that the plaintiffs have appealed to the 9th Circuit Courts of Appeal which has jurisdiction over Guam, Hawaii, California and other States in the region. That appeal is in respect of the findings of the Appellate Division of the District Court that the plaintiffs had misapplied funds. That decision of the 9th Circuit Courts of Appeal may eventually determine whether or not the company defaulted in the payment of interest in the sum of US$48,652.99 as alleged in paragraph 7 of the Statement of Claim. It would appear however that the Defendant's lialility will only depend upon the finding of the Superior Court of Guam on the issue which was referred back to it by the Appellate Division of the District Court, as to whether the defendant is bound by the Continuing Guaranty in writing dated the 26th September 1975, or whether it upholds the defendant's contention that that 'Continuing Guaranty' should be rescinded. That has now to be decided on the merits in the Superior Court of Guam should the plaintiffs proceed with their counterclaim there.

8. There is therefore no judgment standing in the Superior Court of Guam upon which the plaintiffs can now rely in the present action.

9. Mr. Chang for the defendant submits that paragraph 13 of the Statement of Claim should therefore be struck out.

10. Mr. Chang also submits that paragraphs 9, 10, 11 and 12 of the Statement of Claim should also be struck out. This is because the plaintiffs have used the judgment of the Superior Court of Guam to arrive at a figure which they are claiming in the present action. In other words he argues the entire figure is computed on the Guam judgment. It would appear however that paragraphs 9 - 12 of the Statement of Claim are not pleaded for the purpose of relying upon that judgment. They are pleaded for the purpose of setting out the history of the matter, showing how the plaintiffs have arrived at a figure which they now say is due and owing to they by the defendant.

11. Assuming that I was to order that this action should not be stayed, or that these paragraphs 9-12 should not be struck out, the plaintiffs may or may not succeed in Hong Kong in obtaining judgment for the precise sum claimed, depending upon what this Court's attitude would be on the issue of rescission, and on the issue of misapplication of funds. There is just no longer any judgment in the Superior Court of Guam upon which the plaintiffs can now rely.

12. It would seem that the defendant has a good case for asking that paragraph 13 of the Statement of Claim be struck out, as there is no longer any judgment to rely on, but that the question as to whether the plaintiffs' calculations are correct, is still a matter which this Court would be entitled to decide if it went on to hear this action. (Depending of course on the Defence put up by the defendant).

13. Mr. Martin Lee for the plaintiffs who addressed the Court with his usual eloquence has raised a very interesting point. He has drawn the Court's attention to the fact that the judgment of the Superior Court of Guam was dated the 14th November 1977 and the judgment of the Superior Court of Guam called the judgment for deficiency in favour of Citibank is dated the 13th December 1978. The plaintiffs, he concedes, filed the action in this Court on the 26th February 1979 while the judgment of the Appellate Division of the District Court of Guam reversing the decision of the Superior Court of Guam was given on the 18th August this year 1980. He therefore submits that in making the present application the defendant is relying on the judgment given by the District Court of Guam to show that the basis of the plaintiffs' claim has now completely disappeared. In other words the defendant is setting up a Defence based on a judgnent of the Appellate Division of the District Court of Guam which was pronounced long after the plaintiffs, Citibank, had instituted proceedings in Hong Kong. In this respect he relies on the passage in Halsbury's Laws of England 4th edition Para. 737 in the following terms:-

"In order to be a good defence to an action in England on the original cause of action, the foreign judgment must be final and conclusive between the parties ..........."

14. Pausing here for a moment he concedes that the judgment of the District Court of Guam must be regarded as final, despite the fact that there is an appeal pending.

"	-...............
	The judgment must also have been pronounced upon the merits of the case; thus a defendant who has obtained judgment in a foreign court on a plea raising a foreign statute of limitations only cannot rely on the judgment as a defence to proceedings in England. The judgment must be in respect of the same cause of action;......................... A foreign judgment in personam is a bar to proceedings in rem in England in respect of the same subject matter.
	It seems that a foreign judgment cannot be relied upon as a defence in English proceedings if it was not given until after those proceedings began; but the matter is not satisfactorily settled."

15. Mr. Lee submits that the Court can only dismiss or stay an action under Order 18 Rules19 of the Rules Court or under the Supreme Court or undor the inherent jurisdiction of the Court if the case is one where it is plain and obvious that this should be done. If, he argues, there is a point of law which requires serious discussion, then the Court should not exercise 8 a discretion to dismiss or stay the action. He further argues that the defendant is not without a remedy in that he could apply to have the point of law set down for trial as a preliminary point under the provisions of Order 33.

16. Mr. Chang for the defendant counters this argument by distinguishing the authorities quoted by Halsbury (For the final paragraph in the above quotation) from the situation in the present case.

17. The first of these case is THE DELTA (1876) 1 P.D. 393. The facts of that case are summarised in the Headnote as follows:-

"The owners of the ship D. instituted proceedings in a foreign Court against the owner of the ship E. in respect of a collision between the two ships. The owner of the E. instituted a cause of damage in this country in respect of the same collision against the ship D. The owner of the E. neglected to enter an appearance in the foreign Court, but instituted a cross cause in the foreign Court against the owners of the D. In both suits in the foreign Court the owners of the D. obtained judgment by reason of the defaults of the owner of the E. The owners of the D., having appeared in the cause instituted in this country, pleaded the foreign judgments in bar. The Court in this country, having decided on the merits in favour of the owner of the E., refused to give effect to the defence of res judicata."

18. Mr. Chang drew my attention to the fact that the collision in that case occurred on the 11th August 1871. The foreign suit was instituted by the owners of D. in September 1871. The judgment in the foreign court was not given until December 1871. by that time the proceedings had been instituted in England and the parties were fighting the case on the merits whereas in the foreign court the judgment was given by default. In other words he argues the owners of D., although they had obtained judgment in a foreign court, they chose to fight the case on its merits in the English court. The foreign judgment was not relied upon by the very parties who got judgment in the foreign court.

19. In THE DELTA, of course, a defence was put up based on the evidence of foreign jurists and others that the dispute or question of dispute between the parties had previously been determined by another competent court so the matter was in the category of one of res judicata. This was dealt with in the judgment of Sir Robert Phillimore at page 43 as follows:-

"	On the question of foreign law both French and Italian advocates were examined. Their evidence left it at least doubtful whether the judgments of the Court of Commerce, given as they were in default of appearance or prosecution, and never having been executed, would now have in France or Italy the force of res judicata.
	But I think it unnecessary to go into their evidence in detail, as I am of opinion this defence must fail, for two reasons: the first is that at the time when the suit against the Delta was begum there was confessedly no res judicata; there was only a lis alibi pendens; and if the owner of the Delta had wished escape from having two suits against them for the same matter brought to a hearing, they should have put the owners of the Erminia Foscolo to their election, compelling them to abandon one or the other of the suits, according to the rule laid down by me in The Mali Ivo, and quite recently applied in the Catterina Chiazzare.
	As regards the suit against the Erminia Foscolo, that was brought by the owners of the Delta while the foreign lis was pending; they cannot be heard, therefore, to object that that lis is a bar to a decision on the merits in this suit."

20. Mr. Chang relies on this passage and argues that the Court should adopt the same course in the present case and put the plaintiffs to the election whether they want to proceed with the trial on the merits in Guam, or whether they wish to proceed in this Court. Mr. Chang contrasts the situation in the Delta with the situation in the present case. In the Delta at the time the Defence was pleaded there was no lis pendens in the foreign court. There was only a judgment there which had been obtained by default. There was no question of further proceedings there and there was no execution there. Both sides had decided to come to England and fight it. That however was not the situation in the present case. There was a judgment in the Guam Court which had been relied upon by the plaintiffs. They had sued on it. They had proceeded to get an Order 14 summary judgment. They had sued on it here and computed their claim on it. In other words the entire claim was computed on it. They had chosen their own jurisdiction in Guam in the first place. Since the matter had been referred to the Superior Court for re-trial, there was a lis pendens in a foreign court. The transaction was located in Guam. The witnesses were all there. The plaintiffs are an American bank and the jurisdiction is American. Mr. Chang submits that he does not have to invoke' res judicata', because the Court should stay proceedings pending the election by the plaintiffs to decide whether they want to fight the case here on the merits or whether they want to fight it in Guam on the merits.

21. The second case relied upon by the Authors of Halsbury 4th Edition for the last paragraph in the above-mentioned passage is the case of Houstoun v. Marquis of Sligo (1885) Vol. 29 Ch. D. 448. The decision of the learned Judge who heard that case, Pearson, J. is summarised in the Headnote as follows:-

"Held, by Pearson, J., that in order to raise the defence of res judicata it is not necessary to set forth in detail in the defence the pleadings in the other action the judgment in which is said to operate as res judicata, but in order to judge whether the same questions were at issue in the first action as in the second, the Court will look at the pleadings in the first action, though they were not set forth in the defence in the second action. Whether a judgment obtained in one action before the trial of another can operate by way of estoppel as res judicata. unless the judgment was obtained before the issue of the writ in the second action, Quaere."

22. The particular difficulties which confronted Pearson, J. in that case are neatly set out in his judgment and I quote from it:-

"This case, like many others, raises points of far greater difficulty and importance than the particular facts justify. It is plain that at the time when the writ was issued in the English action there was no res judicata in Ireland; the whole matter was open between the parties. On the 11th of July, 1884, after the trial before the jury in Ireland, Lord Sligo obtained leave in the English action to amend his defence, in order that he might set up the verdict which he had obtained in Ireland, and on the 15th of July he delivered an amended defence by which he pleaded in apt terms the Irish judgment. On the 19th of July, Mr. Houstoun re-amended his statement of claim, and now the matter comes before me on the question whether I ought to stay the proceedings in the English action, on the ground that the whole matter in controversy has been decided by a competent Court in Ireland, and that that decision is binding between the parties for all purposes ................ The first point which strikes me is that which was suggested by Mr. Higgins. viz., that, inasmuch as a plea of res judicata is a plea in bar to the institution of an action. that plea cannot succeed in the present case inasmuch as the judgment in the Irish action did not exist at the time when the writ in the English action was issued. I am rather inclined to think that that view is right, and that I cannot stop the proceedings in this action upon the ground that in the interval between the issue of the writ and the hearing of the present application, judgment has been pronounced in the Irish action. But I am unwilling to decide this case entirely upon that ground, because, however right the decision in The Delta may have been under the old practice, I am not satisfied, without a closer examination of the existing Rules of Court that a defendant is not now at liberty to set up as res judicata a decision of the oint at issue by a Court of competent jurisdiction during the progress of the action."

23. Mr. Chang distinguishes that case from ours by submitting that in that case there was no lis alibi pendens. That case was looked at from the point of view of res judicata. What the Court was concerned with in that case is that an action had been started in England when there had been no res judicata in Ireland. However the party pleading res judicata had managed to get a snap judgment in Ireland and then come back to the English Court, amended his pleading, to plead the Irish judgment. The Judge did not decide the case directly on res judicata. Mr. Chang submits that the plaintiffs, having chosen the American forum and having obtained judgment there should not be able to ignore the findings of fee Courts in Guam and now say 'I want to fight out action all over again despite the fact that we filed first in Guam and despite the fact that judgment was obtained first in Guam.

24. I think, however, it should be borne in mind that the plaintiffs did not file first in Guam. The plaintiffs were the defendants in the Guam action and they counterclaimed in that action for the substantially same relief as they have sought in this Court. At the time that action was determined in the Superior Court of Guam, the present action had not commenced. After the present action was commenced the defendant in the present action applied for stay of the present proceedings under the inherent, jurisdiction of this Court on the grounds that there were pending in the Appellate Division of the District Court, of Guam, U.S.A. and the Tokyo District Courts Japan, actions between the parties involving the same subject matter and relief and on the ground that the action was frivolous and vexatious and an abuse of the process of this Court. That application came before the learned Registrar on 10th April 1980 when the summons was withdrawn and a consent order was made giving plaintiff leave to amend Statement of Claim within 21 days and for the defendant to file a defence 28 days thereafter. That is the amended Statement of Claim set out earlier in this judgment.

25. The amended Statement of Claim was filed on 1st May 1980 and served on defendant's solicitors on the same day.

26. On the 6th May 1980 the plaintiffs took out an 0.14 summons for final judgment for the amount claimed in the amended Statement of Claim. That summons came before the learned Registrar on 20th May 1980 but was adjourned to a date to be fixed for argument.

27. On 18th August 1980 the Appellate Division of the District Court of Guam reversed the decision of the Superior Court of Guam. Thus on the 10th September this application was brought.

28. It would thus appear that when this action was filed in the Hong Kong Court there was in force in Guam a judgment of the Superior Court of Guam in favour of the plaintiffs who were the defendants in the Guam action and who had counterclaimed. The plaintiffs did not initially choose the Guam jurisdiction but the defendant did. It was then that the plaintiffs defendant and counterclaimed. At the time when the first application for stay was heard both parties were in agreement that despite the judgment in Guam, they should fight the issues here in Hong Kong. It was only when the Appellate Court in Guam hearing an appeal prosecuted by the defendant who was the unsuccessful plaintiff in the Guam action, reversed the decision of the Superior Court, that the defendant came back to this Court and asked again for a stay. Again it was not the plaintiffs who chose to appeal to the Appellate Division of the District Court of Guam. It was the defendant.

29. It is therefore not completely accurate to say that the plaintiffs filed first in Guam.

30. What is the practical effect of the judgment of the Appellate Court in Guam? It means that the issue of whether the defendant is bound by the terms of the Continuing Guarantee is now a lis alibi pendens in a foreign Court. It means that the issue of misapplication of funds has been decided by a foreign Court of Appeal and is now res judicata in favour of the defendant at least so far as any further action in Guam is concerned. The plaintiffs have now appealed against that decision and the appeal is unlikely to be heard for at least 2 years.

31. There is thus pending in the foreign court an action in which it would appear that the plaintiffs are unable to succeed until and when they get a judgment in the 9th Circuit Courts of Appeal. There are other considerations why they would wish to proceed with that appeal other than to obtain judgment against the defendant and that is to clear the stigma which must attach to them as a result of the Appeal Court's findings what they were in breach of a fiduciary duty.

32. The fact remains that both parties (well knowing of the factual situation existing in Guam at that time) consented to this action proceeding in this Court and directions have been given in accordance with their consent. The only new development is the judgment of the Appellate Foreign Court reversing the decision of the Lower Foreign Court.

33. I agree with Mr. Martin Lee that the authorities cited, namely The Delta and Houstoun v. Sligo support his argument that a judgment obtained in a foreign Court after proceedings had been instituted in Hong Kong cannot be set up as a defence in the Hong Kong Court. Putting his case at its lowest it is not a clear, plain or obvious case for a stay.

34. There are however other grounds for refusing to stay these proceedings. The power to stay is discretionary to be exercised by the Court "if it thinks fit". But it "ought to be very sparingly exercised and only in very exceptional cases" "The general practice is that you should not stay actions unless the action beyond all reasonable doubt ought not to go on".

35. When a plaintiff sues a defendant for the same matter in two courts in England, such a proceeding is prima facie vexatious, and the Court will generally, as of course stay one of the suits, see McHenry v. Lewis (1883) 22 Ch. D. 397. The headnote of which sets the proposition out as follows:-

"	When a Plaintiff sues a Defendant for the same matter in two Courts in this country, such a proceeding is prima facie vexations, and the Court will generally, as of course, put the Plaintiff to his election and stay one of the suits. And the same principle applies where one of the actions is in the Queen's Courts in Scotland or Ireland, or any other part of the Queen's dominions. Under the present practice Lord Dillon v. Alvares cannot be relied on as an authority.
	But if one of the actions is in a foreign country where there are different forms of procedure and different remedies, there is no presumption that the multiplicity of actions is vexatious, and a special case must be made out to induce the Court to interfere. The Court has, however, power to interfere in such a case under its general jurisdiction to restrain vexatious and oppressive legislation, and will interfere in a proper case even before decree.
	And semble, after a decree has been made in one of the actions, the Court will be more willing to exercise its jurisdiction."

36. In the course of his judgment Jessel, M.R. at page 403 gave his conclusion as follows:-

"Therefore no special case is made out for stopping the American or the English actions, but on the contrary there is a special case for two actions; because you can only enforce the claim of the Plaintiffs directly by getting judgment in both countries."

37. Even though the plaintiff initiated the proceedings in both countries, it would appear that the learned Judge nevertheless considered that the need to get judgment in both countries in order to enforce the claim was a good ground for refusing a stay. In that case, like ours, the foreign Court was American.

38. In Ionian Bank, Ltd. v. Couvreur (1969) 2 All E. R. 651 an action was allowed to proceed in England despite the fact that there was a lis alibi pendens in the French Court, on the grounds that judgment could be obtained quickly in England and could be enforced quickly in France (whereas if the proceedings were stayed in England it would be a long time before the proceedings in France could be brought to finality), and since the Bank, if it obtained an English judgment, might be able to execute on the defendant's assets in England, it could be said to have substantial reasons for pursuing the English action whilst proceedings in France were pending.

39. Again the consideration of the matter of enforcement led the Court to exercise its discretion to allow an action to proceed or rather to refuse a stay.

40. In Butted Gas & Oil Co. v. Hammer & Another (1971) 3 All E.R. 1025 the facts are stated in the Headnote as follows:-

"	At a press conference in London the first defendant, who was the chairman of the second defendant, a Californian oil company, made slanderous allegations about the activities of the plaintiff Californian oil company in the Persian Gulf. Both oil companies had interests in the Persian Gulf and proceedings had been started by the defendants in the United States regarding the plaintiff's activities in the Persian Gulf. The allegations made by the first defendant against the plaintiff at the press conference were similar to those made by the defendants in their claim against the plaintiff in the American proceedings. Those proceedings had however been halted by the Federal Court of California on the basis that issues concerning the acts of state of foreign powers were involved. The decision of the Federal Court was subject to appeal. A writ was issued by the plaintiff in England against the defendants claiming damages in respect of the slanderous allegations made at the press conference. The plaintiff applied for leave, under RSC 0.11, r.1(1)(h), to serve the writ out of the jurisdiction.
	Held - (i) Since the action was for slander by words spoken in England, the court had power under RSC 0.11, r.1(1)(h) to give leave to serve the writ out of the jurisdiction.
	(ii) In the circumstances leave would be given because (a) the doctrine of lis alibi pendens was not relevant since the American proceedings had for the moment to be regarded as at an end, and (b) England was a suitable forum for the action since the oil companies were of an international and not purely American character and likewise the dispute was so international concern; furthermore England was as convenient a forum as California since witnesses would have to come from different parts of the would, e.g. the Persian Gulf and England, as well as from California."

41. In the course of his judgment Lord Denning M.R. said at page 1027:-

"	If the Californian actions were live actions about to come for trial, there would be something to be said for letting the issues be fought out in California. But the Californian actions are not live actions. They have been halted. In March 1971 they were halted by a federal judge in California. The reason is because they involve issues about the acts of state of foreign powers. Judges of the United States will not allow the actions of foreign powers to be litigated within their courts. That decision of the federal judge is subject to appeal. I expect it will go to appeal. But goodness knows how long it will take! Even if the appeal succeeds and the actions proceed, goodness knows how long it will be before the action comes on for trail! In these circumstances, I do not think there is any room for the doctrine of lis alibi pendens. The pendency or non-pendency of those actions is not a factor in the scale.
	Counsel for Dr. Hammer submits, however, that England is not the convenient forum for this slander action. He says that these are Californian companies. The disputes are between Californian people. All are in Los Angeles - both them and their attorneys. The slander, he says, should be tried there, and not here. Buttes should issue proceedings in California, and not here. I cannot accept this argument. I do not see that it is any more convenient to have the slander tried in California than here. Some witnesses would have to come from the Persian Gulf; other witnesses would have to come from England; others, no doubt, from California. All those witnesses can be gathered together as well in England as elsewhere. Next, it is said it is a Californian dispute and should be tried there. I cannot go with that submission either. These oil companies are international in character. They operate across the world. The City of London is as much interested in their actions as Los Angeles. Why otherwise should this press conference have been held in London? Why should all these English journalists attend? Why should they ask pertinent questions on this very dispute? It is plain that the differences between these great oil companies concern many people both here and in countries far away. Moreover? if Occidental is right in its assertion -that the words spoken by Dr. Hammer are true - this slander action gives it the opportunity to prove it. I do not see that it can reasonably object to this, especially as the California actions are halted.
	I would add this. If Dr. Hammer should come to this country, as he often does, the writ could be served personally on him here. He could then made no possible objection to the case being tried here. Once he was served here, it would be possible to bring in Occidental also, because it might well be thought to be a 'proper party' to the action. So by that means Buttes could, in any event ensure that the action is tried here.
	The judge refused leave to serve out of the jurisdiction, but he does not in his judgment refer to the fact that the Californian actions are halted. That seems to me to be a most important factor. In all the circumstances, as a matter of convenience and as a matter of discretion - and furthermore as enabling Occidental to prove its case if it is a good one in the interests of all concerned, I think that this action should be allowed to proceed in England."

42. Even if the plaintiffs go ahead in Guam and win on the issue of rescission they may have to wait a period of some two years before the appeal on the issue of misapplication of funds is heard by the 9th Circuit Courts of Appeal. It would not seem to be enough for them to prove in the Superior Court of Guam that the defendant is bound by the Continuing Guaranty. Even if they succeed on this it would appear that the decision of the Appellate Division of the District Court of Guam has prevented them from getting an effective judgment immediately against the defendant because it was the defendant's case that if the funds held by the plaintiffs had not been misapplied, there would not have been any default. The Appeal Court held that there was misapplication of funds in respect of an amount far greater than the amount by which the defendant's company was supposed to have been in default on the 31st March 1975. It would appear that the plaintiffs will therefore have to wait two years to find out whether they can get an effective decree against the defendant in Guam.

43. The defendant is of course a British national and he was served within the Hong Kong jurisdiction. Some of the documents in this action were signed in Tokyo Japan and one was signed in Hong Kong. The defendant is a prominent businessman and conducts business in Hong Kong. Japan as well as Guam. Another point for consideration is that there is no reciprocal enforcement of judgments between the American Court and the Hong Kong Court. The United States of America is not one of those countries designated under the Reciprocal Enforcement of Judgments Ordinance. The defendant immediately prior to the bringing of these proceedings in the Hong Kong Court held substantial assets within the jurisdiction of Hong Kong.

44. It is my judgment that no special case has been made out for staying the present action for the following reasons:-

	(1)	The judgment of the Appellate Division of the District Court of Guam was given after proceeding had commenced in this Court.
	(2)	The defendant is a British National served within the jurisdiction.
	(3)	Some of the documents were signed in Tokyo and one was signed in Hong Kong.
	(4)	The defendant is a prominent businessman and conducts business in Hong Kong, Japan as well as Guam.
	(5)	Immediately prior to the bringing of these proceedings in Hong Kong the defendant held substantial assets within the jurisdiction of this Court.
	(6)	The defendant still holds assets within this jurisdiction despite disposing of large numbers of shares on receipt of the letters of demand before action.
	(7)	There is no reciprocal enforcement of judgments between the Courts of Guam and Hong Kong.
	(8)	The plaintiffs were the defendants in the Guam action and did not initiate proceedings in that Court. They merely counterclaimed there.
	(9)	It is necessary for the plaintiffs to proceed with the Appeal in the 9th Circuit Courts of Appeal, inter alia, if they wish to clear their name.

45. In these circumstances I hold that these proceedings should not be stayed.

46. I do however accede to Mr. Chang's request to strike out paragraph 13 of the amended Statement of Claim since the judgment pleaded therein has now gone.

Lifting of Restraints

47. At the time of the hearing of this application there were in force against the defendant two kinds of restraint. The first was an order of Mr. Justice Garcia in Chambers on the 12th February 1980 ordering that the defendant be restrained, from leaving or departing out of the jurisdiction of this Honourable Court until after the trial of the action herein or until further order.

48. The second type of restraint was that the defendant by his owm counsel undertook not to sell, dispose of, part possession with any of his assets whether by himself, his servants or agents or otherwise until after the trial of the action herein or until further order.

49. The injunction restraining the defendant from leaving the Colony has now been lifted with the consent of the plaintiffs. An order to this effect was made during the hearing of this application. The defendant however is still bound by his undertaking not to dispose of his property. Mr. Chang for the defendant asks that this undertaking be discharged.

50. There is still in force at the present time a warrant for the arrest of the defendant issued under the provisions of Order 44A r. 2 for the bringing of the defendant before the Court to show cause why he should not give security prior to judgment. The terms of that order are that the bailiff is enjoined to bring the defendant before the Court as and when he has completed giving evidence before Mr. Justice Silke in the case of James S. Lee & Co. Clothing Mill (Hong Kong) Ltd. and James Smiuth Lee v. Nomura International (Hong Kong) Ltd. in High Court Action No. 370 of 1975 in order that he may show cause why he should not give security for his appearance to answer any judgment that may be given against him in this action.

51. Mr. Lee for the plaintiffs on the other hand argues that these restraints should not be lifted, because otherwise any judgment eventually obtained by the plaintiffs in this Court would be not worth the paper it is written on. He has based his contention on apparently conflicting statements by the defendant as to his place of residence in Hong Kong or even if he has a place of residence in Hong Kong, by the fact that he is a difficult man not only to serve but also to arrest and thirdly that there has been a substantial disposition of his assets shortly after he received the letters before action.

52. Mr. Chang on the other hand has done his best to deflect and reduce what he calls the points of prejudice. He has argued that the plaintiffs have used the 3 main points of prejudice, namely (1) the residence matter, (2) the difficulties of service, and (3) the disposition of assets matter together with the judgment obtained in the Guam Court to get the restraining order and the Court warrant. He has argued that that judgment has now gone and by a skilful argument aimed at reducing the points of prejudice to nothing he has argued that it is disgraceful that the plaintiffs should still persist in requiring these restraints to continue.

53. Ingenious though Mr. Chang's submissions have been in this case, and persuasive and eloguent as he has been, I find myself somewhat reluctantly having to find against his arguments.

0.44A which provides for the arrest and attachment of a defendant before judgment, and for the taking of security for the appearance of the defendant in a certain case provides as follows:-

"	1. If in any action, not being an action for the recovery of immovable property, the defendant is about to leave the jurisdiction of the Court, or has disposed of or removed from the jurisdiction of the Court his property or any part thereof, the plaintiff may, either at the institution of the action or at any time thereafter until final judgment, apply to the Court to call upon the defendant to furnish sufficient security for his appearance to answer any judgment that may be given against him in the action."
	It also provides in Rule 2:-
	" If the Court, after making such investigation as it may consider necessary, is of the opinion that there is probable cause for believing that the defendant is about to leave the jurisdiction or that he has disposed of or removed from the jurisdiction his property or any part thereof, and that in either case, by reason thereof, the execution of any judgment that may be given against him in the action is likely to be obstructed or delayed, it shall be lawful for the Court to issue a warrant to the bailiff enjoining him to bring the defendant before the Court that he may show cause why he should not give security for his appearance to answer any judgment that may be given against him in the action."

54. It is clear that the plaintiff may exercise his right in Rule 1 if the defendant has disposed of any of his property, and that the Court may exercise the power of issuing a warrant if the defendant has disposed of any of his property and by reason thereof the execution of any judgment that may be given against the defendant in the action is likely to be obstructed or delayed.

55. Having considered all the evidence and the submissions made on these matters, and in particular the affidavit of Michael Chan filed in this Court on the 22nd September 1980, I have reached the conclusion that there is probable cause for believing that the defendant disposed of a substantial number of his assets after receiving the letters of demand and that by reason thereof the execution of any judgment that may be given against him in this action is likely to be obstructed.

56. In paragraph 11 of this affidavit it has been established that two demand letters were sent by Mr. Chan to the defendant for the amount claimed in this action on the 24th January 1979 and 13th February 1979 to two addresses of the defendant in Hong Kong. On the 13th February 1979 9 million shares were transferred out of his name leaving a balance of only 27,380 shares under his name. Furthermore despite Mr. Chang's industrious efforts to deflect the force of the evidence, there can be little doubt on the evidence in this case that the defendant is both a difficult man to serve and a difficult man to arrest.

57. I will therefore not accede to the application, and I will order that the undertaking be not discharged, except if the defendant so requires it, it may be modified in the like or similar manner as that suggested by Mr. Lee at the hearing. This modification would allow the defendant to dispose of his assets provided that the proceeds of sale were frozen.

58. I will not discharge the warrant for arrest which will continue in force until executed as and when the defendant has finished giving evidence in the proceedings specified therein.

	(N.B. Hooper)
	Commissioner of the High Court.

Representation:

Mr. Martin Lee, Q.C. and Mr. Rogers (Wilkinson & Grist) for plaintiffs.

Mr. Denis Chang (Johnson, Stokes & Master) for defendant.