Bank of China (Hong Kong) Ltd v. Nam Tai Electronics, Inc. and Another

HCA 1619/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1619 OF 2007

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Before:  Hon Barma J in Chambers

Date of Hearing:  12 June 2008

Date of Further Written Submissions:  16 and 23 June 2008

Date of Judgment:  10 October 2008

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J U D G M E N T

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Introduction

1.These proceedings are a further chapter in what has become a long-running battle between the Bank of China (Hong Kong) Limited (“BOC”) and Nam Tai Electronics, Inc. (“Nam Tai”) in relation to the affairs of Tele-Art Inc. (“TAI”) and its subsidiary, Tele-Art Limited (“TAL”).  TAL is in liquidation in Hong Kong, while TAI is in liquidation in the British Virgin Islands (“BVI”).  Mr Glenn Harrigan is the liquidator of TAI.

The Background

2.Some of the background has been described in my judgment dated 22 June 2007 in HCCW 974/2000, in respect of TAI’s application to inspect the books of TAL.  For present purposes, the relevant matters to note are as follows:-

(1) BOC was a creditor of TAL in respect of certain loans it had made to TAL.  Those loans were guaranteed by TAI.  TAI’s guarantees were in turn secured by TAI’s shareholding in Nam Tai, which it charged to BOC by two share charges dated 10 September 1993 (“the Share Charges”).

(2) Nam Tai had previously had an amicable relationship with TAI.  However, that relationship subsequently soured, and in 1997, Nam Tai acquired a judgment debt against TAI from another creditor of TAI, and petitioned to wind up TAI in the BVI.  It appears that Nam Tai is now the only creditor in the liquidation of TAI, and will be entitled to all of TAI’s assets after the costs of its liquidation are provided for.

(3) When TAI and TAL went into liquidation, BOC sought to sell the Nam Tai shares which had been charged to it as security.  It managed to sell some of the shares which it held, but as at April 1998, BOC still held some 308,227 Nam Tai shares, the share certificates for which were accidentally sent to Nam Tai.

(4) Nam Tai then devised a scheme to destroy BOC’s security, by amending its articles of association to permit it to redeem shares held by shareholders who were indebted to it.  It then purported to redeem 138,500 of the Nam Tai shares owned by TAI and charged to BOC which had been accidentally sent to it.  It subsequently purported to redeem the rest of the shares as well.

(5) The redemption was challenged by TAI’s then liquidator, in BVI proceedings which concluded when the Privy Council held on 20 November 2006 that the purported redemption was invalid and ordered Nam Tai to restore to BOC the shares wrongfully redeemed by them.  However, it was not until April 2007 that Nam Tai eventually issued 1,017,149 new shares (representing the 138,500 shares wrongfully redeemed by it) to BOC.

3.Even after the issue of the new shares to BOC, the realisation by BOC of its security did not prove to be a straightforward matter.  It was not until 5 September 2007 that BOC eventually sold 539,830 of the new shares for a net amount of US$6.9 million.  This amount was applied to repay the outstanding secured indebtedness of TAI to BOC.  Following such repayment, there was a surplus, which has been retained by BOC as provision for future legal costs.  BOC did, however, return the balance of 477,319 shares to TAI’s liquidator on 18 September 2007.

4.Meanwhile, unknown to BOC and without its consent, TAI’s liquidator and Nam Tai entered into a Deed of Assignment and Indemnity (“the Assignment”) dated 5 June 2007.  The Assignment related to what it described as “certain rights of action vested in [TAI] arising from the Share Charges”.  These rights were described in a schedule to the Assignment in the following terms:-

(1) The Liquidator’s right to collect the surplus from the sale of shares and the dividends payable on such shares that have been issued to [BOC] pursuant to the judgment of the Privy Council.

(2) The Liquidator’s right to take legal action against [BOC] for any failure on [BOC]’s part to account or properly account for monies improperly deducted from the sale of the shares and/or dividends to pay [BOC]’s debt.

(3) The Liquidator’s right to take legal action against [BOC] for any action on [BOC]’s part which may have resulted in harm or loss to the unsecured creditors of [TAI].

(4) The Liquidator’s right to recover any monies wrongfully paid to [BOC] in its capacity as a secured creditor of [TAI].

(5) The Liquidator’s right to take legal action against any third party who may have caused loss to the unsecured creditors of [TAI].

5.Although the Assignment referred to the rights that were to be assigned by it as “the Liquidator’s” rights, all such rights were, of course, the rights of TAI, to be exercised in its liquidation by its liquidator.

6.On 9 June 2007, TAI’s liquidator applied to the BVI court seeking its ex post facto sanction of the Assignment.  In his affidavit in support of the application, Mr Harrigan described the rights being assigned as “the rights to which [TAI] was entitled under the [Share Charges]” (paragraph 5 of his affidavit) and as “the rights of action vested in [TAI] under the [Share Charges]” (paragraph 7 of his affidavit).  He explained that the surplus arising from the proceeds of sale of the shares (which was expected to be substantial) would go to the unsecured creditors of TAI, of which Nam Tai was the largest (as its debt accounted for some 99% of TAI’s indebtedness to its unsecured creditors), and that he thought it important that TAI’s rights under the Share Charges should be strictly enforced.  He went on to explain that as these rights would have to be exercised in Hong Kong, and the liquidation had no available funds, he considered that it was in the best interests of the liquidation to assign the rights to Nam Tai, who would pursue them for the benefit of TAI’s unsecured creditors.  He pointed out that Nam Tai had a presence in Hong Kong and the United States (where the charged Nam Tai shares were listed), and also had the financial resources to take whatever steps might be necessary to safeguard the interests of the unsecured creditors.

7.Mr Harrigan did not, however, exhibit copies of the Share Charges to his affidavit.  Nor did he suggest in his affidavit that there might be any impediment to the Assignment arising from the terms of the Share Charges.

8.On 25 June 2007, the BVI court sanctioned the entering into of the Assignment.  Although Mr Harrigan and Nam Tai were represented at the hearing at which the order was made, BOC was not, not having been given any notice of it.

9.Meanwhile, from about 13 June 2007 onwards, one of Nam Tai’s United States lawyers, a Mr Ridley Whitaker, began writing to BOC’s United States lawyers, expressing his (and Nam Tai’s) dissatisfaction with the progress (or lack of it) that BOC had made towards realising the charged shares.  In his letter of 13 June 2007, Mr Whitaker referred to Nam Tai’s frustration that the shares had not been sold (a frustration that might be thought to be somewhat surprising, as BOC’s lawyers were at the same time engaged in correspondence with other lawyers instructed by Nam Tai in an attempt to resolve certain technical issues that had arisen in relation to the share certificates of the pledged shares, and those other lawyers appear to have been instructed by Mr Whitaker to refrain from responding to BOC’s lawyers), and threatened to institute proceedings in New York on behalf of Nam Tai in which Nam Tai would pay the amount of TAL’s indebtedness to BOC into court and demand the release of the shares.

10.In this letter, Mr Whitaker also reserved all of Nam Tai’s rights in relation to “its claims concerning [BOC’s] so called indebtedness owed by [TAI] to [BOC], the amount of which had never been determined by any court”.  While it may be true that the amount of TAI’s indebtedness to BOC has not been the subject of any court determination, as I observed in my judgment of 22 June 2007 in HCCW 974/2000, BOC appears in fact to have provided substantial information relating to its claim against TAI, and the manner in which it has been calculated, to Mr Harrigan, who did not appear seriously to dispute the calculations that he was given (see paragraphs 10 and 11 of that judgment).

11.On 26 June 2007, Mr Whitaker wrote again to BOC’s United States lawyers, complaining that BOC had “consistently refused or failed to identify or quantify the debt” said to be owing to it by TAI.   BOC’s United States lawyers responded the next day that BOC intended to comply with its obligation to account to Mr Harrigan after it had sold the charged shares, and would do so in Hong Kong, as that was the jurisdiction whose law governed the Share Charges.  This does not seem to have satisfied Mr Whitaker, who wrote again on 18 July 2007, enclosing a copy of the Assignment, and demanding a “complete itemization of the claimed monies owed to BOC by [TAI]”.  This demand was said to be distinct from BOC’s duty to account for the sale of the charged shares, and was to be met within 10 days, failing which “there will be no choice but to commence the required litigation against BOC … in New York”.

These proceedings

12.As a result of this turn of events, BOC commenced these proceedings in Hong Kong on 26 July 2007 claiming the following relief:-

(1) A declaration that the Assignment is a nullity, void and of no effect, as it was in breach of clauses 9.2(a), (b) and (e) and/or 24.1 of each of the Share Charges;

(2) A declaration that BOC is not liable to verify or account for the indebtedness secured by the Share Charges to the satisfaction of the Hong Kong court, any other court, TAI and/or Nam Tai before exercising its power of sale under the Share Charges;

(3) An injunction to restrain TAI and/or Nam Tai from

(a) bringing proceedings against BOC in respect of the Share Charges in New York or elsewhere in the United States, or otherwise than in Hong Kong; and

(b)    interfering with BOC’s sale of the charged shares; and

(4) An order that TAI (through Mr Harrigan) and/or Nam Tai as its purported assignee or agent execute any further documents that BOC might need to effect the sale of the charged shares.

Further correspondence and sale of the charged shares

13.This step provoked considerable further correspondence from Mr Whitaker to BOC’s United States lawyers between 27 July 2007 and 14 September 2007, in which he accused BOC of running to Hong Kong in an attempt to set up a lis alibi pendens, alleged that BOC and its United States lawyers were guilty of converting the unsold shares, and threatened to bring proceedings in New York in which “all of this would be redressed”.

14.As I have noted, BOC sold 539,830 of the charged shares on 5 September 2007, returning the shares that were not sold to TAI on 18 September 2007.

The course of these proceedings

15.Thereafter, BOC served its Statement of Claim in these proceedings on 8 November 2007.  In it, it modified the relief it claimed:-

(1) The declaration as to the nullity of the Assignment was limited to a declaration as to its nullity against BOC, coupled with a declaration that BOC as chargee under the Share Charges was obliged only to account to TAI (acting through Mr Harrigan);

(2) The second declaration was still sought in its original terms;

(3) The anti-suit injunction was still sought, although the injunction against interference with sale of the charged shares was no longer pursued (no doubt because BOC had by then sold sufficient of the charged shares);

(4) The order for execution of documents to facilitate the sale of the charged shares was no longer pursued (for the same reason).

16.TAI and Nam Tai filed a defence and counterclaim on 21 November 2007.  In it, they denied BOC’s entitlement to the relief claimed, indicated that they would not pursue any proceedings in the United States, and made it clear that any action for an account would be brought in Hong Kong.  They also counterclaimed for declarations that:-

(1) Any rights that BOC may have had as chargee under the Share Charges came to an end when it sold the shares and repaid itself out of the proceeds; and

(2) The 477,319 unsold shares were outside the ambit of the Share Charges.

17.Thereafter, the parties made the applications which are now before me.  These were:-

(1) An application by TAI and Nam Tai by summons dated 20 December 2007 seeking to strike out the Statement of Claim and the Indorsement of claim on BOC’s writ, and to have the action dismissed.

(2) An application by BOC by summons dated 31 December 2007, seeking the determination under RHC Order 14A of questions of law as to BOC’s right to the declarations sought, and (if BOC was entitled to any of such declarations) judgment in its favour on the first set of declarations sought and dismissal of the Counterclaim.

(3) An application by BOC by summons dated 8 May 2008, seeking leave to amend the Statement of Claim to delete the claim for the anti-suit injunction, as TAI and Nam Tai had made it clear that any claim to an account would be litigated in Hong Kong.

The applications to strike out and under Order 14A

18.The first two of these applications can be dealt with together.  At the hearing, Sir John Swaine, appearing for TAI and Nam Tai, submitted that so far as the declarations relating to the Assignment were concerned, BOC’s claims should be struck out for a number of reasons.  These can be summarised as follows:-

(1) Clause 9.2 of the Share Charges did not, properly construed, operate to prohibit the Assignment because the restrictions thereunder applied only for so long as any sum remained to be lent or paid by or to BOC, and BOC had been repaid the whole of its indebtedness following the sale by it of part of the charged shares on 5 September 2007;

(2) Alternatively, that clause was not apt to cover rights to the surplus or an account following the sale of the charged shares;

(3) Clause 24.1 of the Share Charges did not, properly construed, operate to prohibit the Assignment either, as that provision only applied so long as the Share Charges were in operation, and for this purpose the Share Charges should be regarded as no longer in operation once BOC had in its hands sufficient shares out of which to satisfy itself in respect of TAI’s indebtedness to it;

(4) Alternatively, TAI’s right to the surplus and an account were not rights which arose under the Share Charges, as they were not contractual rights which arose from the terms of the Share Charges, but were equitable rights which arose in relation to the surplus after the sale of the charged shares.

(5) In any event, the court should not, as a matter of comity, decline to recognise the validity of the Assignment when it had been expressly sanctioned by the BVI court, as this would enable BOC to circumvent the BVI court’s order, without making an application to that court for the discharge of its order.

19.I shall deal first with clause 24.1 of the Share Charges.  This is in the following terms:-

“24.1 This Share Charge shall be binding upon and ensure to the benefit of the parties hereto and their respective successors and permitted assigns (as the case may be), except that [TAL] and [TAI] may not assign or transfer any of its rights, benefits, duties or obligations hereunder.”

20.Although Sir John Swaine submitted that this clause did not apply once the Share Charges were no longer in operation, I am unable to see why this should be so.  Clause 24.1 (unlike clause 9.2) is not subject to any temporal limitation.  There is nothing in the clause to suggest that its operation was intended to come to an end at any particular point in time, or when any particular stage in the relationship of chargee and chargor between BOC and TAI had been reached.

21.It was submitted that this conclusion could be derived from the decision of the English Court of Appeal in ANC Limited v Clark Goldring & Page Limited [2001] BPIR 568, in which the Court of Appeal held that a clause in a franchise agreement prohibiting assignment of the agreement or the rights of the franchisee under it did not survive the termination of the agreement, so that a liquidator of the franchisee could assign rights of action under the agreement following its termination.

22.I do not think that this authority assists TAI and Nam Tai.  It is clear from the judgment of Robert Walker LJ that the court’s decision was based on the construction of the clause prohibiting assignment in the context of the franchise agreement as a whole (clause 16.2).  Another (immediately preceding) clause of the franchise agreement (clause 15.4) provided that the terms of the agreement should continue after termination only if that was provided expressly or by implication.  As the prohibition on assignment did not expressly state that it survived termination of the franchise, and there was no basis for thinking that it so provided impliedly, the prohibition was held to have ceased to have effect after termination of the franchise agreement.

23.That is far from the present case, where there is no equivalent provision to clause 15.4 of the franchise agreement in the ANC case.  In the absence of such a clause, I do not see that there is any basis for finding that clause 24.1 of the Share Charges was intended to terminate at any particular time.

24.Further, I do not think that it would be right to regard the Share Charges as “no longer in operation” once the charged shares were in the hands of BOC in sufficient amounts to cover the indebtedness of TAI to BOC.  As chargee under the Share Charges, BOC was entitled to decide for itself when and how to realise its security.  Even if the charged shares might be sufficient to cover the indebtedness at one particular point in time, until such time as the shares were sold, there was always the possibility that the value of the shares might drop to below the level of the indebtedness secured by them.  It would therefore be unrealistic to suppose that once the charged shares in BOC’s hands exceeded (for however short a time) the amount of the secured indebtedness, the Share Charges would thereupon cease to be operative.

25.In fairness, I do not think that Sir John Swaine pressed these arguments too hard.  His real point was that as the right to an account and the surplus were rights which arose under the operation of the principles of equity, they should be regarded as rights which arose outside of the Share Charges and not under them, so as to fall outside the ambit of Clause 24.1.

26.However, that point is not, in my view, a good one.  It is right to say that the right to an account and to receive the surplus were not expressly provided for in the Share Charges.  But it does not follow that merely because a right is not expressly provided for in a contract, it does not arise under the contract in question.  In the present case, the right to an account and to receive the surplus (if any) were incidents of the relationship of chargor and chargee that arose as a result of, or under, the Share Charges.  They arose as a result of the operation of the rules of equity, and did not need to be spelt out in the body of the Share Charges.  They nonetheless, in my view, arose under them, and therefore fall within the ambit of the phrase “[TAI’s] rights hereunder”.

27.As Mr Jat, who appeared for BOC pointed out, in my view rightly, the relationship of chargor and chargee created by the Share Charges did not come to an end on sale of sufficient shares to satisfy BOC’s secured indebtedness.  Following such sale, other rights and obligations, most pertinently the right of TAI to an account of the sale proceeds, and the obligation of BOC to give such an account, remained.

28.The purpose of a clause such as clause 24.1 is well established.  It is usually to ensure that the other party to the contract will have to deal, and deal only, with the party with whom he has contracted, and who has been prohibited from assigning his rights and obligations under the contract (see e.g. Linden Gardens Trust Limited v Lenesta Sludge Disposals Limited [1994] 1 AC 85 at 108F-109D; Yook Tong Electric Company Limited v Pirelli Cavi E Sistemi SpA [2004] 3 HKLRD 103 at paragraphs 12-13 and 20-23 of the judgment).  In this case, given the way in which the relationship between BOC, TAI and Nam Tai has developed over the course of TAI’s liquidation, it is not difficult to see that this purpose may well be one which would be of importance to BOC.

29.I am therefore of the view that clause 24.1 did operate, as BOC submits, to prohibit the Assignment.  It follows that, whatever may be the position as between TAI and Nam Tai, the Assignment is of no effect as against BOC.

30.For what it is worth, it is of interest to note that Mr Harrigan’s own view as to whether or not the rights to an account and to the surplus were rights under the Share Charges, as expressed in the Assignment and his affidavit in support of his application for sanction from the BVI court, appears to be no different.

31.In the light of my conclusion as to clause 24.1, it is not necessary for me to consider whether the terms of clause 9.2 also prohibit the assignment.

32.It is, however, necessary for me to deal briefly with Sir John’s argument that BOC should be required to seek to have the BVI sanction set aside in an application in the BVI, and that I should not deal with the validity of the Assignment in these proceedings.

33.I see no reason why I should not do so.  The Share Charges are expressly governed by Hong Kong law, and the Hong Kong courts would appear to be best placed to construe them.  In any event, the terms of the orders sought by BOC, limited as they are to declarations as to the effect of the Assignment as against BOC, do not in my view impinge on the sanction of the BVI court – the Assignment may well remain valid as between TAI and Nam Tai.  Whether it has effect against BOC is not, I think, a matter with which the BVI court was concerned, particularly as the Share Charges themselves were not placed before that court, and the prohibition on assignment was not drawn to its attention.  In sanctioning the Assignment, the BVI court therefore was not (and could not have been) expressing any view as to its effectiveness against BOC, particularly as BOC was not a party to the application before it.

34.I am therefore satisfied that BOC is entitled to the declaration sought under paragraph (1) of the prayer in its Statement of Claim, and I shall make that declaration.  It follows that BOC’s summons under Order 14A succeeds, and TAI and Nam Tai’s striking out summons fails.  Mr Jat indicated during argument that in this event, BOC would not pursue its claim to the second declaration sought under paragraph (2) of the prayer.  In these circumstances, it seems to me that BOC should have the costs of both summonses as against TAI and Nam Tai.

BOC’s application for leave to amend

35.Turning to BOC’s summons for leave to amend the Statement of Claim to delete the claim to the anti-suit injunction, the only question in dispute was in relation to the incidence of costs.  Sir John Swaine submitted that as this amounted to a withdrawal or discontinuance by BOC of this claim, Nam Tai and TAI should be given the costs of the application, and of the costs thrown away or wasted as the result of the making of this claim.

36.For BOC, Mr Jat resisted any such order, contending instead that BOC should be awarded its costs for this part of the action, at least up to the date of TAI and Nam Tai’s application to strike out, because until TAI and Nam Tai had confirmed on affirmation that any claim to an account would be litigated in Hong Kong, BOC was perfectly justified in making the claim for the anti-suit injunction.  In these circumstances, said Mr Jat, the situation was analogous to that which obtained in Re Peaktop Technologies (USA) Hong Kong Limited [2007] 4 HKLRD 207, in which I awarded costs in favour of directors who had withdrawn their application for inspection of a company’s books because their application would have succeeded had they not been removed as such directors by the respondents to the application.

37.So far as the merits of the claim for the injunction (up to the point at which the position taken in the Defence was confirmed on affirmation) are concerned, Mr Jat submitted that such an injunction would almost certainly have been granted.  Sir John Swaine disagreed.

38.Sir John Swaine’s principal point, as it emerged from his reply submissions and the further written submissions lodged by the parties, was that an anti suit injunction should only be granted where the pursuit of the foreign proceedings was unconscionable, and where there were Hong Kong proceedings in existence which required to be protected by the grant of the injunction sought.  Sir John submitted that this latter requirement arose under the principles enunciated by Lord Hobhouse in Turner v Grovit [2002] 1 WLR 107 (at paragraph 29 of the judgment).

39.The suggestion that there must be existing proceedings in the courts of the country by whom the anti-suit injunction is issued has generated considerable controversy.  However, in the present case, it does not seem to me that it is necessary to determine this interesting question, as BOC had by its writ instituted proceedings designed to determine whether or not the Assignment could have any effect on them.  They were clearly entitled to do so, as the Share Charges were governed by Hong Kong law.  Having commenced the proceedings, the proceedings themselves constituted, in my view, proceedings which could, in an appropriate case, be protected by an anti-suit injunction.

40.As to whether this was an appropriate case for such protection, I am satisfied that it was.

41.TAI and Nam Tai submitted that there were in fact no threats to issue proceedings against BOC in New York.  It was sought to characterise Mr Whitaker’s correspondence as nothing more than an attempt to impart some sense of urgency to BOC in respect of the sale of the charged shares.

42.With respect, this suggestion had about it an air of unreality.  It is only necessary to read Mr Whitaker’s letters to BOC’s United States lawyers to appreciate that both before and after the issue of these proceedings, he was apparently seriously contemplating bringing proceedings in New York, which would be calculated to interfere with BOC’s rights to dispose of the charged shares as they saw fit, and to impose on BOC an obligation to account in advance of selling the shares to which they would not, I think, be subject under Hong Kong law.  Even if (which I am not prepared to accept), Mr Whitaker was merely banging a drum in the hope of impelling BOC into moving more quickly towards a sale, having regard to the by this time fraught relationship between Nam Tai and BOC, BOC had, objectively speaking, every reason to be concerned that the threats would prove to be more than empty ones.

43.I am therefore satisfied that there was a real threat to bring proceedings in New York.

44.TAI and Nam Tai also submitted that there would have been nothing oppressive in bringing such proceedings in New York, because Nam Tai was listed in New York, and both sides had lawyers engaged in relation to the sale of the shares in New York, so that there was “nothing aberrant about litigating disputes in relation to accounts and verification of the secured indebtedness in New York”.

45.This suggestion too, has little to commend it.  True it is that Nam Tai was listed in New York.  That was why it was necessary for United States lawyers to liaise with one another about the steps which needed to be taken before the charged shares could be sold.  But that had nothing to do with the taking of accounts or verification of indebtedness on the part of TAI and TAL to BOC.  These matters, however, do not depend on any questions of New York law, still less on any facts the evidence of which might be found in New York.  The matters that would call for investigation would be the state of the relationship and account as between BOC on the one hand, and TAI on the other.  This account depended on the state of the account as between BOC and TAL, whose debts were guaranteed by TAI.  That account was maintained in and operated in Hong Kong.  There is no reason at all to think that there might be any relevant evidence to be found in New York bearing on the state of that account.  The overwhelming likelihood is that all such evidence would be found in Hong Kong.  In these circumstances, it seems to me (as it did to Lord Hoffman, giving the judgment of the Privy Council in the litigation between Nam Tai, TAI and BOC in relation to the validity of Nam Tai’s redemption of the originally charged shares) that Hong Kong is the obviously appropriate forum in which questions of accounts should be considered – a position which now appears to be recognised by Nam Tai, and which appears to have been recognised by TAI at the time when Mr Harrigan made his application for sanction of the Assignment to Nam Tai.  To seek to bring proceedings in relation to these matters in New York would, to my mind, be clearly vexatious and oppressive as against BOC.

46.Finally, it was suggested that the claim for the anti-suit injunction was itself vexatious and oppressive, as it was an attempt to oust the jurisdiction of the New York courts.  It was said that BOC could and should have applied to the New York courts for a declaration that that court had no jurisdiction.  This is, with respect, a wholly unmeritorious suggestion.  The relationship in respect of which the account had to be taken was one which was rooted in Hong Kong.  The Share Charges, under which the right to the account arose, were governed by Hong Kong law.  The underlying debt ultimately secured by the Share Charges and TAI’s guarantee was the debt of a Hong Kong company (TAL) to a Hong Kong bank (BOC).  There is no basis whatsoever for suggesting that that BOC should have to seek a declaration from a New York court declining jurisdiction over the matter.

47.In the circumstances, I am quite satisfied that BOC was entirely justified in bringing its claim for an anti-suit injunction.  That claim only became academic when TAI and Nam Tai finally accepted, after these proceedings had been brought, that any questions concerning an account in respect of the surplus sale proceeds from the sale of the charged shares should be dealt with in Hong Kong.  Up to that point, there were what appeared to be real threats to embroil BOC in litigation in the United States, a jurisdiction which had no substantial connection with the matters that might potentially be in dispute.  In these circumstances, it seems to me that there can be no question but that BOC should have its costs of the application to amend, and of the proceedings insofar as they related to this question.

Disposition and costs

48.I would therefore make the declaration sought by BOC in paragraph (1) of its prayer in the Statement of Claim, and give judgment to BOC in respect of that claim, and dismiss TAI and Nam Tai’s counterclaim, as prayed for in BOC’s summons under Order 14A.  I will dismiss TAI and Nam Tai’s application to strike out, and will grant BOC’s application to amend its Statement of Claim.  I make an order nisi that TAI and Nam Tai are to pay BOC’s costs of each of these summonses, to be taxed on the party and party basis if not agreed.

49.As this effectively disposes of the action as a whole, I shall also make an order nisi that TAI and Nam Tai are to pay BOC’s costs of the action, also to be taxed on the party and party basis if not agreed.

Mr. Jat Sew-Tong, SC leading Mr. Mike Lui, instructed by Messrs Deacons,  for the Plaintiff.

Mr. Sir John Swaine, QC,SC leading Mr. Jose-Antonio Maurellet,  instructed by Messrs Wilkinson & Grist for the Defendants