Tempo Group Ltd Chen Ching Chih Maxima Resources Corporation Plaintiffs/Respondents v Fortuna Development Corporation New Frontier Development Corporation Wynner Group Ltd Defendants/Appellants
| Jurisdiction | Cayman Islands |
| Judge | Elliott Mottley,Sir John Chadwick |
| Judgment Date | 05 November 2015 |
| Court | Court of Appeal (Cayman Islands) |
| Docket Number | CICA No. 14 of 2012 |
| Date | 05 November 2015 |
The Rt Hon Sir John Chadwick, President
The Hon Elliott Mottley, Justice of Appeal
The Rt Hon Sir Anthony Campbell, Justice of Appeal
This appeal, from the order of Justice Henderson dated 4 April 2012 dismissing the summons to strike out these proceedings issued by the appellants on 6 June 2011, came before this Court for hearing on 6 December 2012. At the conclusion of the oral hearing, the Court ordered thatthe appeal be dismissed; and indicated that it would provide its written reasons for its decision in due course. The costs of the appeal were stood over to await those written reasons. In the meantime, the proceedings continued to trial; the trial took place at the end of 2014; judgment was handed down on 31 March 2015 and a final order in the proceedings was filed on 1 May 2015. The Court now provides its written reasons for the order made dismissing the interlocutory appeal in December 2012; and will address the outstanding issue as to the costs of that appeal in the light of those reasons.
The first named appellant, Fortuna Development Corporation (‘Fortuna’), was incorporated as an exempt company under the Companies Law on 25 February 1994. The three principal shareholders, each holding 30% of its shares, were the first named respondent, Tempo Group Limited (‘Tempo’), the second named appellant, New Frontier Development Corporation (‘New Frontier’) and the third named appellant, Wynner Group Limited (‘Wynner’). Tempo, New Frontier and Wynner were controlled, respectively, by three individuals each resident in Taipei: the second named respondent, Chen Ching Chih (‘Dr Chen’), Lawrence Ting Shan Li (‘Mr Ting’), and Tsien Peng Lun (‘Mr Tsien’). The remaining 10% of the shares in Fortuna were allocated to Bates Group Limited (‘Bates’); a company then owned by Tempo, New Frontier and Wynner in equal shares. Subsequently (i) Mr Tsien caused Wynner to sell and transfer part of its holding (equivalent to a holding of 5% of the Fortuna shares) to the third named respondent, Maxima Resources Corporation (‘Maxima’), a Samoan company owned and controlled by Mr Philip Fei Niu (‘Mr Mu’); and (ii) Mr Albert Hsu (‘Mr Hsu’) acquired a 30% interest in Bates. Each of Dr Chen, Mr Ting and Mr Tsien were appointed directors of Fortuna. Mr Hsu became a director of Fortuna following his acquisition of an interest in Bates.
By June 2004 Dr Chen, Mr Ting and Mr Tsien had fallen out. On 2 June 2004, at a meeting of the directors held in Beijing (which Dr Chen and his associates were unable to attend) it was resolved to convene an extraordinary meeting of Fortuna on 22 June 2004, also in Beijing. The purpose of that extraordinary meeting was to consider special resolutions which, if passed, would have the effect of removing Tempo and Dr Chen from participation in the management of Fortuna; and ordinary resolutions which would have the effect that Mr Ting and Mr Tsien became its only directors.
A meeting was held on 22 June 2004. Dr Chen, Mr Ting and Mr Tsien attended that meeting; and Tempo, New Frontier, Wynner and Bates were represented by proxies. Mr Niu sought to attend the meeting as representative of Maxima; but was refused entry on the ground that Maxima's proxy had already been given to Mr Tsien. The special resolutions (which required a two thirds majority of those voting) were passed, against the opposition of Tempo and Dr Chen, by the votes of New Frontier (30%), Wynner (25%), Bates (10%) and (by Mr Tsien's use of Maxima's proxy) Maxima (5%). Had Mr Niu been admitted to the meeting and permitted to vote against the special resolutions (as, it was said, he would have done) the special resolutions would not have been supported by the required majority.
Shortly thereafter, on 3 August 2004, Tempo presented a petition in the Grand Court seeking an order that Fortuna be wound up on the just and equitable ground, pursuant to section 94 of the Companies Law. On 30 April 2009 Justice Henderson ordered that that petition be struck out. He did so on the basis that he was satisfied, for the reasons which he had set out in his judgment dated 6 January 2009, that the respondents to that petition (New Frontier and Wynner) had made a reasonable offer to purchase the petitioner's shares. The offer followed, and was based on, a valuation made by accountants jointly instructed by the parties. Justice Henderson's order of 30 April 2009 was upheld in this Court on 17 August 2010, for the reasons set out in its judgments reported at 2010 (2) CILR 85.
These proceedings were commenced by the issue of a writ of summons on 21 June 2010. Tempo, Dr Chen and Maxima sought a declaration against Fortuna, New Frontier, Wynner, Bates and two other defendants that the meeting of Fortuna held on 22 June 2004 was invalid, and that the ordinary resolutions and special resolutions purported to have been passed at that meeting were void and of no effect. The grounds included the allegation that Mr Niu —‘the lawful representative of the Third Plaintiff [Maxima]’— was wrongly excluded from the meeting and that Mr Tsien had wrongfully but invalidly purported to exercise Maxima's voting rights in favour of the resolutions. It was further alleged that the special resolutions were ‘not bona fide and/or in the best interests of Fortuna and/or were oppressive of a minority of the shareholders of the company’. A statement of claim was served on or about 16 November 2010; the first three named defendants — Fortuna, New Frontier and Wynner served their defence on or about 28 January 2011; and a reply to that defence was served on or about 11 March 2011.
On 6 June 2011 Fortuna, New Frontier and Wynner — but not Bates or the other two defendants to these proceedings — issued a summons seeking(inter alia) an order that the claims against them be struck out. That summons came before Justice Henderson for hearing in February 2012. By paragraph 1 of the order which he made on 4 April 2012, the judge dismissed the application to strike out. By paragraph 7, he directed that the applicants pay 50% of the plaintiffs' costs of the summons to strike out, to be taxed on the standard basis if not agreed. His reasons are set out in his written judgment of the same date.
The judge identified two issues for determination: (i) whether the claims should be struck out on the ground that the proceedings were plainly and obviously an abuse of process; and (ii) whether the claims should be struck out because the statement of claim disclosed no reasonable cause of action (or, in the alternative, whether the applicants should be granted summary judgment on the contractual claims made against them in the statement of claim). The judge determined each of those issues against the applicants. The second issue was not the subject of the appeal to this Court; and it is unnecessary to do more than mention it in the context of the judge's order as to costs.
The judge addressed the first of the two issues which he had identified at paragraphs 20 to 28 of his judgment. At paragraph 20 he pointed out that the applicants — Fortuna, New Frontier and Wynner — submitted that pursuit of the claims in these proceedings by Tempo, Dr Chen and Maxima ‘offends against what is sometimes called the “extended” form of theres judicata rule’. He referred to the statement of that rule by Sir James Wigram, Vice Chancellor, in Henderson v Henderson (1843) 3 Hare 100, 114–115. That statement (of which the judge set out the second sentence) is in these terms:
‘In trying this question I believe I state the rule of the Court correctly when I say that, where a given matter becomes the subject of litigation in, and of adjudication by, a court of competent jurisdiction, the Court requires the parties to that litigation to bring forward their whole case, and will not (except under special circumstances) permit the same parties to open the same subject of litigation in respect of matter which might have been brought forward as part of the subject in contest, but which was not brought forward, only because they have, from negligence, inadvertence, or even accident, omitted part of their case. The plea of res judicata applies, except in special cases, not only to points upon which the Court was actually required by the parties to form an opinion and pronounce a judgment, but to every point which properly belonged to thesubject of litigation, and which the parties, exercising reasonable diligence, might have brought forward at the time.’
At paragraph 21 of his judgment the judge went on to observe that:
‘Obviously the rule in its classic form cannot apply because no court has made findings of fact and given judgment on the claim about the EGM and the resulting resolutions. The extended form of theres judicata principle applies to points which might have been, but were not, advanced in the earlier litigation. The present claim by the plaintiffs was pleaded in the Petition but not tried because the proceeding took a different course. Thus, the present situation does not fit readily within either branch of the rule. In recognition of their difficulty the defendants have argued that Tempo should have brought this proceeding “in parallel with” the Petition and not waited until its Petition had been dismissed.’
At paragraph 22 of his judgment the judge directed himself that theres judicata rule had been explained and restated by the House of Lords in Johnson v Gore-Wood [2000] UKHL 65; [2002] 2 AC 1‘in terms which shift the focus to a “broad merits-based...
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