Jun 2024
In a recent decision of the BVI Commercial Court, the Honourable Mr Justice Wallbank dismissed an application by the Defendants in King Bun Limited & Ors v Lau Man Sang James & Ors to set aside a previous order granting substantial relief to the Claimants in a high-stakes derivative action.
On 14 November 2023, the Honourable Mr Justice Wallbank issued an order requiring the defendants to pay over US$55 million in equitable compensation, plus pre-judgment interest, totalling nearly US$97 million to the Claimants (the “Quantum and Relief Judgment“). The Quantum and Relief Judgment was handed down following the Court’s July 2021 ruling that the Defendants were liable for various breaches of directors’ duties in connection with a sale of the company’s most valuable asset to the First Defendant at a gross undervalue (the “Liability Judgment”). Our previous article on the Liability Judgment is available here, and in respect of the Quantum and Relief Judgment here.
The Defendants applied to set aside the Quantum and Relief Judgment on the basis that they were not present or represented at the hearing on 14 November 2023. The Defendants sought to invoke ECSC Civil Procedure Rule 39.5, which allows a party who was absent from a trial to apply to set aside the judgment if they are able to establish (i) a good reason for failing to attend the hearing and (ii) that it is likely that had they attended, some other judgment or order might have been made.
In a thorough and well-reasoned extempore judgment delivered on 30 April 2024, Justice Wallbank rejected the Defendants’ application. Having considered the relevant case law, the judge concluded that none of the reasons stated by the Defendants were good reasons for them not to attend the trial.
Crucially, the judge agreed with the Claimants that the reason the Defendants were purportedly “unaware of the Quantum and Relief trial was because of the irregular and irresponsible manner in which the [defendants] [had] decided, entirely of their own volition to manage the defence of their proceedings, entrusting everything to an individual who, on his own evidence, was too busy, not particularly focused on the proceedings and did not keep a record of any deadlines“. In addition, the Court considered the general conduct of the Defendants throughout the trial including their apparent disengagement with fulfilment of disclosure obligations, non-compliance with costs orders and more general lack of engagement leading up to the Quantum and Relief Trial.
In dismissing the application, Justice Wallbank emphasised the importance of “finality in litigation“. The Court recognised that allowing the application would cause prejudice to the Claimants in respect of additional costs, delay, and significant costs thrown away.
This judgment serves as a strong signal that the BVI Court will not easily allow parties to avoid the consequences of their failure to engage with Court proceedings. The detailed reasoning provided by Justice Wallbank in this decision is likely to have significant precedential value for future applications to set aside judgments on the basis of a party’s absence from trial proceedings.
Conyers acted for the successful Claimants in these proceedings.
The Claimants’ legal team was led by Jern-Fei Ng KC of 7BR Chambers supported by James Bailey of 7 King’s Bench Walk, alongside Conyers’ cross-border disputes team comprising Partners Jerry Samuel and Norman Hau, Counsel Alecia Johns and Associate Catherine Wong.