China Metal Recycling (Holdings) Ltd v Wai & Ors

Permission to serve proceedings out of the jurisdiction requires three matters: a serious issue to be tried, an applicable gateway, and England being clearly or distinctly the appropriate forum. Where several gateways are relied upon, each must be established on the applicable standard, including whether the claimant has the better of the argument.

Forum conveniens is assessed by weighing all relevant connecting factors. Witness availability may be important, but it may be outweighed by the location of the disputed property and the fact that the claim is principally directed to enforcement against assets in England. A proposed claim may properly be stayed pending related foreign proceedings where findings in those proceedings are likely to provide the foundation for the English claim.

The claimants, companies in compulsory liquidation, sought permission to serve the first to third defendants outside England. The proposed claims concerned the beneficial ownership of a London flat and money held in English bank accounts, or alternatively transfers at an undervalue intended to prejudice creditors under section 423 of the Insolvency Act 1986.

Related proceedings concerning fraud and connected matters were already pending in Hong Kong. The claimants proposed that the English proceedings should be stayed until judgment in Hong Kong. The fourth to sixth defendants were daughters of the first and third defendants; the sixth defendant was domiciled in England, and the fourth and fifth defendants consented to alternative service.

The issues were whether the service-out gateways were established and whether England was clearly or distinctly the appropriate forum.

1. Service out. The court applied the established three-stage test. It had to be satisfied that there was a serious issue to be tried, that one or more gateways in paragraph 3.1 of CPR Practice Direction 6B applied, and that England was clearly or distinctly the appropriate forum. The serious-issue requirement was satisfied on the evidence. The claimants also had the better of the argument for the gateways relied upon.
2. The necessary or proper party gateway was established because the claims against the first to third defendants were closely connected with the claim against the sixth defendant, who was domiciled in England, and would appropriately be tried together. The property gateway was established because the relevant flat and bank funds were in England. The enactment gateway was also established because the alternative claim was brought under section 423 of the Insolvency Act 1986.
3. Appropriate forum. The court weighed the connections with England and Hong Kong. The English connections included the location of the property and bank accounts, the presence in England when the transfers were received, the deliberate transfer of assets to England, the domicile of one defendant, and the application of English law. Witness availability was the strongest factor favouring Hong Kong, particularly because relevant witnesses were there and one was imprisoned there.
4. Those factors were outweighed in the overall assessment by the strong connection between the claim and England. The proceedings were in substance enforcement proceedings against assets situated in England, intended to be pursued after judgment in Hong Kong. The prior Hong Kong proceedings did not determine where enforcement against the English assets should occur, and did not materially alter the forum analysis.
5. The court therefore granted permission for service out and ordered alternative service against the first defendant. The proceedings were to be stayed pending determination of the existing Hong Kong proceedings.