Tatung Company v Chungwha Picture Tubes Ltd; Granville Technology Group Ltd ((in Liquidation)) and Ors Intervening
| Jurisdiction | Bermuda |
| Judgment Date | 21 April 2023 |
| Court | Supreme Court (Bermuda) |
| Docket Number | Civil Jurisdiction 2022 No 98 |
[2023] Bda LR 42
Civil Jurisdiction 2022 No 98
In The Supreme Court of Bermuda
Application to intervene in existing proceedings — Enforcement of security — Sale of shares — Joinder — Whether applicant is a secured creditor
The following cases were referred to in the judgment:
Gurtner v Circuit [1968] 2 QB 587
Pegang Mining Co Ltd v Choong Sam & Ors [1969] 2 MLJ 52
Young v Hodge [2001] Bda LR 70
Long v Crossley (1879) 13 ChD 388
McIlroy-Rose v McIlroy-Rose [2019] NI Ch 13
Kings Quality Homes Ltd v AJ Paints Ltd [1998] 1 WLR 132
Amon v Raphael & Son Ltd Tuck [1956] 1 QB 537
Bentley Motors (1931) Ltd v Langonda Ltd (1945) 114 LJ Ch 208
Monarch Airlines Engineering Ltd v Intercon (Cattle-Meats) Ltd (1985) 11 Con LR 59
Sanders Lead Co In v Entores Metal Brokers Ltd [1984] 1 WLR 452
Colonial Bank v Whinney (1885) 30 ChD 261
British Mutoscope and Biograph Co Ltd v Homer [1901] 1 Ch 671
Masri v Consolidated Contractors International Co SAL [2009] UKHL 43
Mr M Hardwick KC and Mr J O'Mahoney for the Plaintiff
Mr T Raphael KC and Mr S Stevens for the Interveners
JUDGMENT of Hargun CJ
1. These proceedings were commenced by Tatung Company (“Tatung”) against Chunghwa Picture Tubes Ltd (“CPT”) by Originating Summons dated 20 April 2022. In the Originating Summons it is said that Tatung is a company incorporated in Taiwan and listed on the Taiwan Stock Exchange. It mainly engages in the manufacture and sale of electronic and electrical products.
2. CPT is also a company incorporated in Taiwan and also listed on the Taiwan Stock Exchange. At all material times, Tatung was and remains a major shareholder of CPT. It is said that on 13 December 2018, CPT applied to the Taiwan Taoyuan District Court for restructuring, which application was refused and in around September 2019, CPT applied to the Taiwan Court for its own winding up and on 29 August 2022 that application was granted by the Taoyuan District Court.
3. Chunghwa Picture Tubes (Bermuda) Ltd (“CPT Bermuda”) is a company incorporated in Bermuda and is a wholly owned subsidiary of CPT.
4. It is said that on 25 December 2015, Tatung and CPT entered into an Endorsements and Guarantees Agreement (the “EGA”), under which Tatung agreed to provide guarantee(s) in favour of financial institutions in Taiwan to secure CPT's prospective indebtedness with them. In return, it is said that CPT agreed to provide the entire equity interest of CPT Bermuda to Tatung as security (the “Security”), to pay Tatung the Endorsements and Guarantees Fees and repay the Endorsements and Guarantees Amount.
5. It is said that in December 2015, acting on the EGA, Tatung provided guarantees to three banks in Taiwan (the “Banks”) to secure CPT's indebtedness by pledging Tatung's time deposits with the Bank's as security.
6. It is further said that: On 13 December 2018, CPT defaulted on the loans with the Banks. On or about 14 December 2018, the Banks set off Tatung's time deposits to discharge CPT's indebtedness, which amounted to NTD 1,993,372,833. In addition, the outstanding Endorsement and Guarantees Fees as of 14 December 2018 was NTD 1,772,055. The total outstanding sum that CPT was liable to pay Tatung as of 14 December 2018 was therefore NTD 1,995,144,888, approximately US $72 million (the “Total Outstanding Sum”).
7. Since December 2018, it is alleged that Tatung repeatedly demanded CPT to repay the Total Outstanding Sum, and informed CPT that if it failed to do so, Tatung would enforce the Security. CPT stated that it was unable to repay the Total Outstanding Sum due to its financial inability and did not dispute its liability towards Tatung or Tatung's right to enforce the Security.
8. On 17 December 2019, Tatung obtained an order from the Taiwan Court that CPT repay the Total Outstanding Sum and interest to Tatung. CPT has failed to comply with this Court order.
9. In these circumstances in the Originating Summons, Tatung seeks an order for the appointment of joint and several receivers to receive (and sell as appropriate) the Security and the dividends, profits, interest and other monies receivable in respect of CPT's interest in the Security to be transferred to Tatung for the unpaid Total Outstanding Sum as well as any interest and the costs of enforcement.
10. The Interveners' interest in the present proceedings is set out in the first affidavit of the Mr Nicholas Wood dated 29 July 2022. Mr Wood is a partner of Grant Thornton UK LLP and is the liquidator of Granville Technology Group Limited (in liquidation) (“Granville”) and OT Computers Limited (in liquidation) (“OTC”). His colleague Jackie Stringer has been appointed as liquidator of VMT Limited (in liquidation) (“VMT”).
11. Mr Wood explains that Granville and OTC were large UK manufacturers of personal computers during the 90's and early 2000's. VMT was a manufacturing arm of Granville. Granville entered administration on 27 July 2005 and subsequently liquidation on 15 January 2007, while OTC entered administration on 29 January 2002 and then liquidation on 5 February 2004. VMT entered administration on 5 August 2005 and subsequently liquidation on 15 January 2007.
12. VMT, Granville and OTC, acting through their respective liquidators, issued a claim in the English courts relating to losses arising from the CRT (cathode ray tube) cartel on 18 October 2017 (the “CRT Claim”). The CRT Claim is a “follow-on” claim for damages which relies on the findings of liability determined by the European Commission in a decision in Case AT 39437-TV dated 5 December 2012 (the “Decision”). By the Decision, the European Commission found two separate infringements of Article 101 of the Treaty on the Functioning of the European Union in the sector of cathode ray tubes.
13. The CRT Claim was brought against various defendants who were the subject of the Decision, including the Defendant, CPT, on the basis that each defendant is jointly and severally liable for the whole of the loss caused by the cartel.
14. By order dated 16 July 2020, the liquidators obtained default judgment against CPT in the UK in the sum of £33,663, 090 for Granville and VMT and £44,688, 694 for OTC, totalling £78,351,784 (the “Judgment”).
15. The Interveners registered that judgment in Bermuda pursuant to an order dated 1 July 2021 (the “Registration Order”). Following the Registration Order, the Interveners obtained a Writ of Fieri Facias (“the Writ”) from the Bermuda Court dated 13 September 2021 to enforce the Judgment as registered in Bermuda. The Writ provides: “WE COMMAND YOU that of the goods, chattels, lands, houses, shares and any other property of [CPT] authorised by law to be seized by you in execution you cause to be made the amount in Bermuda dollars equivalent of £33,663,090 to the First and Second Plaintiff's and the amount of £44,688,694 to the Third Plaintiff together with Judgment Interest, Provost Marshall General's fees, costs of levying and all other legal incidental expenses and that immediately after the execution of this Writ you pay the Plaintiffs in pursuance of the said Judgment the amount levied in...
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