SUNCO PROPERTY HOLDINGS CO LTD AD ANOTHER v.

HCA148/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 148 OF 2008

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(Consolidated by order of Master de Souza dated the 10^th day of March 2008)

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J U D G M E N T

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1. This is an appeal from the order of Master de Souza made on 10 March 2008 ordering that HCA no. 148 of 2008 be consolidated with HCA no. 2145 of 2007.  The master also ordered that the plaintiffs in HCA no. 148 of 2008 shall be regarded as the 1^st and 2^nd plaintiffs in the consolidated action and that the plaintiffs in HCA no. 2145 of 2007 shall be regarded as the counterclaiming 1^st and 2^nd defendants in the consolidated action.

2. Quite clearly, the action first in time is the HCA no. 2145 of 2007.  On 10 October 2007 Sunco Property Holdings Company Limited (“Sunco A”) and Huge Rise Investments Limited (“Huge Rise”) commenced HCA no. 2145 of 2007 (“the 1^st action”) against Sunco China Holdings Limited (“Sunco China”), Sunco Management Holdings Limited (“Sunco Management”) and Sun Hongbin (“Mr Sun”).  

3. Sunco A and Huge Rise’s claim is for the sum of RMB 288 million or damages for breach of warranties given by Sunco China and Sunco Management, and against Mr Sun as guarantor, under an option agreement for the sale and purchase of shares dated 23 January 2007.

4. The writ and statement of claim in the 1^st action was served on Sunco China in Hong Kong on 13 December 2007 and on Sunco Management in the BVI on 7 January 2008. 

5. Sunco Holdings and Sunco Management have acknowledged service of the writ in the 1^st action.  Leave to serve Mr Sun in the US has already been granted and service has been effected on him.

6. HCA no. 148 of 2008 (“the 2^nd action”) was commenced by Sunco China and Sunco Management on 25 January 2008 against Sunco A and Huge Rise.  Their claim is for declaratory relief arising from breach of the same agreement namely, the option agreement for the sale and purchase of shares dated 23 January 2007. 

7. The writ in the 2^nd action has not yet been served. 

8. On 5 February 2008 Sunco China and Sunco Management issued the summons for consolidation of the 1^st and 2^nd actions and for directions that they be made plaintiffs in the consolidated action. 

9. On 7 March 2008 Sunco China and Sunco Management filed a defence and counterclaim.  On the same day and at the same time they filed a statement of claim in the 2^nd action.  The relief sought in the counterclaim by Sunco China and Sunco Management in the 1^st action are the same as the relief claimed in the statement of claim in the 2^nd action.  The facts relied upon in both actions are for all material purposes the same. 

10. On 10 March 2008 the master, on the hearing of the summons for consolidation, made the order that I have mentioned. 

11. Two matters have developed since the master’s order.  The first is that on 7 April 2008 an application was made to serve HCA no. 148 of 2008 out of the jurisdiction.  It is not clear why that was so since by that time an order for consolidation had been made.  This appears to be an error made by the solicitors.

12. The second matter that has occurred is that on 11 April 2008 the defence and counterclaim in the 1^st action was amended by the deletion of the counterclaim.  So there is no longer any counterclaim in the 1^st action.

13. Whatever the position might have been before the master it seems to me that the present position is that there are two causes pending in the Court.  It appears to me that the provisions of O. 4, r. 9(a) and (b) RHC are satisfied and the Court may order those causes to be consolidated on such terms as it thinks just. 

14. It seems to me that Mr Jat Sew Tong SC is right when he says that the proceedings will still have to be served out of the jurisdiction or an order for substituted service will have to be obtained.  That has not yet been done.  However, I do not think that is a bar to the Court making an order for consolidation.  The reality of the matter is that all the parties are represented by solicitors and counsel in Hong Kong and I do not foresee any difficulty in obtaining the proper orders for service. 

15. In the circumstances it seems to me that it is right that the order for consolidation should remain.  However, it seems to me that the plaintiffs in the consolidated action should be Sunco A and Huge Rise since the 1^st action was commenced first in time and if they prefer to be the plaintiffs then, in my view, they ought to be. 

16. I would dismiss the appeal insofar as the order for consolidation is concerned and vary the order of the master in respect of paragraphs 2, 3 and 4.  I order that the 1^st and 2^nd plaintiffs in HCA no. 2145 of 2007 shall be regarded as the 1^st and 2^nd plaintiffs in the consolidated action and that the 1^st, 2^nd and 3^rd defendants in HCA no. 2145 of 2007 shall be regarded as the 1^st, 2^nd and 3^rd defendants in the consolidated action.  I shall hear counsel if they wish me to make any further directions at this stage.