SHAILAIN HIRACHAND JHAVERI v. RAJENDRA JHAVERI AND OTHERS

[In considering inter partes an application to set aside an order made ex parte giving leave to serve proceedings out of the jurisdiction under 0.11, r.l, it is necessary to have regard, not just to the plaintiff's case, but to all the admissible material before the court. In those circumstances, the court may have to assess the relative strength of the parties' cases. If there is a dispute over a question of fact concerning something which has to be proved in order to bring the case under 0.11, r.l, the plaintiff has to persuade the court that it should conclude, albeit only provisionally or tentatively, that the plaintiff is probably right upon that question. If the court is so persuaded, it should go on to consider whether, upon that basis, the plaintiff has a good arguable case for contending that he has satisfied the requirements of 0.11, r.1. If the court decides that he has, the leave granted should be allowed to stand.]

1989 No. A1864

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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J U D G M E N T

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1. This is an appeal from a decision of the Registrar, Supreme Court, who, on 1st December 1989, refused an application by the 2nd, 3rd and 4th defendants to set aside an order of Master Jones made ex parte on 21st April 1989. The order of Master Jones gave the plaintiff leave, pursuant to Order 11, rule 1 of the Rules of the Supreme Court, to serve the writ in this action on the four defendants, all of whom reside outside the jurisdiction of this court. (The 1st defendant has filed a defence and has not applied to have the order of 21st April 1959 set aside as against him.)

2. In considering inter partes an application to set aside an order made ex parte giving leave to serve proceedings out of the jurisdiction under 0.11, r.1, it is necessary to have regard, not just to the plaintiff's case, but to all the admissible material before the court. In those circumstances, the court may have to assess the relative strength of the parties' cases. If there is a dispute over a question of fact concerning something which has to be proved in order to bring the case under 0.11, r.1, the plaintiff has to persuade the court that it should conclude, albeit only provisionally or tentatively, that the plaintiff is probably right upon that question. If the court is so persuaded, it should go on to consider whether upon that basis, the plaintiff has a good arguable case for contending that he has satisfied the requirements of 0.11, r.l. If the court decides that he has, the leave granted-should be allowed to stand.

3. These propositions are, in my judgment, consistent with, and indeed follow from, the views expressed in the Court of Appeal in England by Staughton L.J. (giving the leading justment) in Attack Cement Co. Ltd v. Rumanian Bank for Foreign Trade [1989]1 W.L.R. 1147.

4. In the present case, the following facts are not in dispute. All the parties are in the diamond business. The plaintiff carries on business here. All the defendants carry on business in India. The plaintiff has had business dealings with the 1st defendant which have resulted in his being substantially indebted to the 1st defendant. The 2nd, 3rd and 4th defendants, creditors of the 1st defendant, accompanied the 1st defendant to a meeting with the plaintiff at the plaintiff's office in Hong Kong held on 15th May 1937 in connection with these matters.

5. The following facts are asserted by the plaintiff and by the lot defendant. At the meeting; the plaintiff handed over a parcel of gems to the 4th defendant, and the 1st defendant has signed consignment notes in respect of them.

6. The 2nd and 3rd defendants have not denied these assertions by the plaintiff and by the 1st defendant. This is so, although they were both present at the meeting, and have had an opportunity to make such a denial. (Each of them has denied that the goods were handed to him; but no one has in face suggested that.) The 4th defendant has not denied that the gems were handed to him. With the evidence in this state, I conclude, tentatively, that the plaintiff is probably right; and that he did hand the gems over to the 4th defendant. On what basis he did so is quite another matter. The plaintiff has offered more than one explanation for what happened at the meeting of 15th May 1987. In a letter dated 7th November 1988 from Poon & Dissanayeke, solicitors for the plaintiff, to the 1st defendant, the plaintiff suggested that he had been prepared to hand over the gems on an approval or return basis to enable the 1st defendant and his creditors to make an offer for them; and that the 1st defendant had requested him to hand the gems over to the 4th defendant. (The plaintiff had given a similar explanation to the Hong Kong Customs in earlier letters dated 25th February 1988 and 14th April 1988.)

7. In his statement of claim, endorsed on the writ, which was issued on 12th April 1989, the plaintiff asserts as follows :

"10. Following discussions between the plaintiff and the defendants it was eventually orally agreed by the plaintiff and the defendants acting jointly and severally that :-

(1) The plaintiff would hand over to the defendant and/or the committee [that is a reference to a committee of the creditors of the 1st defendant of which the plaintiff alleges the 2nd, 3rd and 4th defendants were members] in sealed packages 812.79 carats of cut and polished diamonds then worth approximately US$300,000 and 311.13 carats of cut and polished emeralds in open packages then worth approximately US$20,000;

(2) The 1st defendant would sign consignment notes evidencing such handing over;

(3) The 2nd, 3rd and 4th defendants and/or the committee through the 4th defendant would in return advance within four days the sum of US$326,000 ("the advance") to the plaintiff to enable him to pay and to discharge part of his liability to the [1st defendant];

(4) On the next day, the 15th May 1987, the plaintiff would start to remit instalment payments to [the 1st defendant] of US$7,000 and each working day thereafter in further discharge of the balance owed by him to [the 1st defendant] until the same was liquidated;

(5) The plaintiff would repay the advance to the 2nd, 3rd and 4th defendants and/or the committee within six to twelve months whereupon the diamonds in the sealed packages would be returned to him together with the emeralds in the unsealed packages.

11. On the sane day, pursuant to the said oral agreement :

(1) The plaintiff gave the 4th defendant for and on behalf of the 2nd, 3rd and 4th defendants and/or the committee 812.79 carats of diamonds in sealed packages and 311.13 carats of emeralds in unsealed packages : the said diamonds were then worth US$300,000 and the said emeralds were worth US$26,000;

(2) The 1st defendant signed the plaintiff's consignment notes Nos. 1098, 1099 and 1100, all dated l4th May 1987 evidencing the delivery of the said diamonds and emeralds on the terms agreed."

8. In his affirmation of 14th November 1989, the plaintiff deposes as follows :-

"In may 1987 I owed the 1st Defendant a considerable amount of money as I have admitted. The market at that time was however slow, by which I mean that I could not sell large quantities immediately. When I explained this fact to the Defendants, the 4th Defendant, who is a large dealer of international repute, said that he could solve that problem by taking the diamonds and pledging them in Hong Kong. The money so raised would then be given to me: I would pay the 1st Defendant: and in turn he would make the payment available to his creditors in Bombay. This was eventually agreed to by us all as part of the overall agreement. I therefore handed over the diamonds in the belief that they were to be pledged in Hong Kong as agreed: and that I would recover them by repaying the pledge monies as I received further business funds. The rationale for the pledge was that it would release an immediate large sum of money which otherwise I was unable to do. At no time did the Defendants lead me to believe that the diamonds were to be re-exported to India. Since I naturally wanted some evidence that I had handed over the diamonds, the 1st Defendant signed the Consignment Notes. I respectfully aver that the 1st Defendant would not have signed the Consignment Notes unless I had handed over the diamonds to either himself or the other Defendants: ie, the 4th Defendant acting as the spokesman of the 2nd-4th Defendants"

9. These explanations are not consistent. But I am satisfied, tentatively, that at the meeting on 15th May 1987, the plaintiff did arrive at some agreement with the defendants (all of them) pursuant to which he handed over the gems to the 4th defendant. I am not satisfied, even tentatively, that the terms of that agreement were precisely those pleaded in the statement of claim. However, I do not think that matters. Since I have formed the (tentative) view that some agreement, to which the plaintiff, and all the defendants, were parties, was reached at the meeting on 15th May 1987 and that the plaintiff parted with the gems pursuant to that agreement (whatever its precise terms were) I conclude that the plaintiff (who now asks for the return of the gems, having had no value for them) has brought himself within the provisions of 0.11, r.l. The agreement, whatever it was, was made in Hong Kong. That being so, I see no reason to set aside the order giving the plaintiff leave to serve the proceedings out of the jurisdiction, and I propose to uphold the decision of the Registrar and to affirm that order. It follows that the appeal must be dismissed with costs.