XCHRX CONTINENTAL MARK LTD. v. VERKEHRS-CLUB de SCHWEIZ

HCA7999/2000

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H E A D N O T E

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The plaintiff, a Hong Kong company, claimed that a contract to purchase 4000 aluminium scooters had been entered into between a representative from its German office and a Swiss entity. A Master made an Order on an ex-parte application by the plaintiff for service out of Hong Kong of the concurrent writ on the defendant.

Held : Allowing the appeal and setting aside the ex-parte Order with costs.

(1) The plaintiff's evidence was inadmissible for manifest breach of Order 41, rule 5(2) as the solicitor had failed to state the sources of her knowledge and belief for her evidence in support on critical issues : Leung Kin Fook v. Eastern Worldwide Co. Ltd [1991] 1 HKC 55 (CA) applied.

(2) The solicitor had incorrectly stated that the assumed contract contained a Hong Kong exclusive jurisdiction clause. That was a breach of the ex-parte duty of frankness : The Hagen [1908] P 189, 201 (CA) applied; Hong Kong Civil Procedure 2001 11/1/2 approved.

(3) There was no good arguable case that a contract existed : Yee Sang Metal and Building Supplies Co. Ltd v. Taiyo Maritime SA [1991] 2 HKC 291 (CA) applied. The export conditions (which contained the exclusive jurisdiction clause) were not incorporated in the assumed contract Dicta of Gatehouse J in Metaalhandel JA Magnus BV v. Ardfields Transport Ltd [1988] 1 Lloyds Rep 197, 202-204 followed.

(4) Under Order 11, rule 1(d)(iii) Rules of the High Court applying the test of Litton JA in Century Yachts Ltd v. Xiamen Celestial Ltd [1994] 1 HKC 331 (CA) Hong Kong was not, by implication, the jurisdiction which governed the assumed contract.

(5) A solicitor who had innocently filed an affidavit which was subsequently found to be incorrect was under an immediate duty to rectify the mistake of fact by a further affidavit : Myers v. Elman [1940] AC 282, 294 (HL).

FOR REFERENCE

HCA7999/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO.7999 OF 2000

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J U D G M E N T

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1. On 9 August 2000, the plaintiff commenced proceedings against VCS Boutique ("VCS"), the commercial department of the present defendant, the Switzerland Automobile Association. By a Statement of Claim it alleged that a contract was entered into between it and VCS dated 9 May 2000, in which VCS agreed to purchase 4000 aluminium scooters for a sum of US$172,000 being equivalent to HK$1,341,600. The claim alleged that VCS wrongly failed or refused to take delivery of the scooters by denying the existence of the contract. The plaintiff's solicitors had by a letter of demand dated 16 June 2000, unsuccessfully required payment on behalf of their client.

2. By an affirmation dated 15 August 2000, the plaintiff's solicitor Mr Man applied ex-parte for leave to issue and serve a Writ of Summons and Statement of Claim for service out of the jurisdiction in Switzerland against VCS. The application came before Master Andy Ho who did not make the Order sought, but instead gave directions requiring the plaintiff to identify that it had a good arguable case for the relief claimed and also requiring it to set out sufficient facts to show that Hong Kong was the forum conveniens.

3. By an affirmation dated 20 September 2000, a solicitor (Ms Lai), employed in the firm retained by the plaintiff, filed an affirmation purportedly to deal with the two matters raised by Master Ho. This affirmation is peculiarly defective in a number of different ways.

(1) It does not carry the orthodox provision that the affirmation is made for and on behalf of the plaintiff - although it does say it is made "in support of the plaintiff's application".

(2) She does not state the sources of her knowledge and belief for the critical evidence she gave. See : Kay J who lamented in Bidder v. Bridges (1884) 26 Ch D 1, 5 that "this rule is systematically ignored".

(3) The affirmant expressly stated that her evidence is a submission, as she uses variations of the expression "I would submit ..." throughout.

(4) She asserted in paragraph 2(i) that VCS had "duly confirmed and accepted" the contract. Not a single jot of evidence is put forward for this conclusion.

(5) In paragraph 2(ii) she exhibited a letter from the defendant to her firm dated 21 June 2000, in which the defendant denies having ordered the goods. She did not, in this ex-parte proceeding, exhibit the separate and earlier letter dated 14 May 2000 in which the defendant emphatically rejected the notion that a contract had been formed.

(6) She further "submit[s]" that it was agreed by the parties that "the legal domicle (sic)" is Hong Kong. What appears to be signified by that statement is that the contract was governed by Hong Kong law using "domicile" in a non-technical meaning, as in Cowley v Heatley The Times 24 July 1986 (interpretation of Commonwealth Games Constitution). But the document only states that the plaintiff is a Hong Kong company with its legal domicile in Hong Kong.

(7) The seventh matter is perhaps the most egregious of all. She states "that before the execution of the said contract by the defendant, the plaintiff also sent an export conditions informing the defendant that the said contract shall be governed by and construed in accordance with the laws of Hong Kong..." (Emphasis not in original).

4. The plaintiff's case by its evidence and by its pleadings to sustain the ex-parte Order was that the contract was embodied in a "Confirmation Order" dated 9 May 2000. Certainly, on 10 May 2000, the plaintiff unilaterally sent by facsimile to the defendant a set of export conditions. These conditions are important, because if they were part of the contract, then the parties had agreed that Hong Kong should be the exclusive jurisdiction for litigation. The defendant says, as part of its resistance that even on the plaintiff's own case that set of export conditions could not be part of the contract. See : for example Metaalhandel JA Magnus BV v. Ardfields Transport Ltd and Eatfell Ltd [1988] 1 Lloyds LR 197 at 202 - 204 per Gatehouse J, where standard conditions communicated by the seller were plainly post-contractual and therefore inoperative. Therefore, it was critical to determine whether the export conditions were in the contemplation of the parties and incorporated in the contract before or on 9 May 2000. On this vital issue, Ms Lai says "before" the contract the plaintiff "also" sent a set of export conditions to the defendant. On her evidence, which was before the Master in the ex-parte proceedings, there was (subject to its admissibility - to which I will return momentarily) evidence that the defendant had prior to the contract plainly received the export conditions, which contained a Hong Kong jurisdiction clause. But it has now been expressly conceded by Mr Hung in the course of the appeal that this evidence of Ms Lai is totally "incorrect". Indeed the defendant by an affidavit filed on its behalf on 16 June 2001 by Ms Wan, one of its Hong Kong solicitors, and which in contradistinction totally complies with the rules of evidence, identifies that her instructions are that the defendant received a copy of the plaintiff's export conditions, for the first and only time on 10 May 2000. By an affidavit dated 14 August 2001 Mr Lieberz the sales representative of the plaintiff who had been involved in the contract or purported contract accepted, on oath, that Ms Wan had accurately stated the position. It follows that Ms Lai had not received accurate instructions from the plaintiff and the implications of that will doubtless fall for consideration at any trial. Further Ms Lai as an officer of the Court will need, in any event, to file a rectifying affirmation. This should have been done already : Myers v. Elman [1940] AC 282, 294 (HL) per Viscount Maugham

"A solicitor who has innocently put on the file an affidavit by his client which he has subsequently discovered to be certainly false owes it to the Court to put the matter right at the earliest date if he continues to act as solicitor upon the record. They duty of the client is equally plain."

5. There remains to be assessed the effect this highly material and highly inaccurate evidence would have had on Master C.B. Chan on 26 September 2000, who made the ex-parte Order granting the plaintiff leave to issue and serve a concurrent Writ out of the jurisdiction upon the defendant. But there must a very strong claim to have the Order set aside as of right, on the usual principles, because of the default.

6. On 22 November 2000, the solicitors for the defendant filed a Notice to Act in these proceedings, a notice of intention to defend and disputed the jurisdiction : Order 12, rule 8(1).

Summons to set-aside

7. On 8 December 2000, Mr Malcolm Kemp a partner in the defendant's Hong Kong solicitors swore an affidavit as evidence for a Summons Inter Partes dated the next day. That summons sought an Order that the Writ and concurrent Writ be set aside, a declaration that the latter had not been duly served on the defendant in Switzerland, an Order that Master Chan's own Order granting leave to serve the concurrent Writ out of the jurisdiction be discharged and a declaration that the Court has no jurisdiction over the defendant in respect of the proceedings. Four grounds were advanced.

Irregular service in Switzerland : non-compliance with the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil and Commercial Maters of 15 November 1965

8. The first ground was that the concurrent Writ had not been served upon the defendant in accordance with Swiss law. Before Master Mary Yuen the plaintiff conceded that its purported service by airmail on the defendant in Switzerland was not lawfully effected. That concession is correct based on the evidence of foreign law. In Switzerland, service of judicial documents between contracting States is governed by the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil and Commercial Matters of 15 November 1965 ("The Hague Convention"). By virtue of a Diplomatic Note from the Ambassador of China on 10 June 1997 to the Government of Switzerland, the Hong Kong Special Administrative Region is a party to the Convention. Switzerland has formally incorporated reservations from Articles 8 and 10 of the Hague Convention so that it is not possible, under Swiss law, for service of Writs (and Statements of Claim), to be lawfully served in accordance with the Hague Convention by postal channels. See Ferraini S p A v. Magnol Shipping Co. Inc., The Sky One [1988] 1 Lloyd's Rep 238 (another case involving ineffective service in Switzerland under the Hague Convention).

9. Indeed, any legal practitioner can easily discover the requirements for service under the Hague Convention in relation to any Member State by searching the web-site www.hcch.net/e/status/stat14e.html.

Three other grounds

10. The second ground was that the affirmation of Ms Lai and that of Mr Man filed in support of the ex-parte application did not establish a good arguable case for the relief claim. The third ground was that the plaintiff's application did not set out sufficient facts to show that Hong Kong is the forum conveniens. The fourth ground was that the ex-parte Order had been procured without full and frank or sufficient disclosure of the facts. On 14 December 2000, Master C.B. Chan gave directions in relation to the hearing. The hearing scheduled for 15 December 2000 was vacated and the parties were permitted to file evidence, on terms.

Plaintiff's summons

11. On 8 February 2001, the plaintiff took out a summons seeking various Orders, principally that it be at liberty to amend its Writ and Statement of Claim and that it be at liberty to serve a concurrent amended Writ and amended Statement of Claim on the present defendant, rather than on VCS, the original defendant. The amended statement of claim now avers that the 9 May 2000 confirmation order which had formerly been identified as the "contract" is now re-pleaded to provide that the contract also included various documents sent by the plaintiff to the defendant on 10 May 2000 (including the export conditions). The defendant understandably sees this belated variation as a contrivance designed to include the Hong Kong jurisdiction clause (in the export conditions) within the contract. It is also importantly inconsistent with the Plaintiff's own original evidence, that by the new evidence the contract was spread out over two days. The plaintiff by the Amended Statement of Claim is clearly seeking to claw into the contract the export conditions.

12. On 8 February 2001, Ms Lai filed her second affirmation. On 5 March 2001, Mr Kemp filed his second affidavit, which exhibited letters referred to in the second affirmation of Ms Lai, but which she had not exhibited.

The order under appeal

13. On 15 March 2001, Master Mary Yuen ordered that the defendant's summons be dismissed, save that it was ordered and declared that the Writ of Summons and the concurrent Writ of Summons had not been served on the defendant, for non-compliance with the Hague Convention. A week later, the defendant filed a Notice of Appeal under 058 Rules of the High Court from the Orders of Master Yuen (other than in relation to the Order in which the defendant had succeeded before her). In the result I find for the defendant on each ground in this appeal. As a matter of logic there is no need therefore to determine the remaining grounds after determination of the first, but as a matter of prudence I have done so, treating each ground as free-standing.

Evidence since the order below

14. On 16 June 2001, Ms Wan an assistant solicitor employed by the defendant's solicitors firm in Hong Kong filed an affidavit on behalf of the defendant. In it she stated that the defendant had first seen an advertisement placed by the plaintiff in a newspaper published in Zurich about 1 April 2000. Mr Gerhard Siegenthaler was asked by the commercial manager of the defendant, a Mr Meyer to contact Mr Lieberz of the plaintiff's representative office in Germany about the advertised scooters. A brochure and some information was sent from Germany and in due course Mr Siegenthaler met Mr Lieberz at the defendant's office in Switzerland. The conversations were in the German language and Mr Siegenthaler was accompanied by two staff members throughout.

Defendant's case

15. On 9 May 2000, Mr Siegenthaler asked Mr Lieberz what was the price for 4000 city blitz scooters. In response Mr Lieberz handed to Mr Siegenthaler a document in English called an Order Confirmation ("OC"). Mr Siegenthaler made it clear to Mr Lieberz that he did not have the authority to transact business in the amount of US$150,000. Mr Siegenthaler therefore insisted that the words "Order From VCS Follows Until" be added in the handwriting of Mr Lieberz to reflect the fact that this was only an expression of intention and was subject to confirmation and approval by others in the defendant.

Plaintiff's case

16. Mr Lieberz denies that at any time Mr Siegenthaler stated that he had no authority to enter the contract at the amount of US$150,000. There was a full accepted contract.

Common ground

17. On 10 May 2000, Mr Siegenthaler received a fax from the plaintiff, consisting of three pages containing a typed up version of the 9 May OC and in addition the plaintiff's export conditions. It had been sent from the plaintiff's office in Hong Kong to the defendant's office in Switzerland. This, the second order confirmation "2OC" was never signed by the defendant but the sent document already bore the typed words "accepted by VCS Boutique". These words were sent by the plaintiff and not added by the defendant. At no stage has the defendant signed or approbated 20C. A few hours later the plaintiff sent a further fax to Mr Siegenthaler attaching an amended order confirmation "3OC". This 3OC contained additional apparent contractual terms not included in 2OC or OC and also no communicated acceptance was ever given by the defendant to the plaintiff.

18. On 14 May 2000, Mr Siegenthaler wrote to Mr Lieberz stating that the plaintiff's offer would not be accepted. Mr Lieberz then responded to Mr Siegenthaler in writing on the same day stating that the defendant's attitude "takes us by surprise, since your presentation does not correspond to the course of the business". The letter required the contract to be fulfilled and for the defendant to open a Letter of Credit.

Analysis

19. The plaintiff's case is that there was a concluded contract. For the defendant the case is that the sales representative of the plaintiff has jumped the gun - no doubt motivated by his potential commission and in the knowledge that Mr Siegenthaler had expressly stated in front of two colleagues, that he had no authority to enter any contract at the stipulated price.

20. On 14 August 2001, Mr Lieberz swore, before a German Notary, an affidavit. In his evidence he states that Mr Siegenthaler never expressed his lack of authority to enter the contract. Yet Mr Lieberz does not make any explanation as to why the hand-written English words "Airfreight Order From VCS Follows Until" which had been written appear on the OC exist, but he adds that the word "Until" was deleted. He does not condescend to say when that was done or why that was done. The plaintiff's own evidence shows that it was Mr Lieberz who wrote the words across the order confirmation. This is a point that the defendant understandably relies upon. Indeed the defendant's Swiss attorneys wrote to the plaintiff observing in this regard "for this reason, a corresponding proviso or condition in your handwriting was written onto your offer of 9 May 2000". The Swiss attorneys, G?tz & Grauer of Liestal, also alleged that Mr Lieberz had misrepresented that only the plaintiff had the rights to distribute the City Blitz brand of scooters in Switzerland ― which is said to be provably untrue.

21. Mr Lieberz also states that 2OC and 3OC were sent to "confirm" various matters of importance. He does not explain why something must be confirmed, or confirmed in significantly different terms, if it has already been agreed. He adds 2OC was "to confirm the place of jurisdiction of the purchase order"; this is clearly an attempt to refer to and incorporate the Hong Kong exclusive jurisdiction clause.

Order 41, rule 5(2) Rules of the High Court : inadmissible affirmation

22. In re JL Young Manufacturing Company Limited [1900] 2 Ch 753 (CA) and Lumley v. Osborne [1901] 1QB 532 (DC) it was held that an affidavit of information and belief that does not state the source of the information or belief is inadmissible as evidence, whether on an interlocutory or a final application. It was stressed that a party or solicitor who filed such an affidavit would do so at peril as to costs.

23. In Leung Kin Fook v. Eastern Worldwide Co. Limited [1991] 1 HKC 55 (CA), Mr William Waung (as he then was) persuaded the Court of Appeal that Order 41, rule 5(2) Rules of High Court should be strictly complied with where it is an objection of substance. That is now settled law. In an important ex-parte proceeding like this under Order 11, rule 1, it is plainly an objection of substance and not a technical and frivolous objection. As Lord Radcliffe stated in Vitkovice Horni a Hutni Tezirstvo v. Korner [1951] AC 869, 882 "Service out of the jurisdiction is, of course, an exceptional measure". See also the remarks of Scott LJ in George Monro Ltd v. American Cyanamid and Chemical Corporation [1944] KB 432, 437 (CA) quoted with express approval by Diplock LJ in Mackender v. Feldia AG [1967] 2 QB 590, 599G. "Service out of the jurisdiction at the instance of our courts in necessarily prima facie an interference with the exclusive jurisdiction of the sovereignty of the foreign country where service is to be effected". The Court of Appeal in Leung Kin Fook approved the earlier decision in Wang King Fong v. Chan Fook Hong (No.1) [1961] HKLR 448 (HC). Ms Lai's affirmation was inadmissible. There was by default then only Mr Man's affirmation to be considered and for the reasons given by Master Ho it was plainly insufficient. That is the whole reason why Ms Lai needed to file evidence, to rectify the inadequacy of Mr Man's evidence. In the result she added nothing to it ― no evidence. This by itself is enough for the appeal to succeed.

Ex-parte duty Order 32, rule 6 Rules of the High Court

24. The Hong Kong Civil Procedure 2001 states correctly in 11/1/2 that the practice under Order 11, rule 1 is for leave to be made ex-parte "on an affidavit setting out the relevant facts; it must be clear and frank" if any material fact is omitted this would justify the Court in discharging the Order, even though the party might later be in position to apply again : The Hagen [1908] P 189 (CA). At page 201 Farwell LJ said of Order 11, rule 1 applications : "inasmuch as the application is made ex-parte, full and fair disclosure is necessary, as in all ex-parte applications, and a failure to make such full an fair disclosure would justify the Court in discharging the order, even although the party might afterwards be in a position to make another application". See also Lazard Brothers and Co. v. Midland Bank Limited [1933] AC 289, 306 - 307 (HL) per Lord Wright where it was stated that innocent non-disclosure is a sufficient basis to set aside an order under Order 11, rule 1. The applicant must make full disclosure particularly of anything which casts doubt on his case : The Electric Furnace Co. v. Selas Corp. of America [1987] RPC 23, 28-29 (CA) per Slade LJ referring to The Hida Maru [1981] 2 Lloyds Rep 510 (CA). If Ms Lai's affirmation had been admissible then for the observations made earlier, it was significantly misleading by both mis-statements of facts and by omission. The affirmation is completely casual, over-generalised and lacking in specificity and supporting material. It is not for a plaintiff preparing evidence in support of an application under Order 11, rule 1 to anticipate all the arguments or all the points which might be against his case. The duty is one of degree : MacAuley (Tweeds) Ltd v. Independent Harris Tweed Producers Ltd [1961] RPC 184, 194 per Cross J. But here the central fact pertaining to the incorporation of the exclusive jurisdiction clause in the contract has been stated as the opposite of the agreed truth. This by itself is also sufficient for the appeal to succeed.

Good arguable case

25. The question whether or not the case meets the conditions prescribed for service out of the jurisdiction under Order 11, rule 1 does not involve an exercise of discretion, but a judgment of fact. The Court must conclude that the plaintiff has a good arguable case, not just a case that could be argued. It need not be shown that the plaintiff is right beyond all reasonable doubt. The Court does not try the case upon the affidavits, but must necessarily reach a provisional or tentative conclusion that the plaintiff is probably right, before allowing service outside the jurisdiction to stand; Attock Cement Co. Ltd v. Romanian Bank for Foreign Trade [1989] 1 WLR 1147 (CA) followed in Yee Sang Metal and Building Supplies Co. Ltd v. Taiyo Marine SA [1991] 2 HKC 291 (CA).

26. A good arguable case is one with a good prospect of success : R. Leslie Deak v. Deak Perera Far East Ltd [1991] 1 HKLR 551 (CA); and see per Godfrey J in United Links International Ltd v. The Price Co. [1994] 2 HKC 617 at 620 F. But the presence of disputed issues of fact (while being relevant to questions of forum conveniens) shows only the need for a trial, and does not necessarily detract from the conclusion that the plaintiff has shown a good arguable case : Wo Fung Paper Making Factory Ltd v. Sappi Kraft (Pty) Ltd [1988] 2 HKLR 346 (CA). In showing a good arguable case the plaintiff is not required to meet the standard of proof applicable at trial : disputed facts are not to be tried on affidavit, and the question whether the plaintiff has shown a good arguable case (something better than a prima facie case) is to be decided primarily with reference to the plaintiff's evidence : Tay Choo Wah v. Singapore-Johore Express (Pte) Ltd [1991] 2 HKC 180 (CA). Clough JA at 196B emphasised that the jurisdiction of the Court under Order 11, rule 1 (to allow service out of the jurisdiction) is however, not to be lightly exercised. The plaintiff must satisfy the Court that it has a good arguable case, not merely a case that can be argued. In essence the Court must reach a provisional conclusion that the Plaintiff is probably right : Yee Sang Metal and Building Supplies Co. Ltd. v. Taiyo Maritime SA [1991] 2 HKC 291 (CA). There will be issues that the Court cannot obviously or properly resolve on the papers before it. But the Court must reach a provisional conclusion which necessarily involves some analysis of the weight of the evidence based on the inherent probabilities of the claim, the detail and precision of the claim, the consistency of the claim and the evidence in relation to it and whether it is a bare claim or one plainly supported by independent evidence. The Court must take into account all the circumstances, all the realities and all the commercial instincts.

27. While there cannot be an attempt to try disputes of fact on the affidavits the defendant can show that the evidence of the plaintiff is incomplete or plainly wrong or attendant with some sustained doubt. In my judgment, this has been successfully achieved here. Note Chetan v. Jhaveri Shailain Hirachand [1990] 2 HKC 170 (CA), where in relation to Order 11, rule 1 at 173 G-H Kempster JA observed that "The plaintiff himself has advanced differing versions of the agreement...". At 174 F Cons VP noted "we have the basic inconsistency between the correspondence on the one hand and the claim and deposition on the other... In the face of such a clear and thus unexplained inconsistency, I find myself unable to accept that the plaintiff has shown a good arguable case". I do not conclude that the plaintiff has a good arguable case. There are a number of unsettling features (referred to throughout) in and about the evidence that exclude the attainment of that standard. For this reason alone the appeal also succeeds.

Order 11, rule 1(d)(iii) Rules of the High Court

28. Order 11, rule 1 (d)(iii) Rules of the High Court provides that service of a writ out of the jurisdiction is permissible where "the claim is brought to enforce... a contract ... being ... a contract which

(iii) is by its terms, or by implication, governed by Hong Kong law"

29. In the absence of an express agreement under Order 11, rule 1(d) (iii) as I have found, the Court must consider whether by implication the contract was governed by Hong Kong law. It has been said that no one factor is necessarily decisive. The ultimate test appears to be what is the system of law with which the transaction has the closest and most real connection : Compagnie Tunisienne de Navigation SA v. Compagnie d'Armement Maritime SA [1971] AC 572, 583F per Lord Rerd, 587E per Lord Morris of Borth-y-Gest and at 603H per Lord Diplock; Coast Lines Ltd v. Hudig Chartering & Veder NV [1972] 2 QB 34, 44B per Lord Denning M.R., 46D per Megaw L.J. , 50C-D per Stephenson L.J. and Armadora Occidental SA v. Horace Mann Insurance Co. [1977] 1 WLR 1098, 1100 F - G per Lord Denning M.R. Fortunately there is a decision of the Court of Appeal directly in point which articulates the exact test a Court must ask itself : Century Yachts Ltd v. Xiamen Celestial Yacht Ltd [1994] 1 HKC 331. There Litton JA (as he then was) at p 339F (with Bokhary JA (as he then was) and Sears J concurring), stated that the test is "what ordinary reasonable businessmen would have been likely to have agreed if their minds had been directed to the question".

30. Where under Order 11, rule 1(d)(iii) there is no express agreement as to what the governing law should be then the task of the Court is to infer their intention from all the relevant circumstances. This involves a bifocal approach ([1994] 1 HKC 331, 339A) engaging the large picture as well as the close focus. I have little doubt that all participants would have recognised that the assumed contract, was to be governed by Swiss law. All negotiations took place there in the German language at the defendant's office. The plaintiff's representative office was nearby in Germany. All meetings took place in Switzerland and all documents were sent there. The scooters would be shipped there. All the relevant circumstances point to Europe and not Asia. On this point too the appeal succeeds as the application of the Century Yachts test points assuredly to Switzerland.

Order 11, rule 4(1)(b) Rules of the High Court

32. In Century Yachts Litton JA emphasised that in that case "scant attention" had been paid to the provisions of Order 11, rule 4 by the plaintiff. At p. 335I it was stated that what is required under Order 11 rule 4(1)(b) "is not some ritual incantation of the wording", relying upon Man Won Co Ltd v. Tay Vi Bing Civ App 32/90 (which is however, oddly, reported sub nomine as Tay Choo Wah v. Singapore-Johore Express (Pte) Ltd at both [1992] 1 HKLR 19 and [1991] 2 HKC 180 (CA)). It is a matter of substance and not of form whether there has been compliance with this jurisdictional requirement. An affidavit that confirms that the facts pleaded in a Statement of Claim are true may suffice. The affirmation of Mr Man therefore meets the jurisdictional requirement but by Order 11, rule 4 (2) the case is not a proper one for service out of the jurisdiction.

Forum conveniens

33. In Seaconsar Far East Ltd v. Bank Markazi Jomhouri Islami Iran [1994] 1 AC 438 the House of Lords held that the assessment of the plaintiff's claim and the application of the principle of forum conveniens are separate and distinct elements in the exercise of the Courts discretion under Order 11, rule 1.

34. In Kuwait Asia Bank EC v. National Mutual Life Nominees Ltd [1991] 1 AC 187 (PC) it was held that the Court retains an inherent jurisdiction to decline jurisdiction on grounds such as forum non conveniens or failure of the plaintiff to make out a good arguable case. It is for the plaintiff to show that Hong Kong is the most appropriate forum : Spiliada Maritime Corporation v. Cansulex Limited [1987] AC 460 (HL).

35. The plaintiff's representative office is based in Grünwald, Germany. The defendant's office is in Herzogenbuchsee, Switzerland. That is where the contract was said to be made. All participants spoke in German. Any trial in Hong Kong would necessitate virtually every witness (and all the important ones) travelling from Europe to Hong Kong and giving evidence through interpretation and translation. Further and alternatively to all my other findings the forum conveniens is obviously Switzerland indeed Mr Hung accepted, that without a Hong Kong jurisdiction clause, Switzerland was the forum conveniens. The appeal would also succeed on this ground alone.

Findings

36. My findings are that the defendant succeeds on every point :

(1) The first affirmation of Ms Lai was inadmissible. She failed to set out her sources of knowledge and belief in her critically important evidence in the ex-parte proceeding.

(2) Further the plaintiff failed to make full and fair disclosure to the Court of all relevant facts. In particular, Ms Lai made a highly material and incorrect Statement of Fact that the export conditions (which contained the Hong Kong exclusive jurisdiction clause) had "also" been provided to the defendant "before" the date of the assumed contract. In light of the specific recorded directions of Master Ho this evidence was of extraordinary importance and is extraordinarily incorrect, as its thrust was to attempt to incorporate the Hong Kong jurisdiction clause, via the export conditions, into the contract.

(3) The plaintiff's case that there is a contract is not a good arguable case.

(4) Further and in any event the export conditions sent on 10 May 2000 do not form part of the assumed contract on a good arguable case basis; therefore the Hong Kong exclusive jurisdiction clause is not incorporated into the assumed contract.

(5) Under Order 11, rule 1 (d)(iii) the assumed contract does not by its terms or by implication fall to be governed by Hong Kong law, but would be governed by Swiss law applying the test of Litton JA in Century Yachts Ltd v. Xiamen Celestial Yacht Ltd [1994] 1 HKC 331, 339F (CA).

(6) In any event this is not a proper case for service out of the jurisdiction : Order 11, rule 4(2).

(7) Switzerland is the forum conveniens.

37. I am grateful to Mr Andrew Cotterell and to Mr Andy Hung for the precise and concise way in which they argued this appeal.

Orders

38. The appeal is allowed and I make the following Orders namely :

(1) An Order that the Writ of Summons herein and/or the Concurrent Writ of Summons be set aside.

(2) An Order that the Order of Master CB Chan dated 26 September 2000 giving leave to serve the Writ of Summons on the defendant out of the jurisdiction, the Concurrent Writ of Summons issued pursuant thereto, be discharged.

(3) A Declaration that in the circumstances of the case, the Court has no jurisdiction over the defendant in respect of the subject matter of the claim or the relief or remedy sought in this action.

(4) An Order that the plaintiff's summons dated 8 February 2001 be dismissed.

(5) An Order nisi that the plaintiff do pay the defendant's costs of this appeal and of the defendant's summons and the plaintiff's summons, to be taxed if not agreed.