YAHORI LTD v. PANAGIOTIS PETROPOULOS

HCA 230/2015

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 230 OF 2015

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J U D G M E N T

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Background

1.  On 28 January 2015, the plaintiff (“Yahori”), a company incorporated in Hong Kong, issued proceedings against Panagiotis Petropoulos (“Mr Panos”). The statement of claim (“SoC”) asserts that Mr Anes el Bardoudi (“Mr Bardoudi”) is the sole director of Yahori, which is owned by himself as to 10,000 of 20,000 shares, and a company incorporated in Hong Kong, Lioki Ltd (“Lioki”) as to 10,000 shares.  The claim is based first, upon the tort of fraudulent misrepresentation, and second, upon the tort of negligent misrepresentation.  In addition, the SOC asserts that:

“insofar as may be necessary (Yahori) would rely on sections 3(1) and (2) of the Misrepresentation Ordinance, Cap 284.”

2.  No specific allegation is made in the SoC as to the place of residence of Mr Panos although there is an allegation that Mr Bardoudi and Mr Panos were employed by a Belgian company from around 2004 to September 2007.  The allegation did not specifically say where they were so employed.

3.  The SoC asserts that Lioki is beneficially owned by Mr Panos through his brother, Mr Andreas Theodorus Petropoulos (“Mr Petropoulos”) who holds all the issued share capital in Lioki on trust for Mr Panos as a nominee shareholder.

4.  The SoC asserts that:

“11. In or around November 2008, Panos acting on behalf of Lioki, made the following representations to Bardoudi acting for and on behalf of Yahori.

That (Yahori) could benefit from higher rates of interest without risk;

To do so (Yahori) would need to loan monies to Lioki;

Lioki had access to relatively high rates of interest at UBS Bank Hong Kong (“UBS”) whilst (Yahori) could not access the same;

The loan to Lioki would be only for the accrual of relatively high rates of interest and not for any risky investment products at UBS;

The loan would eventually be paid back by Lioki to the Plaintiff together with a share in the interest accrued.”

5.  Paragraph 12 of the SoC asserts that in reliance on the representations Yahori was induced to make loans to Lioki in the sum of €1,112,000 by way of 23 transfers from about December 2008, to around January 2011.  These transfers are described as “the Loan Agreement”.  The SoC does not assert where the 23 transfers were made.

6.  Paragraph 13 of the SoC deals with the Loan Agreement asserting that it was concluded partly orally and partly in writing in part in telephone conversations and in part in what are described as “various email communications”.  The paragraph does not make any assertion as to where either Mr Bardoudi or Mr Panos were when the various telephone conversations or e-mail communications were made.

7.  Paragraph 16 of the SoC asserts that the representations:

“... were false, or were reckless, not caring whether they were true or false, dishonestly made and amounted to fraudulent misrepresentations.”

Four sub paragraphs then purport to set out particulars of the manner in which the alleged misrepresentations were false.

8.  Paragraph 17 of the SoC asserts an alternative cause of action of negligent misrepresentation, and in four sub paragraphs purports to set out particulars of the manner in which the alleged misrepresentations were negligent.

9.  Paragraph 19 of the SoC asserts that Yahori discovered that each of the misrepresentations were false in about June 2010.  The SoC says that notwithstanding discovering that the alleged misrepresentations were false, Yahori continued to make payments to Lioki until January 2011.

Service out of the jurisdiction

10.  Upon an exparte application by Yahori, supported by an affidavit made by a solicitor associate of the then solicitors for Yahori, Messrs Cheung & Lee, an order was sought from the Master giving leave to issue a concurrent Writ of Summons for service on Mr Panos out of the jurisdiction.  The solicitor making the affidavit asserted that:

“On the basis of information made known to me by (Yahori) I honestly and verily believe that the last known address of (Mr Panos) is situated at 1 av. Du Bresil, 1000 Bruxelles, Belgium.”

11.  The affidavit set out the fact that Yahori was incorporated in Hong Kong and that Lioki was also incorporated in Hong Kong. The affidavit asserted that both Mr Bardoudi and Mr Panos lived in Belgium, and that Mr Petropoulos lived in Greece.  The affidavit set out a detailed explanation of steps that had been taken to serve Mr Panos with a separate set of proceedings described as:

“... a claim against Lioki (for) rescission of certain loan agreements and the return of €982,274.41 paid under those loan agreements, or alternatively damages, plus interest and costs due to certain misrepresentations as set out in paragraph 16 of the said Statement of Claim”.

12.  The affidavit identified the fact that the loan agreements and the misrepresentations referred to in those other proceedings were identical to those relied upon in the present proceedings.  It was said in the affidavit that because the two actions gave rise to common questions of law and facts and that the rights to relief arose out of the same misrepresentations an application for consolidation of the two actions would later be made.

13.  Under a heading “Ground of the Application for Service out of Jurisdiction” the affidavit referred first to Order 11, rule 1(1)(f) of the Rules of High Court:

“(f) the claim is founded on a tort and the damage was sustained, or resulted from an act committed within the jurisdiction;”

The fact that payments were made out of Yahori’s Hong Kong bank account into Lioki’s Hong Kong bank account was identified.

14.  The affidavit went on to say in subsequent paragraphs:

“28. The damage suffered by Yahori was sustained in Hong Kong particularly given that the monies were paid between two bank accounts in Hong Kong and between two Hong Kong companies and there would be no other place for repayment other than Hong Kong.

29. Some of the misrepresentations were made orally during conversations between Mr Panos on behalf of Lioki and Mr Bardoudi on behalf of Yahori when Mr Panos was located in Belgium and in Hong Kong and when Mr Bardoudi was located in Belgium, Hong Kong and China. Other communications were by email. The first transfer of €250,000 was made on 29 December 2008, when both Mr Panos and Mr Bardoudi were in Hong Kong.

30. The tortious acts were also committed in Hong Kong.”

On the basis of those paragraphs the maker of the affidavit asserted that she believed that Yahori had a good arguable case under Order 11, rule 1(1)(f).

15.  The next section of the affidavit dealt with the question of forum conveniens.  It asserted as follows:

“32. Both (Yahori) and (Lioki) are companies incorporated in Hong Kong which was doing business in Hong Kong and China and selling to customers in Europe. Both Mr Bardoudi and Mr Panos are directors of companies incorporated in Hong Kong. I am informed by Mr Bardoudi that he and Mr Panos speak and write fluent English and have regularly travelled on business to Hong Kong. (sic)

33. (This paragraph dealt with the residence of Mr Petropoulos in Greece, his desire to move to Asia and the fact that he spoke and wrote English).

34. The bank documents relating to this dispute are in English and come from banks located in Hong Kong. Other documents are held in Hong Kong by (Yahori) and Lioki as they are Hong Kong companies.

35. If there are any documents such as emails that need to be translated to English, in Hong Kong provides excellent translation services.

36. It is possible that witnesses may be called from the banks in Hong Kong who are based in Hong Kong. Also the accountant of (Yahori), Mr Simon Chiu, could be a potential witness. Mr Simon Chiu holds the books and records of (Yahori) and he is based in Hong Kong.

37. The loan monies that (Yahori) advanced to Lioki as a result of the misrepresentations made by Panos were transferred by Lioki to another Hong Kong company named Exenol Ltd which I am informed by Bardoudi and believe is beneficially owned by Panos. There is now produced and shown to me marked “YCCY-12” a copy of the annual return of Exenol Ltd made up to 20 November 2013.

38. The bank accounts of Exenol Ltd and Lioki will show that the domain name was bought with funds transferred between the bank accounts of Exenol Ltd and Lioki.

39. For the foregoing reasons I believe that the Hong Kong court is the natural and appropriate forum for the trial of this action.”

16.  On 25 February 2015, an order giving leave to serve out of the jurisdiction was made, apparently without question by the Master.  The Writ was duly served in Belgium and on 7 July 2015, the solicitors for Mr Panos filed an Acknowledgement of Service.

The subsequent applications

17.  On 11 August 2015, Yahori filed an application pursuant to Order 4, rule 9, seeking to consolidate HCA 324/2013 with these proceedings, (the consolidation summons).  The application was supported by an affidavit from Mr Bardoudi’s solicitor which demonstrated that in those proceedings Lioki was the 1^st defendant and Mr Panos the 2^nd defendant.  The statement of claim sought rescission of loan agreements, and the return of €982,247.41 paid under those loan agreements. The affidavit asserted that the damages claimed in the present proceedings arose out of the same facts as were alleged in HCA 324/2013.  It asserted that common questions of law and fact in both actions and the relief claimed by Yahori against Bardoudi and Panos arose from the same transactions.  It asserted that there were common documents and that the factual witnesses for the trial would be the same in both actions.

18.  On 2 September 2015, on Mr Panos’ application, an order was made that by 4 PM on 11 September 2015, he must make an application pursuant to Order 12, rule 8 of Rules of High Court, to dispute the jurisdiction of the court, and that the time for filing his defence be extended to 21 days following the determination of that application.

19.  On 11 September 2015, pursuant to Order 12, rule 8, Mr Panos duly filed the required summons, (the dispute as to jurisdiction summons), seeking an order discharging the leave granted to serve out of the jurisdiction, setting aside the service of the writ on Mr Panos and a declaration that the writ had not been duly served on Mr Panos.  In the alternative, an order was sought, on the basis of forum non conveniens, that the proceedings be stayed, or be conducted in the courts of Belgium.  By making an application under Order 12, rule 8 Mr Panos is required to file an affidavit in support of his position, but in so doing, he is not to be treated as having submitted to the jurisdiction of the Hong Kong courts: see Order 12, rule 8(6).

20.  On 15 September 2015, an order was made by the Master that the consolidation summons should be adjourned sine die pending the resolution of Mr Panos’ dispute as to jurisdiction summons.  On the same day Yahori was given leave to file and serve an affidavit in opposition to the dispute as to jurisdiction summons within 28 days, with Mr Panos to reply 28 days thereafter.  An order was made that no further affidavits be filed without the leave of the court.  On 8 October 2015, Mr Panos filed an affidavit in support of his dispute as to jurisdiction summons.  On 27 November 2015, Mr Bardoudi filed an affidavit in opposition to that summons.  On 12 February 2016, Mr Petropoulos filed an affidavit in support of Mr Panos.  On the same day, Mr Panos filed an affidavit in reply to Bardoudi’s affidavit in opposition.

The further affidavit summons

21.  Plainly recognising that there had been an order that there be no further affidavits without leave of the court, on 27 April 2016, Yahori filed a summons seeking leave to file a 2^nd affidavit by Mr Bardoudi in reply to Panos’ affidavit in reply.  When I drew Mr Lee’s attention to the fact that he did not rely upon that affidavit in reply at any stage in his skeleton he agreed to adjourn that summons sine die, to be brought on at seven days notice if required.

Service out of the jurisdiction: the law

22.  The principles in respect of a grant of an application for service out of the jurisdiction are conveniently stated by Anthony To J in Yantai Wanhua Polyurethanes Co Ltd v Pur Products Ltd [2013] 1 HKLRD 590 at §6 in the following terms:

“In an application for service out of the jurisdiction, which is usually made ex parte, the plaintiff has to satisfy the court that it is a proper case for the exercise of the discretion to grant leave. He has to show there is a good arguable case that the case falls under one of the sub paragraphs of O 11 r 1(1); the serious issue to be tried; and that Hong Kong is clearly the appropriate forum for the trial of the action: see O 11 rr 1(1) and 4(2). This onus remains on the plaintiff when the defendant challenges jurisdiction in an application to set aside the issue in service of the writ at an inter partes hearing pursuant to O 12 r 8: see Ren Yun Ling v China Merchants Bank Co Ltd (unreported, HCA 1456/2005, [2007] HKEC 159).”

23.  In any application ex parte, and on an application for leave to serve out of the jurisdiction, a plaintiff owes a duty to the court to provide full and frank disclosure of all material facts relevant to the court’s consideration.  That is clear from the judgment of the Court of Final Appeal in Kayden Ltd v Securities and Futures Commission (2010) 13 HKCFAR 696 at §§36 – 38:

“36. The need for a strict approach is dictated by at least three related considerations. First, it is grounded on recognition of the need for special care given the extraordinary nature of the long-arm jurisdiction asserted under O 11. As Lord Mustill pointed out, it involves seeking to compel a foreign defendant to submit to adjudication by the court or suffer judgement and execution in default[1].

37. Secondly, as indicated by the passage from Parker v Schuller[2]cited above, the court acts on the face of the plaintiff’s representations made to it ex parte when granting leave for service of process abroad. Given the extraordinary nature of the jurisdiction which the court would thereby be asserting, it insists on special care on the plaintiff’s part and full disclosure of the basis upon which that jurisdiction is invoked.

38. Thirdly, as Neill LJ pointed out in Excess Insurance Co Ltd v Astra SA Insurance and Reinsurance Co:[3]

'... it is not only the court which must be appraised of the cause of action alleged.  The defendant must know the basis of the claim which he has to meet so that, if so advised, he can challenge the order which asserts the court's jurisdiction over him.’”

24.  It is clear that materiality is to be decided by the court and not by the assessment of the applicant or his legal advisors: see Brink’s Mat Ltd v Elcombe & Ors [1988] 1 WLR 1350.  The duty to disclose cannot be fulfilled simply by exhibiting voluminous documents mentioned in the supporting affidavit without making any distinct reference to the points in the body of the affidavit itself or when addressing the judge, either by memorandum or at a hearing: see Standard Chartered Securities Ltd v Arthur Lai & Ors [1993] 1 HKC 375 at 380 – 381.

25.  Mr Brown’s submission is that in the present case there have been a number of deficiencies in disclosure.

26.  First, he says that the SoC is manifestly deficient.  Second, he says that the affidavit in support, being made by Yahori’s solicitor, and not Mr Bardoudi, covers matters that are highly contentious and outside the solicitor’s knowledge. Third, he says that the complete absence of any reference to Belgium as a potential alternative jurisdiction is significant, and material non disclosure.

The affidavit in support

27.  It is common practice for a solicitor to make an affidavit in support of an ex parte application.  That is perfectly acceptable in respect of noncontentious matters.  I adopt the following passage from the judgement of Anthony Chan J in UES International (HK) Ltd v Maritima Maruba SA (unreported, HCA 632/2011, 19 November 2013):

“15. In my view, solicitors should only give evidence on behalf of their client as a matter of exception which can be justified. As an example, where documents was served by a solicitor, it would be proper for him to make an affidavit to verify that matter. However, even where the client is abroad and his affidavit cannot be perfected in time, a draft of the same can be exhibited to that of his solicitor.”

I would add to that this; in modern days of virtually instant electronic communication there is usually no reason why a signed copy of an affidavit by a client cannot be sent by email and exhibited to an affidavit by a solicitor, with a statement as to when the original signed affidavit is likely to be filed, and an undertaking that the original signed affidavit would be filed upon receipt.

28.  Where that cannot be done and the solicitor is to make the affidavit in place of the client, the affidavit should clearly set out an explanation or justification for the exceptional step that is being taken.

29.  In Jose Miranda da Costa Jr & Anor v Lorenzo Yih & Ors (unreported, HCA 156/2010, 24 March 2014, Chung J), on an application for security for costs, the affidavit was made by the solicitor, and not by the party making the application.  As the solicitor could only have deposed to the matters referred to from the party’s business records and some of the matters deposed to were inaccurate, the affidavit was held to carry no weight at all.

30.  Here there is simply no explanation from the solicitor why Mr Bardoudi could not have made the affidavit himself, or why it was necessary for the solicitor to make the affidavit.  The traditional rote assertion by the solicitor is contained in the affidavit:

“The facts and matters to which I depose here and are true to the best of my knowledge, information and belief, being derived from my involvement in the conduct of these proceedings on behalf of the plaintiff. Where facts and matters referred to herein are not within my knowledge they are derived from documents in my possession or otherwise from instructions and sources identified below, which I believe to be true to the best of my information and belief.”

This assertion does not save the matter. Whenever a hearsay assertion is made, and there are many, whether the assertion is derived from documents or instructions or sources is simply not identified.  In those circumstances it is not possible for the Master or Judge assessing the issues to determine what weight might be placed upon what is otherwise a hearsay assertion

31.  Second, the affidavit asserts at §29 that Mr Panos was in Hong Kong on 29 December 2008.  Mr Panos has exhibited his travel records which show that statement to be indisputably incorrect.

32.  When dealing with the transferred funds, the affidavit asserts that the ultimate beneficiary of the funds was a company named Exenol Ltd (“Exenol”) which, it is said, based on a statement by Mr Bardoudi, is beneficially owned by Mr Panos. In support of this proposition, the annual return of Exenol is exhibited.  The affidavit is completely silent as to the fact that the only shareholder in Exenol is a company called Lintel Securities Ltd (“Lintel”), which company is also the sole director of exenol.  There is no evidence whatsoever which might in any way link this company with Mr Panos.

33.  In the light of these matters, it is difficult to understand how the court could accept, in the complete absence of an assertion as to any document, instruction or source, a statement that Lioki is beneficially owned by Mr Panos through his brother who holds all the issued share capital in Lioki on trust as a nominee shareholder.  There is no assertion as to a sight of a declaration of trust by the solicitor.  There is no assertion of any instruction by Mr Bardoudi as to that fact or any basis upon which Mr Bardoudi might be able to assert to that fact.  It is asserted that Mr Panos had authority, either actual and/or ostensible, to act on behalf of Lioki.  The source of that authority is not particularised in any way.  It is asserted that Mr Petropoulos:

“... was accustomed to act on the directions and instructions of Mr Panos.”

Again, the source of that information or the basis upon which the conclusion is made is not particularised.

34.  I accept Mr Brown’s submission that in the circumstances of this case the solicitor’s affidavit is one upon which very little weight may be given.

Non‑disclosure as to jurisdiction

35.  Where a claim is founded on a tort committed entirely abroad or partly abroad and partly in Hong Kong the claim may come before the Hong Kong courts in two ways.  First, the tort may be committed abroad by a party who may be personally served in Hong Kong.  Second, where the tort is committed partly abroad and partly in Hong Kong, leave to serve out may be given so long as the damage resulted from an act committed in Hong Kong or was sustained in Hong Kong.

36.  In those circumstances, the obligation to give full and frank disclosure requires a party seeking leave to serve out of the jurisdiction to deal with any other potential jurisdiction that might exist.

37.  The affidavit is inconsistent in this respect. The bald statement is made in §30 that:

“... the tortious acts were also committed in Hong Kong” (see §14 above)

38.  But the previous paragraph, §29, makes reference to the representations being made both orally and by email.  It does not make it clear, indeed it is quite confusing, as to where the parties were when the oral representations were made.  There are six possible combinations of location.  From §29, it is arguable that the representations may have been made when the parties were both located in Belgium, or one in Belgium and one in Hong Kong, or one in Belgium and one in China, or one in Hong Kong and one in China, or both in Hong Kong, or both in China.

39.  The emails referred to were not exhibited by the solicitor, so it is impossible to say on what date they were sent or where either party was when the emails were sent and received.

40.  At the very least, with the assertion in the affidavit that both Mr Bardoudi and Mr Panos reside in Belgium it is plainly necessary to deal with the possibility that Belgium maybe an appropriate forum.  If the representations were made orally in Belgium, and if both Mr Bardoudi and Mr Panos were in Belgium at the time their discussion took place or their emails were exchanged, as may well be the case, Belgium law may be the governing law of the contract.  It is important to remember that the action is based on the representations, not the loan agreement which arose as a result of the representations.  Consequently, the location where the representations were made is of the utmost importance.

41.  Further, the evidence is that both Yahori and Lioki has one director only.  Reference is made in the affidavit only to the place of incorporation of each company Hong Kong.  The maker of the affidavit completely ignores the fact that the residency of a company is not determined by its place of incorporation but where it is central management lies: see Pacific Aerosupplies Ltd v Dakota Air Parts International Inc (unreported, HCA 1233/2010, 24 June 2011, per Deputy High Court Judge Coleman SC at §65).  With both Mr Bardoudi and Mr Panos residing in Belgium, the clear inference is that the residency of both companies is in Belgium.

42.  By asserting that:

“the tortious acts were committed in Hong Kong”

without any reference to the possibility of Belgium as a place where the tortious acts may have been committed, the nondisclosure of the relevance of Belgium, effectively conceals that fact from the Master.

43.  For these reasons I am satisfied that there has been material nondisclosure as to jurisdiction in respect of the application for leave to serve out of the jurisdiction.

The grounds for leave to serve out

44.  An applicant for leave to serve out of the jurisdiction must establish that he has a good arguable case for leave to serve out, that there is a serious issue to be tried in respect of the substantive claim itself, and that the Hong Kong courts are clearly and distinctly the appropriate forum for the trial of the action (see §23 above).

A good arguable case

45.  It is required by Order 18, rule 12(1)(a), and in any event trite law, that a pleading of misrepresentation or fraud must contain all necessary particulars.  The particulars must be stated with the utmost particularity and care: per Bokhary JA in Aktieselskabet Dansk Skibsfinansierring v Wheelock Marden & Co Ltd [1994] 2 HKC 264 at 270.

46.  It is immediately obvious that the SoC does not contain particulars asserting where the representations were made, how they were made, whether orally or in writing, and if in writing, identifying the relevant document.  It is to be noted that although there are assertions in paragraph 13 that the loan agreement was concluded partly orally and partly in writing, there is no assertion in that respect is to the representations. 

47.  On the solicitor’s affidavit the representations may have been made in Belgium, Hong Kong, or China.  A defendant is entitled to know, when the statement of claim is served, precisely which representations he must meet.  He is entitled to know where they were made, whether they were oral or in writing and the documents in which they were made.   The SoC does not make it clear whether the representations pleaded were the precise words used, or whether the words pleaded are the effect of the words used.

48.  The representations complained of are said to have take in place “In or around November 2008.” The writ was not issued in Hong Kong until 28 January 2015, six years and two months later.

49.  The limitation period in Hong Kong in respect of a tort is six years.  It is right that under the Limitation Ordinance Cap 347 (“LO”) the limitation period in fraud is, by section 26, extended, and the 6‑year time limit does not run until the plaintiff has discovered the fraud.  Whilst on the pleadings, with the assertion that the fraud was not discovered until “in or about June 2010” (§19 SoC), the action for fraudulent misrepresentation might be saved, plainly, an action for negligent misrepresentation, a mere tort, or the action relying upon the Misrepresentation Ordinance Cap 284 (“MO”), (contractual misrepresentation) is plainly statute barred.

50.  The attention of the Master was not drawn to these facts.  They were left to the Master to find for herself.  If statute barred it cannot be said that there is a good arguable case in respect of the action for negligent misrepresentation or an action under the MO.

51.  It is the case for Yahori that Mr Panos was acting for and on behalf of Lioki.  Mr Panos, says Yahori, was Lioki’s agent.  Liability in an action reliant upon the MO is confined to the principal and not the agent: see Resolute Maritime Inc & Anor v Nippon Karji Kyokai & Ors [1983] 1 Lloyd’s Rep 431. 

52.  In that case there can be no good arguable case under the MO against the agent, in this case Mr Panos. Again the attention of the Master was not drawn to this principle.  Mr Panos’ evidence establishes that when Yahori sought to join Mr Panos into Yahori’s earlier proceedings based on the same misrepresentations, against Lioki, Mr Panos’ solicitors had specifically drawn their attention to this point in the course of the separate High Court proceedings between the related parties (see §11 above). The solicitors knew of this issue and should have disclosed it to the Master.

53.  It was pleaded that Yahori became aware of the falsity of the statements in about June 2010, but continued to make payments to Lioki thereafter.  The argument plainly arises that it will not be possible for Bardoudi to maintain that Yahori’s decision to make payments to Lioki was dependent on the statements.  If it had been dependent upon the statements one would have thought that upon discovery of the falsity the payments would have stopped.

54.  No explanation or argument is made to the Master how in those circumstances it can still be said that there is a good arguable case, other than a silent reliance on an explanation in the SoC as to why the payments continued.  The matter should have been specifically drawn to the Master’s attention.

A serious case to be tried

55.  The absence of proper particulars in the SoC, the limitation point, the MO point and the continuing payment point, dealt with above, go additionally against the argument that in the present case there is a serious case to be tried.

Hong Kong as the appropriate forum

56.  An applicant for leave to serve out of the jurisdiction must show that Hong Kong is the appropriate forum under the principles governing forum conveniens: see Dynasty Line Ltd v Sukumato Sia [2009] 4 HKLRD 454 CA.  The appropriate or natural forum is the one with which the action had the most real and substantial connection.  It must be shown clearly that this is the case.

57.  In this respect, Mr Brown made the following submissions.

58.  That Yahori is incorporated in Hong Kong is largely irrelevant because it is resident in Belgium because its central management, Mr Bardoudi, is resident in Belgium.

59.  Equally, if as Mr Bardoudi says, Lioki is controlled by Mr Panos, it too is resident in Belgium, and its Hong Kong incorporation is largely irrelevant.

60.  Yahori’s businesses is described as “sourcing goods in China and selling them to a Belgian company”.  The evidence is that Yahori has no physical presence in Hong Kong other than a registered office and an accountant acting as a company secretary.  Its presence in Hong Kong may properly be described as merely a letterbox and a bank account.  It is difficult to see how its business can be described as being “a business carried on in Hong Kong”

61.  It is asserted that both Mr Bardoudi and Mr Panos speak English. But the evidence of the emails put in by Mr Panos is it they communicated in French, a language which has no connection with Hong Kong.  The fact that both Mr Bardoudi and Mr Panos have travelled regularly to Hong Kong, and the fact that Mr Petropoulos wishes to relocate in Asia are of no relevance to the issue whether the case has a real and substantial connection with Hong Kong.

62.  It is right that there are bank documents which are in the English, those documents are held in Hong Kong, and the company secretaries are in Hong Kong.  But it is hardly likely that the bank transfers, the only matter of relevance for which the parties might need Hong Kong evidence, would be in any way in dispute.  Those facts do not assist in a contention that Hong Kong is a place with the most real and substantial connection to the proceedings.

63.  Equally, an ability to translate documents is not a relevant matter.  In fact if the case were heard in Belgium little or no translation into English would be needed.

64.  That another company used money received from Lioki to purchase a domain name is entirely irrelevant to the question of whether or not Hong Kong is the natural forum.  That is particularly so when there is no evidence whatsoever to relate the ultimate recipient of the funds to any of the parties.  The representation alleged is that the money would be placed on interest-bearing deposit with UBS bank.  If it was not, the misrepresentation is established, irrespective of what Lioki might have done with the money.  There is not even any evidence to establish that the funds transferred by Lioki to Exenol did not come from some source other than Yahori’s payments to Lioki.

65.  The only real factor that Mr Kim is able to point to is that the payments were made by Yahori to Lioki in Hong Kong.  In the whole of the context of the factors in this case it is hardly sufficient to establish that Hong Kong is the appropriate place for the trial.

66.  For the foregoing reasons I am satisfied that Yahori has not discharge the burden of proving that Hong Kong was clearly the appropriate or natural forum to try the case.

Consequence of material nondisclosure

67.  Where material nondisclosure has been found, it is generally the case that the order for service out will be set aside and costs will follow the event.  The court has discretion to overlook the nondisclosure but such cases will be very rare: see Dong Shing F&T Co Ltd v Hamec Co [2010] 5 HKLRD 591.

68.  In this case, not only has there been material nondisclosure, but had there been full disclosure, for the reasons set out in §§46-66, this is not a case where leave should have been given to serve the writ out of the jurisdiction.  This is not a case in which either the material nondisclosure should be ignored or there should be a re‑grant of the leave to serve out of the jurisdiction.

A stay of proceedings

69.  It is not sufficient for Mr Panos to rest on the setting aside of the leave to serve out of the jurisdiction.  In order to protect himself fully he seeks, as he is entitled, a stay of the proceedings.  It is necessary in an argument against a stay based upon forum non conveniens for the party resisting the stay to show that Hong Kong is the natural and proper forum for the trial.  For the reasons set out above that cannot be so.  There are further reasons.

The expert evidence

70.  Both parties have filed expert evidence as to Belgian law.  There are difficulties with the evidence from each party. Mr Panos’ evidence complies with the requirements for expert evidence in Hong Kong in that the expert, Mr Bernard Maingain at least provides his curriculum vitae, establishing that he is qualified to give expert evidence in the relevant subject.  However, he makes no declaration of independence as required by the Rules, nor is his evidence sworn.  Mr Bardoudi’s expert, Prof Dr Thalia Kruger, has not provided her curriculum vitae and does not establish herself formally as being qualified to give expert evidence.  She too makes no appropriate declaration of independence.  Her evidence is not sworn.

71.  There is a conflict between the experts.  Yahori’s expert asserts that the limitation period in Belgium appropriate to this litigation is five years.  Mr Panos’ expert asserts that the limitation period that is appropriate is 10 years.  I am unable to resolve this conflict in these interlocutory proceedings.

72.  The matter is relevant because a factor to be taken into account determining whether to grant or refuse a stay on the grounds of forum non conveniens is whether or not, as a consequence of the order made, a party would lose a juridical advantage.  The case for Yahori is that with a five-year limitation period imposed upon it in Belgium, to require the case to be litigated in Belgium would mean that it would lose the juridical advantage of the fraud extension of the limitation period in Hong Kong.

73.  But the reply by Mr Panos is that if Yahori is sent back to Belgium as the proper and natural forum for the proceedings, he will have lost nothing because there is a 10‑year limitation period with time still to run.

74.  Where a plaintiff's claim is time-barred in the appropriate forum and where he has not acted unreasonably in failing to commence proceedings within the limitation period applicable there, practical justice requires the court not to deprive of the benefit of complying with the time bar in Hong Kong: see Spiliada Maritime Corp v Cansulex Ltd, The Spiliada [1987] AC 460, which involved the very situation faced in this case.

75.  The question as to when the limitation period under Belgian law will commence is not dealt with by either of the experts.  I proceeded on the basis that Belgian law in this respect is the same as Hong Kong law, and that time will begin to run either from the date on which the representations were made, or the date on which the contract, relying upon the representations, was made.  On that basis, time began to run at the end of December 2008.

76.  On that basis, if Yahori’s expert is correct, a five-year period would have expired, at the latest, on 30 November  2013, 5 years from the last date of the representations, or 31 December 2013, 5 years from the first payment under the loan agreement. 

77.  Yahori says it became aware of the fact that the representations were false in June 2010, well before the expiry of the Belgian limitation period.  No proper explanation is offered as to why proceedings were not commenced in Belgium within that period.  It would have been reasonable to have done so.  The statement in §20 of the SoC that:

“Despite the discovery of the falsity, Yahori was forced to continue making loan payments to Lioki until January 2011 because, inter alia:-

Mr Panos managed Foto.com, the only customer of (Yahori);

Mr Panos represented to (Yahori) that Foto.com would only make payments due to (Yahori) if the loans continued.”

is no proper justification for not commencing proceedings based upon a fraud either in Belgium or Hong Kong within the appropriate limitation period.

78.  In those circumstances I cannot say that Yahori has not acted unreasonably and consequently it cannot rely upon any juridical advantage that might arise by the commencement of proceedings in Hong Kong rather than Belgium.

79.  If, on the other hand, Mr Panos’ expert is correct and the limitation period is 10 years, then it is still open to Yahori to commence proceedings in Belgium.  In those circumstances Yahori has lost nothing.

80.  Yahori and Mr Panos are both resident in Belgium.  The evidence is that Mr Bardoudi and Mr Panos communicated orally together in French, which I understand to be an official language in Belgium. Their communications by email were in French.  It is certainly open on the evidence that the representations, if made, were made to Yahori either orally or by email to Mr Bardoudi as agent for Yahori, when Mr Bardoudi was in Belgium.  The case has a strong connection with Belgium.  The evidence from both experts is that with both Yahori and Mr Panos resident in Belgium the Belgian courts have jurisdiction over the dispute.

81.  In the circumstances I am satisfied that the more appropriate forum is Belgium and that accordingly the case in Hong Kong should be stayed on the grounds of forum non conveniens.

Disposal

82.  For the foregoing reasons the appeal is allowed. The order of Master K Lo dated 15 February 2015, granting leave to Yahori to issue a concurrent writ of summons against Mr Panos and to serve that writ on Mr Panos in Belgium is discharged.  Service of the concurrent writ upon Mr Panos is set aside.  There will be a declaration that the concurrent writ has not been duly served on Mr Panos.

83.  There will be an order staying the proceedings.

Costs

84.  There will be an order nisi that Yahori must pay Mr Panos’ costs of the proceedings on a party and party basis.