SUNCO PROPERTY HOLDINGS CO LTD AND ANOTHER v. SUNCO CHINA HOLDINGS LTD AND OTHERS

HCA2145/2007 & HCA148/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2145 OF 2007

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(CONSOLIDATED)

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J U D G M E N T

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1. It is a delightful hearing today, delightful in the sense that both counsel have exerted the highest standard of submissions for their clients.

2. Mr Johnny Mok SC, for the 3^rd defendant, has very forcefully and ably tried to persuade me that according to the rules, the plaintiffs’ solicitors have not complied strictly to the letters of the provisions.  The issue is whether they have complied with Order 11 in the area of service out of jurisdiction to disclose all material before Master C. Kwan when they made the application on or about 5 December 2007.  This led to the Order made on 10 December 2007 by the learned Master in allowing the plaintiffs to serve the writs on the 3^rd defendant out of jurisdiction in the United States of America.  The rules provided that the plaintiffs must state all material facts leading to the plaintiffs’ belief that the 3^rd defendant may be found in that residential address of the 3^rd defendant in U.S.

3. For this, the plaintiffs relied on Mr Zen’s affirmation filed on 5 December 2007 in which he said with a title “In what place the Defendants may be found” at paragraph 23 :

“I refer to page 1 of the Option Agreement:-

(1)  The 2^nd Defendant’s registered office is situated at Sea Meadow House, Blackburne Highway, Road Town, Tortola, the British Virgin Islands;

(2)   The 3^rd Defendant’s address is 44 Pembroke DR Glen Cove NY 11542-1788.”

and paragraph 25 :

“On about 8^th October 2007, the Plaintiffs instructed Fairbairn Catley Low & Kong to conduct director search on the 3^rd Defendant to ascertain whether he is a director of any company registered in Hong Kong and if so, the residential address of the 3^rd Defendant.  According to the forms dated 18^th September 2007 and 24^th September 2007 filed with Hong Kong Companies Registry, the residential address of the 3^rd Defendant is ‘44 Pembroke Drive, Glen Cove, NY111542’.  There is now produced and shown to me exhibit marked ‘ZCHH-6’ Form D1 of Sunac Property Investment Holdings Limited and form D2A of Qiwei Property Investment Holdings Limited.”

In other words, the most recent search of the most recent addresses filed by these two companies showed that the 3^rd defendant had the same residential address in the States.

4. The mode of contention is in paragraph 29 which I have to quote in full :

“As stated in paragraph 17 hereof, on 21^st September 2007, Fairbairn Catley Low & Kong, on behalf of the 1^st Plaintiff, sent a pre-action letter (marked ‘ZCHH-4’) TO THE 3^RD Defendant to the Tianjin Address and the Tianjin Fax.  The 3^rd Defendant replied by a letter (marked ‘ZCHH-5’).  Although the 3^rd Defendant was apparently able to receive correspondence through the Tianjin Address of the Tianjin Fax, there appears to be no sufficient reason for me to believe that the 3^rd Defendant is actually working or residing at the Tianjin Address.  On or about 23^rd August 2007, the Plaintiffs instructed their representative to locate the 3^rd Defendant at the Tianjin Address, but to no avail.  The Plaintiffs believe that the 3^rd Defendant received the pre-action letter through somebody working at the Tianjin Address  Yet the Plaintiffs have no information about the identity of the representative or agent receiving the correspondence for and on behalf of the 3^rd Defendant.  Further, the Plaintiffs have no information about the current residential or working address of the 3^rd Defendant in Tianjin or elsewhere in mainland China.”

5. Mr Mok has forcefully submitted that these contentions were either misleading or otherwise the deponent did not condescend on particulars, and in particular what Mr Zen meant by the representative of the plaintiffs trying to locate the 3^rd defendant at the Tianjin commercial address but to no avail.

6. Mr Mok referred me to two letters dated 23 August 2007 and 17 September 2007 at pp. 388 and 390 of Bundle B.  These are the notices given to the 1^st, 2^nd and 3^rd defendants under the Option Agreement which is one of the issues in this case.  It was required under the Option Agreement that if notices to be given to a Beijing address but then before these letters the plaintiffs were informed that they should give notice to a Tianjin address which was the address stated in the affirmation of Mr Zen.

7. Mr Hectar Pun, for the plaintiffs, submitted that these letters do not count at all because they were given pursuant to the Option Agreement and, in any event, at the direction of the three defendants.

8. The crux of the matter eventually, after two hours of argument, concerned with this sentence and that is, what did Mr Sun Hongbin mean when he said representative of the plaintiffs went to that Tianjin address in order to locate him but to no avail.  Mr Sun, in his affidavit, said at paragraph 6(6) :

「… 事實上約從去年11 月起，本人曾數次與有關原告方會面傾談有關如何和平解決於現時已向香港高等法院所提出有關糾紛事宜。於談判過程當中有關原告方清楚知道本人現主要居於中國天津巿， 而非其他地方。」

He made such a statement because the negotiation was attended by him in person in Beijing.

9. However to my mind, whether the other side was informed that he there and then mainly resided in Tianjin is not the most relevant material.  The question is : Is it fair for Mr Zen said in his affidavit “In fact I do not know exactly where he is now.  He is an American holding American passport with American residential address.  He gave his home address in all the company purchases at the American address”?  Could Mr Zen be entitled to say in his affirmation that “I verily believe that the 3^rd defendant may be found at the American address”?

10. It is true, as submitted by Mr Mok, that in paragraph 30, apparently the wrong test was used and, that is, the plaintiffs verily believed that the American address is the usual and last known address of the 3^rd defendant.  That is the test for people living in Hong Kong when one applies for substituted service.  That is required or when one is trying to serve on a defendant in Hong Kong.  But fortunately there was a title given to this section and that is “In what place the Defendant may be found”, so the inference is that the deponent is trying to say that : “since that is the usual and last known address of the 3^rd defendant, I verily believe the 3^rd defendant may be found at that U.S. address.”

11. Now, we come to the crux of the matter, and that is, how come the representative of the plaintiffs could not locate the 3^rd defendant at the Tianjin address when he said tried to locate him at that address but to no avail.  Mr Sun protested vehemently that : “That cannot be true because everybody in that office know who I am and it cannot be the case that he did not locate me at that address.”

12. It is true to say that the deponent should condescend on to particulars when he is just in the end result, but of course when Mr Zen was making this affirmation and presumably the same was drafted by a lawyer, only the end result was stated.  I cannot on affidavit say Mr Zen lied because Mr Sun said : “Everybody knows in the office who I am and how I could be located.”  I take judicial notice that in the Mainland, nearly everyone has information phobia or what I call furnishing information phobia.  Whenever you phone up anyone in whatever unit in the Mainland, you usually meet with a number of questions : “Who are you?  Why you phone up this unit and what is the matter?”  And whenever you ask “Who are you?” and “Why I cannot find the recipient of the phone call?”, you will never be given a definite answer, and usually the answer is : “He is not here.” and the phone is quickly hung up.  You cannot get information in the Mainland and that was very serious in the past and I think the condition has improved.  Perhaps the representative was simply told that the 3^rd defendant was not here, and that of course was amounted to the conclusion of “to no avail”.

13. I am not speculating but the statement in paragraph 27 is not inconsistent with Mr Sun’s contention in his affirmation to the effect that everybody know who he is and he is the alter ego of the company and therefore he was very surprised that the representative could not locate him.  The two things are not mutually exclusive and, doing the best I can on making assessment on affidavits, I cannot say Mr Zen actually lied or the representative lied when he said he could not locate the 3^rd defendant at the Tianjin address.  That being the situation I think, it is open to the plaintiffs to apply for service out of jurisdiction by saying to the effect that “I verily believe that the 3^rd defendant may be found at that address.”  “May be found” does not mean he can physically be found there.  “May be found” means the writs will eventually reach the hands of the 3^rd defendant.

14. We should not forget the whole intention of Order 11 in the area of service out of jurisdiction was to ensure that a foreigner defendant would have noticed of the writ, the fact that he has been sued and why he was being sued, so that he could file the acknowledgement of service within time.  In this case, the 3^rd defendant did notice the writ, did file an acknowledgement of service, albeit he was filed without prejudice to his right, to set aside the writ.  He is entitled to do that.

15. But should I set aside the writ?  I do not think so.  In this case, the main purpose of Order 11 is fulfilled and that is to bring notice to this very defendant, the 3^rd defendant, that he is now being sued together with his two other companies under his control, that is, the 1^st and 2^nd defendants herein under certain Option Agreement.  The 1^st and 2^nd defendants under his control actually filed Defence and Counterclaim by another firm of solicitors.

16. For the aforesaid reasons, I accept Mr Pun’s submissions in total in his written and oral submissions.  The 3^rd defendant’s application is dismissed.

17. I think I just make a simple order of costs, unless I hear anything otherwise, with costs to the plaintiffs.  As promised, I make an order pursuant to section 5 of the Official Language Ordinance, Cap. 5 that all further documents to be filed by all parties herein shall be in Chinese unless otherwise agreed between the parties or their solicitors and by consent between the plaintiffs and the 3^rd defendant that this is a Long Case and the parties before me requested the Chief Judge to designate a judge of the CFI to be in charge of the case according to the Practice Direction.  For the avoidance of doubt, the consolidated Statement of Claim to be served on the 3^rd defendant shall be in Chinese as requested by the 3^rd defendant within 21 days hereof.  The mode of service on the 3^rd defendant shall be stated by him within 14 days hereof.