M.I. MARKETING LTD t/a MONTPELIER INTERNATIONAL PROPERTIES v. SOCIETE DES HOTELS MERIDIEN SA

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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JUDGMENT

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1. This is an appeal from a decision of Master Wilson given on 8th December 1982.  It arises in this way. On 6th April of that same year, the master gave leave to serve the writ and the Statement of Claim in this case on the defendant outside the jurisdiction, leave being given under Order 11.  In response to that the defendant took out a summons asking for that order to be set aside and the claim dismissed. That came before the master on 8th December and he dismissed it. It is from that decision that the defendant in the action now appeals. Let me pay tribute at the outset to the quality and clarity of the argument that I have received on both sides.

2. Now the applicable principles are not seriously in dispute and are conveniently summarised in note 11/1/4 to Order 11 rule 1 in the White Book. This says that the applicant for leave to serve outside the jurisdiction has to show three things: first that he has a case falling within one of the sub-paragraphs; secondly that he has a good arguable case on the merits; and thirdly that it is a proper case for the court to exercise its discretion.

3. The argument here is centred upon 2 and 3. The leading decision upon the applicable principles is the decision of the House of Lords in Vitkovice Horni A Hunti Tezirstvo v. Korner (I think commonly known as Horni v. Korner) (1951)AC 869. That decision as I see it, really in the context of the onus of proof, says three things.

4. First it is not sufficient for the applicant to show simply a prima facie case. He must show a case which has, I think more apparent substance than that. The difference between those two concepts is conveniently illustrated by the decision of the Court of Appeal in England in Diamond v. Bank of London and Montreal (1979) Q.B. 333.   Secondly it is not necessary for the applicant to prove his case. The Judge certainly does not have to be satisfied on any balance of probabilities that the case is good, or have to be satisfied that any of the individual components alleged which brings the case within one of the sub-rules are proved. Satisfied was the word used by the trial judge in Korner's case, and was said by the House of Lords to be wrong. The correct approach is, I think, conveniently summarised in the sentence in the speech of Lord Radcliffe at page 883 where having referred to sub-rule 4 of Order 11 which includes these words: "it shall be made sufficiently to appear to the court that the case is a proper one.", Lord Radcliffe says "a case does not sufficiently appear to be a proper case for the purposes of this Order unless on consideration of all admissible material there remains a strong argument for the opinion that the qualifying conditions are indeed satisfied."  Then over the page he paraphrased this as"a strong case for argument".  So the first point that emerges from this decision is that that is the appropriate standard which I must apply.

5. Secondly the case also contains warnings and dicta applicable to the third point in the note I referred to. Lord Simonds on page 877 reminds one that this is "a discretionary jurisdiction which must be exercised with caution and with a bias against invading the sovereignty of a foreign state:" Lord Radcliffe, "It is only natural the court should approach with circumspection any request" p.882. Then Lord Tucker at page 889: "This jurisdiction is to be exercised with great care and any doubts should be resolved in favour of the foreigner."

6. Those are the two relevant principles which one extracts from that decision.

7. Now there are certain facts here which are not in dispute. The plaintiff company carries on business as estate agents, property surveyors, and international property consultants in Hong Kong. It's principal is a Mr. Andjel and indeed he is the guiding spirit. It gives a number of addresses abroad, but some doubt has been thrown in the course of the argument upon whether the company actively carries on practice at those addresses. The defendant, Meridien, is I think a subsidiary of Air France or closely associated with Air France. It is a well known company carrying on business as operators or managers of hotels.

8. Now in 1978 and 1979 the defendant was looking for an hotel or hotels in Hong Kong. They set their sights on the two hotels then in the course of development by the Regal Hotels Group then, I think, controlled by the Lo brothers. They did their best to sell their services to the brothers Lo, but without much success, because by the end of 1979 it would seem that the Lo brothers had decided to operate the hotels themselves, and were simply not in the market for the sort of services which the defendant was offering.

9. The plaintiff, in the person of Mr. Andjel first surfaced early in 1980. Realising that the defendants were looking for an hotel, he started making inquiries for himself in their potential interest. Then, as it were he sold his services to the Air France representative in Hong Kong, because by that time he had discovered a site in Harbour City where the Wharf Company were proposing to erect an hotel, and where the defendant's services might have been required. It is therefore important to see at the outset that the plaintiff in this case was putting a specific project to Air France, and indirectly to Meridien, in relation to a specific hotel.

10. The next thing that happened was that Mr. Renault of Meridien came to Hong Kong. A meeting took place on the 21st March 1980 between Mr. Renault and Mr. Andjel. That is the crucial meeting in this case. They discussed, first, as I understand it, the Wharf Company's project and that led to a meeting or a visit by Mr. Renault to that site the next day. The coversation then turned to cover the Regal Hotel position. Because what had happened in the mean time was that Mr. Andjel had been in touch with a Miss Ashby, who is the principal of a company called Ashby Realty. She had presented herself to Regal Hotels as being authorised by Meridien or Air France to make inquiries about the Regal Hotels. I say that because she says that she spoke to one of the brothers Lo, Mr. K.S. Lo, saying that her client was Air France or Meridien. I do not know whether that was in fact true or whether it was a piece of self-help on that lady's part. She was certainly presenting Meridien and Air France to Mr. Lo as interested in these hotels as potential buyers. This was plainly made known by her to Mr. Andjel before the meeting on 21st March, because in the course of that meeting Mr. Andjel suggested to Mr. Renault that he might be able to arrange a meeting between Mr. Renault and Lo brothers. He asked him if he was able to arrange such a meeting whether Mr. Renault would to. Mr. Renault then replied affirmatively. What happened then was that Mr. Andjel then spoke, apparently on the telephone, to Miss Ashby telling her to set up a meeting as quickly as possible. Miss Ashby then must have spoken to Mr. Lo, or somebody on the telephone, because the meeting is then arranged at Mr. Lo's office for that very afternoon.

11. Now I have got three accounts of that meeting. Mr. Lo plainly thought that he was receiving Meridien as potential buyers. But he says in his affirmation that the meeting has scarcely started before it was apparent to him that they were not potential buyers but they were potential operators. That is one account.

12. Secondly both Miss Ashby and Mr. Andjel insist that the whole purpose of that meeting was to discuss a proposed sale or lease of the hotel to Meridien. That was the subject matter of a preliminary meeting in which it was explained to one Mr. Lo, that Mr. Renault was there wearing a totally different hat as a potential buyer not a potential operator. Indeed the whole subject matter of the meeting itself was a potential sale. What Mr. Renault would say about that I do not know because this has been a very late development in the case. It was only put on affirmation in this form last Friday or Saturday. But it has made plain by the account from Mr. Andjel and Miss Ashby that the introduction by them of Mr. Renault to the Los on that occasion (and I use the word "introduction" in a neutral sense) was exclusively as a buyer and not as an operator.

13. That was the end of Mr. Andjel's direct involvement in any negotiations. What happened after that was that the negotiations went on between the Regal Group and Meridien. They resulted in the following September in an agreement between those two parties under which Meridien operate both the Regal Hotels. In the mean time Mr. Andjel kept in touch with the defendant, but the first document which in my view can remotely be described as a letter of claim was a letter dated 25th September 1980 written after the news of the deal had been made public. In this Mr. Andjel writing to M. Jean-Paul Camblain of Meridiend says "I would now like from you as verbally agreed between us recognition of our re-introduction to you to the Los." Then he goes on to say that he recognised that they met before, but the negotiation had broken down and it was he and Ashby Realty who had got the sides together. The letter concludes "I am looking to you for recognition of a reasonable fee for this re-introduction in the light of the events which have now materialised." It is a letter which can be read in a number of ways. There are two points each side made about this. The defendant says remarkable, this is the first claim after the event and after the deal was done: to which the plaintiff replies equally remarkable that the defendant never answered the letter until it was followed up by solicitor's letters some months later.

14. The question really which lies in the heart of this case is what transpired on the morning of 21st March.  Because it is perfectly obvious that if the plaintiffs are entitled to commission in this case or entitled to reasonable remuneration, that stems from the introduction they effected of Mr. Renault to the Los on the afternoon of 21st March.   That is the qualifying event which constitutes the introduction. The commission was earned when that introduction turned into a concluded contract at a later date. So one has to look rather carefully at what is said about the events of that morning; to inquire in what capacity and in what circumstances this sequence of events was set in motion. Because it really comes down to this - that Mr. Andjel says that he is entitled to reasonable remuneration for making a phone call to Miss Ashby. So one has to look at those circumstances and see whether that phone call was made by him as a volunteer which is really what Mr. Renault is suggesting; whether it was made on the term that if it was successful and a meeting resulted this would constitute in a technical sense, an introduction, and qualify Mr. Andjel to receive remuneration; thirdly whether it was it made on the further term that the introduction would be suitably rewarded if a contract was made.

15. Now it seems to me that I have got three different accounts on the documentation as to what happened. The first is to be found in the Statement of Claim. That alleges that Meridien were interested in the possibility of becoming operators or managers of one or more hotels in Hong Kong; and that Mr. Andjel knew of the availability of such an hotel and he made this known. to Air France. That is plainly a reference to the Wharf Company. Then it pleads the morning meeting on 21st March the crucial sentence being: "It was agreed that if Montpelier was able to find a suitable hotel for Meridien its services would be suitably rewarded." It then goes on to say that the afternoon meeting was arranged by the plaintiff. Then at that meeting (this is paragraph 8) "discussions began as to the possibility of Meridien becoming the operators and /or managers of two hotels then being built by Great Eagle". That is a very important assertion. It then goes on to say that Montpelier's introduction was acknowledged in a letter of 1st August. I am bound to say I do not so read the letter. And then there were some complicated formulations of quantum. I think one can say this about that: first of all there was no express agreement as to how the plaintiffs were to be rewarded. What is alleged simply an express agreement to pay something. As I see it the only real basis upon which this can be put forward would be a quantum merit.

16. Now this case as pleaded, therefore, is a simple case of a broker or agent introducing two willing parties to one another who later entered into a contractual relationship. It said that the agreement was that if the plaintiff was able to find a suitable hotel its service would be awarded; it found that suitable hotel; and it brought about a meeting at which discussions began. Now it is perfectly obvious on the facts I have already given that this is a terrible over simplication. This was in fact by no means the initial introduction between these parties. Negotiation did not begin at this meeting at all. They had began some time before, and it is an issue to whether they were alive or dead. But in no way can the meeting on 21st March be described as the beginning. But the pleading does not begin to explain any of this, or explain that this was in fact a reintroduction as it was put in Mr. Andjel's letter. It does not contain any assertion as to how this reintroduction had come about, and particularly any assertion that it would constitute a reintroduction because of certain past events e.g. bad blood of something of that nature. So that the Statement of Claim as it stands will not do. One had got to look beyond that.

17. Then one comes to the second version, which one finds in Mr. Andjel's third affidavit, I should say in parenthesis the first two simply affirm the truth of the Statement of Claim. This was, sworn on 27th February of this year. In this he says two things when describing his express agreement with Mr. Renault. The first is in paragraph 6. "It was accepted by Mr. Renault that I would be remunerated for any services which I was able to render should a contract be concluded by Meridien as a result of my introduction." That is slightly ambiguous way of putting it because it suggests post-introduction services and I think in fairness to Mr. Andjel it is more clearly put in paragraph 10. "I repeat, too, that I have no doubt at all that at our first meeting Mr. Renault assured me that any successful introduction produced by me would be suitably recognised by which he meant that I should be paid for any introduction which led to a concluded agreement."   So there one has an assertion that Mr. Renault assured him any successful introduction would be suitably recognised. Now the trouble about those words seems to me to be this. As I have said this meeting was brought about to enable Mr. Andjel to discuss with Mr. Renault a specific proposal in relation to the Wharf Company. These words "any successful introduction" would precisely fit anything that might happen with the Wharf Company, who at that stage were not in contact with Meridien. If that contact was to be brought about, as indeed it was, it could fairly be described as having be resulted from an introduction effected by Mr. Andjel. But this is much less readily seen in relation to the Lo brothers or Regal Hotels. It is technically a possible concept but it does not by any means follow naturally.

18. One then comes on to the third version which is to be found in Mr. Andjel's affirmation, sworn on 15th June this year. This was sworn at the same time as an affirmation giving at second hand Miss Ashby's account. Both these accounts emphasised the point which I have already alluded to that this meeting in the afternoon was set up as between potential vendor and potential purchaser of the hotels. Mr. Andjel says: "the whole basis of the negotiation at the meeting was that Meridian would buy or lease the hotel. And in relation to his morning meeting with Mr. Renault, Mr. Andjel says this: "However I explained to him, (that is Mr. Renault) the Great Eagle would probably be interested in this latest proposal as this related to purchase or lease of the hotel. Mr. Renault was extremely anxious to secure a deal for a hotel and accepted ml offer to reintroduce him to the Los."  Now this is an assertion of express acceptance by Mr. Renault that he was being reintroduced by Mr. Andjel to the Lo brothers as a potential purchaser of this property. The trouble about this is that it seems to me flatly to conflict with the Statement of Claim itself. The Statement of claim as I pointed out pleaded that the Meridien were operators. The Statement of Claim pleaded very significantly and importantly that at this very meeting discussions began as to the possibility of Meridien becoming operators or managers. Now what is being said is that this was not discussed at this meeting at all. The whole discussion related to a potential purchase or lease and that this was recognised to be brand new by Mr.Renault. It recognises the concept that he did not need to be introduced as an operator, but that he was welcoming reintroduction as a purchaser. But that is not what the Statement of Claim said and one is minded to think that if that was well founded the Claim would have to be based not upon a management contract which is how the claim is put and how the quantum is formulated, but on the basis of a purchasing agreement.

19. In the light of those three accounts I have to come back to the question posed by Lord Radcliffe, and ask myself whether there is now a strong case for argument that the contract asserted by Mr. Andjel in these pleadings and affirmation was in fact entered into. I am constrained to the conclusion that there is only one answer to that and that is no.

20. It seems to me that Mr. Andjel's first problem is that he was self-appointed in the sense that he offered his services to Meridien. It seems to me that one who volunteers his services has a particular duty to define the terms upon which those services are being offered. Because the services which he offered were in relation to a particular transaction. That is what he was presenting initially, a potential introduction by Meridiend to the Wharf Company. This is not a case where he was retained as Meridien's Hong Kong broker; it was not a case where he had a general retainer in Hong Kong. Now I have already pointed out that the remarks attributed to Mr.Renault in Mr.Andjel's third affidavit are precisely appropriate to the Wharf Company. It may well be that if the matter had gone ahead with the Wharf Company Mr. Andjel would be able to have said, that was done on my introduction, with absolute accuracy.

21. Equally those words are not readily applicable to Lo brothers or Great Eagle. Let us just test it. "Mr. Renault assured me that any successful introduction produced by me would be suitably recognised." If Mr. Renault had then been asked, does introduction include Great Eagle and the Los, the instinctive answer I am minded to think is: "good gracious me no. I do not need any introduction to them. My company has known them for years."  In these circumstances it seems to me there was a particular obligation on Mr. Andjel, before he made this telephone call (if he was regarding this as part of his professional duties which if successful was going to entitle him to put forward a substantial claim for commission) to make it clear that the effect of this was either to give him a general retainer from Renault, or that the orbit of his services were going to be extended to these properties as well as to the Wharf Company; and that if he was successful in bringing about this meeting this was going to constitute an introduction or a reintroduction (I do not mind how it is described) the foundation of a professional claim and the performance by him of professional services. It does not seem to to me on the accounts that he has put before me that lie really has any real prospect of discharging that at all. He does not really face up to the problem in his second affidavit of last February, and the third version, the recent one, seems to me with the greatest respect to make the thing even more difficult, because it introduces an enormous area of conflict between that and the very first version.

22. It follows from that that he is equally in trouble on quantum, because the whole case on quantum merit founded upon the decision in Way v. Latilla in(1937)3 A.E.R. 759 depends for its validity upon the performance by him of services known to the other party to qualify for reward. Which ever way you look at it that is not satisfied unless he makes his position clear. I do not think in the face of the accounts that I have got he started to do that. So that in my judgment this applicant does not on the material before me show a good arguable case. I say that because the material before me differs very considerably from that which was before the Master.  If there is no arguable case that is the end. of this matter.  I think the additional evidence may well have caused some problems to the applicant in the light of the decision in Parker v. Schuller (1901) 17 T.L.R. 299 but I do not found upon that. I found my decision upon the conclusion that in this case there is no good arguable case as defined by Lord Radcliffe.