KOGEE CO., LTD v. PINE SPIRIT INTERNATIONAL LTD AND OTHERS

DCCJ 2920/2013

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 2920 OF 2013

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DECISION

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1.  There are 2 applications before me:

(a)  the plaintiff (“Kogee”)’s application by its notice of motion dated 2 August 2017 for judgment against the 1^st defendant (“Pine Spirit”), the 2^nd defendant (“Leung”) and the 3^rd defendant (“Chan”);

(b)   Choi Tak Wai (“Choi”, the intended intervener)’s application by his summons dated 22 September 2017 for an order staying the proceedings herein for 2 months.

Kogee’s application for judgment

2.  Kogee is seeking judgment against all the 3 defendants in these proceedings.  However, it is not known on what ground Kogee is applying for judgment against Leung and Chan.  Leung and Chan have filed and served a defence to Kogee’s claim, in which Leung and Chan have not admitted liability.  Mr James Cheng, counsel for Kogee, submits that Kogee is only seeking judgment against Pine Spirit in this hearing.  In my view, this concession is properly offered, as there is simply no basis to enter judgment against Leung and Chan on the basis of the materials before this court. Insofar as Leung and Chan are concerned, Kogee’s application must be dismissed.

3.  Kogee seeks judgment against Pine Sprit on the ground that Pine Spirit has never filed and served a defence to Kogee’s claim.  In other words, Kogee is applying for a default judgment against Pine Spirit.  In an application for a default judgment, only the matters pleaded in the statement of claim would be considered and no evidence is permitted.  See Leung Pak Ki v Pang Kau (HCA 624/2009, 1 March 2016), per DHCJ Paul Lam SC at [5].

4.  Kogee’s pleaded case as set out in the statement of claim is as follows:-

(a)  Pine Spirit is a company registered in Hong Kong.  Leung is a director of Pine Spirit since 9 May 2009. Chan was the secretary of Pine Spirit between 9 May 2009 and 6 July 2009, and is the secretary of Pine Spirit at the time of the statement of claim.

(b)   Kogee is a company incorporated in Samoa as an international company on 23 June 2006.

(c)  Kogee, through the acquisition of a vehicle, had invested in the Guangdong Province, and the investment value was over USD 9 million.

(d)   The Guangdong Provincial authorities maintain a policy (“the Policy”), under which foreign companies having investments in Mainland China would enjoy special rights, which include the entitlement to 1 Cross-Border Vehicle Licence (“CBV Licence”) if the investment value is USD 1 million or more, and the entitlement to 2 CBV Licences if the investment value is more than USD 8 million.

(e)  In or about May 2009, Pine Spirit, Leung and Chan, wrongfully and with intent to injure Kogee, made false representations or caused the same to be made to the Guangdong Provincial authorities that Kogee was or had become a director and the sole shareholder of Pine Spirit and thereby induced the said authorities to issue 1 CBV Licence to Pine Spirit.

(f)   As a result, Kogee has suffered loss and damage, being the costs incurred in hiring vehicles with CBV Licence.

5.  Kogee claims, inter alia, the following reliefs in the statement of claim:-

(a)  damages, including aggravated and exemplary damages;

(b)   an injunction to restrain Pine Spirit and Leung from committing a repetition of the acts complained in the statement of claim;

(c)  an account of all business and matters where Kogee’s name was mentioned and/or used by Pine Spirit, Leung and Chan;

(d)   an order that Pine Spirit, Leung and Chan shall deliver all the necessary documents to Kogee and provide all the necessary assistance to Kogee to obtain the CBV Licence and/or to transfer the CBV Licence to Kogee.

6.  In my view, there are various problems in Kogee’s pleaded case.

7.  Firstly, Kogee’s case is that by making the false representations or causing the same to be made to the Guangdong Provincial authorities, Pine Spirit, Leung and Chan have deprived Kogee of the CBV Licence.

8.  Leung and Chan have requested for further and better particulars of the statement of claim, including further and particulars (“FBPs”) of the Policy mentioned by Kogee in its statement of claim.  In its answer to the request, Kogee states in §2(4):

“The CBV Licence would be issued to the name of the foreign investment company such as the Plaintiff and not in the name of any subsidiary.”

So according to the FBPs provided by Kogee (which are deemd to be part of its statement of claim, see Hong Kong Civil Procedure 2017, Volume 1, §18/12/67), under the Policy, the CBV Licence would only be issued to the holding company and not to any subsidiary company.

9.  I must say that Kogee’s case is contradicted by the FBPs provided by Kogee.  The effect of the false representations pleaded by Kogee is creating an impression that Kogee is the sole owner of Pine Spirit and a director of Pine Spirit.  However, according to the FBPs provided by Kogee, the CBV Licence would be issued to the holding company and not the subsidiary company.  In these circumstances, even if the false representations have been made, that would not cause the CBV Licence being issued to Pine Spirit and not to Kogee.

10.  With this internal contradiction, Kogee cannot get a default judgment on its pleaded case.

11.  Secondly, Kogee is saying that Pine Spirit, Leung and Chan have committed the tort of interference with business by unlawful means.  According to Kogee’s pleaded case, it seems that at least some of the tortious acts occurred in Mainland China and not in Hong Kong.  That being the case, Kogee has to explain in its statement of claim as to why its complaint is actionable in Hong Kong.

12.  The relevant principles have been conveniently set out by the Court of Appeal recently in Xiamen Xinjingdi Group v Eton Properties Ltd [2016] 2 HKLRD 1106, [215]:

“The first argument concerns actionability in Hong Kong. The principles have been set out conveniently in The Conflict of Laws in Hong Kong, 2nd ed para. 5.077 as follows:

“1. The general rule is that, in order for tortious liability to be established, the matter must be actionable both under the lex fori and under the lex loci delicti. This is often referred to as the rule of double actionability.

2. The exception is that a particular issue between the parties (or the entirety of the claim) may in some circumstances be governed by the law of the country which, with respect to that issue (or the claim as a whole), has the most significant relationship with the occurrence and with the parties.””

13.  Kogee has not pleaded that (a) its complaint is both actionable in Mainland China and in Hong Kong, or (b) there are special circumstances so that Hong Kong is the place with which its complaint and the parties have the most significant relationship.

14.  Having failed to address this conflict of laws issue in its statement of claim, Kogee cannot succeed in getting a default judgment.

15.  Thirdly, Kogee has completely overlooked Practice Direction 27, §4, which requires:

“All writs and originating summonses should contain a plea that the relief sought do fall within the jurisdiction of the District Court, specifying which section(s) of sections 32 to 39 of the District Court Ordinance (Cap. 336) do apply to the case.”

16.  Kogee has not explained in its statement of claim as to why this court would have the jurisdiction to grant the various reliefs claimed, which include prohibitory and mandatory injunctions.  The jurisdiction issue is further complicated by the plea in the statement of claim that the value of a CBV Licence is in excess of RMB 1 million, which is more than HKD 1 million.  The omission to deal with the jurisdiction issue is another reason for refusing Kogee’s application for a default judgment.

Choi’s application for stay

17.  Choi’s summons was only filed a few days ago, and his affirmation in support of the summons was only filed on 25 September 2017.  There is no satisfactory evidence showing that the summons and the supporting affirmation have been duly served on all the parties in these proceedings.  Accordingly, I treat Choi’s application as per the summons as an ex parte application.

18.  Before discussing Choi’s application, I have to briefly mention another action, DCCJ 2737/2017, in which the 1^st and the 2^nd plaintiffs are Li Kwok Lung (“Li”) and Choi respectively, and the 1^st, the 2^nd and the 3^rd defendants are China H.K. Commerce Limited (“China HK”), Leung and Holder(s) of All Shares in Kogee respectively.  In that action, Li and Choi claims:-

(a)  Choi acting for and on behalf of Li, entered into a contract (“the Contract”) with China HK.  By the Contract, China HK agreed to obtain a CBV Licence for Choi (together with the establishment of the necessary corporate vehicles) at the price of RMB 300,000.

(b)   For the purpose of performing the Contract, China HK has incorporated Kogee and Pine Spirit.

(c)  By reason of the Contract, Leung holds the shares in Pine Spirit as trustee for the benefit of Li at all material times.  Further, the holders of all the shares in Kogee hold the said shares as trustee(s) for the benefit of Li at all material times.

(d)   As a result of the above, Li and Choi claims various declarations in relation to the shares in Kogee and Pine Spirit.

19.  The reason given in Choi’s affirmation in support of the stay application is that by an “unless order” made in DCCJ 2737/2017, Leung has to file and serve a defence in that action by 19 October 2017.  Li and Choi would need to see that defence and then seek legal advice on the proper step(s) to be taken by them in this action.  Hence, Choi seeks a stay of 2 months.

20.  One has to go back to the basic to see whether there is any merit in the stay application.  Choi may make the stay application only if he has some personal interest in this action.  He claims so, and he describes himself as “an interested party and intended intervener of this action” in his affirmation.  In my view, this is not correct.

(a)  In this action, the subject matter is the unlawful interference suggested by Kogee concerning the CBV Licence.  In DCCJ 2737/2017, the subject matter is the beneficial ownership of the shares in Kogee and the beneficial ownership of the shares in Pine Spirit.  The subject matters in the 2 sets of proceedings are different.

(b)   In this action, no one has ever raised any allegation concerning Choi’s personal interest.  It would not be correct for Choi to say that he is an interested party in this action.

(c)  In DCCJ 2737/2017, Choi does not claim that he has any personal interest in any shares in Kogee or in any shares in Pine Spirit.

21.  In my judgment, Choi simply has no interest to intervene.  The application as per his summons therefore must fail.

Other matters

22.  Mr Alex Lai, counsel for Leung and Chan, invites me to direct that this case be adjourned before a master for directions.  Mr Lai submits that Leung and Chan would take out a summons seeking an order to consolidate this action with DCCJ 2737/2017.  The master may consider to give proper directions in the 2 actions in the hearing.

23.  With respect to Mr Lai, I decline to accede to this request.  Since I have refused Kogee’s application for judgment, this action is still in an early stage.  I observe that DCCJ 2737/2017 is also in its early stage.  That being the case, anyone may take out an application to seek necessary directions at an appropriate time as he deems fit.  It would not be necessary, and indeed it may not be appropriate, for me to fix a direction hearing in the absence of any application.

Disposition

24.  For the reasons above, I dismiss both Kogee’s application and Choi’s application.

25.  Having heard submissions on costs, I am of the view that:-

(a)  In Kogee’s application, costs should follow the event, with a certificate for counsel.  As Choi has failed to obtain an order to intervene, the parties in this application are Kogee, Pine Spirit, Leung and Chan.  Pine Spirit is absent.  Accordingly, costs of that application is to be paid by Kogee to Leung and Chan forthwith, with a certificate for counsel, to be taxed if not agreed.

(b)   In Choi’s application, as the application is an ex parte application, there should be no order as to costs.  I so order.

(c)  For the purpose of facilitating taxation, I record that 90% of the time of this hearing is spent on Kogee’s application.

26.  I thank Mr Cheng, Mr Lai and Mr Mak for the assistance provided to the court.