ZHAO YONGKUI v. ZHANG CAIHUI AND OTHERS

HCA 2281 / 2017

[2018] HKCFI 2680

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2281 OF 2017

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REASONS FOR DECISION

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Introduction

1.  By a summons filed on 1 March 2018 (“the Summons”), the 2^nd Defendant (“D2”) applied for an order (1) setting aside the purported service of the Writ by a clerk engaged by the Plaintiff (“P”) on D2 as bad; and/or (2) staying this action in favour of the courts in Mainland China on forum non conveniens grounds pursuant to Order 12 rule 8 of the Rules of the High Court (“RHC”) and/or the inherent jurisdiction of this Court.

2.  I heard the Summons substantively on 3 December 2018, after which I (1) dismissed the Summons; (2) ordered D2 to pay the costs of the Summons, summarily assessed by me with Certificate for Counsel at HKD 136,830, to P forthwith; and (3) made an unless order that unless D2 files and serves his Defence at or before 4:00 pm on 31 December 2018, P be at liberty to enter judgment against D2 (“the Decision”).

3.  My reasons for the Decision are as set out below.

Submissions of D2

4.  In support of the Summons, Mr Justin Lam, Counsel for D2, submitted, inter alia, that: -

(1) Service of the Writ on D2 must be bad because D2 was never told at the time of the purported personal service on 29 November 2017 that the document he had been handed over (but which he refused to take) was a Writ or a legal document [HB/42 para 6]; and

(2) Everything in this action happened in Mainland China, both P and D2 resided in Mainland China, the laws of Mainland China applied to all issues in dispute, and as such this action had nothing to do with Hong Kong and should not be tried here – this action should be tried in Mainland China instead.

Submissions of P

5.  In opposition of the Summons, Mr M C Law, Counsel for P, submitted, inter alia, that: -

(1) D2’s allegation that he was never told and thus did not know the document which was being handed over to him was a Writ or legal document must be false, for on his own affidavit evidence [HB/42 para 6] he was able to and did in fact tell his own solicitors Hart Giles that the document in question was a legal document;

(2) There was no proper expert evidence before me that a specific court in Mainland China would be “available” to hear the current dispute between P and D2 in the sense of being willing, able and prepared to take up the matter; and

(3) In any case, staying this action against D2 only would be highly undesirable as the 3^rd Defendant here (“D3”), being a law firm based in Hong Kong, filed a Defence and there would in any case be a trial between P and D3 in Hong Kong – staying this action against D2 only would result in there being separate proceedings over the exact same matter in two separate jurisdictions.

My View

6.  For both limbs of the Summons, I agreed with the submissions of P and disagreed with the submissions of D2.

7.  On the question of the service of the Writ, for the reasons put forward by P, I had no doubt the service on 29 November 2017 was good.

8.  On the evidence before me, D2 must have been explicitly told he was served with a Writ or a legal document, which in my judgment was the only plausible reason why (1) D2 could and did tell his own solicitors he was served with a legal document, resulting in the advice about service of legal documents which he had himself deposed to [HB/42 para 6]; and (2) D2 could and did file an Acknowledgement of Service via his solicitors on 13 December 2017 [HB/19], exactly 14 days from 29 November 2017.

9.  I gave Mr Lam, Counsel for D2, a full opportunity to explain why, if D2 was (as D2 alleged) never told what he was being handed over on 29 November 2017 was a Writ or a legal document, D2 nonetheless did (1) tell his own solicitors he was served with a legal document, resulting in the advice about service of legal documents which he had himself deposed to; and (2) file an Acknowledgement of Service through his own solicitors on 13 December 2017, exactly 14 days from 29 November 2017.  Mr Lam fairly accepted that he could not improve on the evidence filed by his client, and he could not give evidence from the Bar Table.  Mr Lam further drew my attention to Order 12 rule 8(5) of the RHC, which provided that I could either dispose of the Summons summarily, or direct that the issue be tried as a preliminary issue.  In gist, Mr Lam was suggesting that I should either accept his case summarily, or direct a trial of preliminary issue, but should not reject his case summarily.

10.  Mr Law, Counsel for P, opposed the idea that I should direct a trial of preliminary issue.  He submitted it was “trite” that this Court was never bound to accept any allegation at face value, and if the allegations in an affidavit were “wholly incredible”, this Court would be fully entitled to reject the allegations without cross-examination.  Mr Law submitted that D2’s allegation to the effect that he was not told the document he was being handed over was a Writ or a legal document clearly fell within the “wholly incredible” category for the reasons he had submitted so that I should reject such allegations summarily without cross-examination, similar to the way this Court would reject wholly incredible allegations in summary judgment applications without trials.

11.  I considered the option of directing a trial of preliminary issue carefully and rejected it.  In my judgment, directing a trial of preliminary issue would only be appropriate when the allegation in question was prima facie believable but disputed so that this Court could not safely determine the matter without cross-examination.  For the reasons put forward by Mr Law on behalf of P, the allegation of D2 did not even reach the prima facie believable threshold and should be dismissed summarily.

12.  In any case, even if the service in question was bad that would not be the end of this litigation, for P would still be fully entitled to keep trying to serve the Writ, whether by personal service in Hong Kong, or by Order 11 in Mainland China, or by seeking an order for substituted service.  D2’s challenge on service, quite apart from being wholly unmeritorious for the reasons put forward by P, was in my judgment quite pointless.

13.  The other point raised by D2 was the forum non conveniens point.

14.  There was no dispute between the parties on what the law said.  Any litigant applying to stay a Hong Kong action on forum non conveniens grounds must establish that (1) Hong Kong is not the natural or appropriate forum; and (2) there is in existence another available forum which is clearly or distinctly more appropriate than Hong Kong.  Failure to establish either of these two matters would be fatal.  Also, a litigant would be able to resist such an application successfully if he can establish that (a) if the action is tried in a forum other than Hong Kong he would be deprived of a legitimate personal or juridical advantage; and (b) balancing the parties’ advantages and disadvantages, the overall justice of the matter demands that the action be tried in Hong Kong: SPH v SA (2014) 17 HKCFAR 364 at 386-387, para 51.

15.  In my judgment, D2’s application could never have got off the ground for the simple reason that D2 never filed any proper expert evidence signed or sworn by a Mainland Chinese lawyer pointing to a specific court in Mainland China being available to adjudicate the dispute between P and D2 herein.  All that was placed before me was hearsay evidence from D2 that a person, allegedly a lawyer, allegedly called Jason Tian, and allegedly practising law from Dentons Law Offices in Shanghai, had told D2 certain things.  D2 did not explain in his affidavit why the alleged lawyer did not himself provide a signed expert report.  D2 did not say anything about the availability of any specific court in Mainland China, did not mention the qualifications or credentials of the alleged lawyer, did not exhibit copies of the relevant statutory provisions, and did not exhibit copies of the alleged lawyer’s CV, name card, practising certificate or even his LinkedIn profile.  On the evidence adduced, I was not at all satisfied there was in existence a specific court in Mainland China which was clearly available to adjudicate the current dispute between P and D2 in the sense of being willing, able and prepared to adjudicate the matter.  The law required the identification of a specific court so it was not good enough for D2 to simply point to all courts in the whole of Mainland China, or all courts in an area in Mainland China: Hwoo Huang Linda v Fu Being San [2013] 1 HKLRD 259 at para 55 per DHCJ Reyes SC; and Greenwood Limited v Pearl River Container Transportation Limited & Another (unreported, CACV 27 / 1994, 25^th May 1994) per Power VP, Nazareth and Litton JJA.  The lack of particularity in D2’s affidavit evidence was in my judgment fatal to D2’s application for a stay.  Even for this reason alone, D2’s application must be dismissed.

16.  Mr Lam, Counsel for D2, mentioned that P did not adduce any evidence to contradict the evidence of D2.  That was factually correct, but it did not assist.  As Le Pichon JA had correctly observed in Full Wisdom Holdings Ltd & Others v Traffic Stream Infrastructure Co Ltd & Others [2004] 2 HKLRD 1016 at para 23 (see also the endorsement by Ribeiro PJ in (2004) 7 HKCFAR 442 at para 22), even when no contradicting evidence had been adduced, the courts of Hong Kong would not simply accept stated conclusions on foreign law at face value.  The courts of Hong Kong must examine the basis of the legal reasoning independently.  Since the hearsay evidence adduced by D2 was singularly lacking in legal analysis, it would in any case be quite wrong for me to attach any weight to it, even though P did not adduce any evidence to contradict it.

17.  Further, even if there were better evidence, I would still have dismissed the Summons, as P would obviously wish to give evidence only once, and staying this Hong Kong action as between P and D2 (but not as between P and D3) would mean that P would have to give evidence on the same subject matter twice – once in Mainland China (for the action against D2) and once in Hong Kong (for the action against D3) – wasting time and costs. There could also be inconsistent orders or inconsistent findings of facts in two separate sets of proceedings (one in Mainland China and one in Hong Kong) about the same subject matter.  In my judgment, balancing everything, given that the dispute between P and D3 would in any case be tried in Hong Kong, it would in any case be substantially more appropriate that the dispute between P and D2 be tried in Hong Kong as well.  I would have dismissed the Summons on this alternative ground in any event.

18.  As to consequential directions, D2 did not file a Defence and must be given time to do so.  In my judgment, giving D2 28 days from 3 December 2018 to file a Defence should be more than sufficient, given that D2 had been legally represented since at least 13 December 2017 when D2 instructed his solicitors, Hart Giles, to file his Acknowledgment of Service on his behalf.  D2 and his lawyers had been sitting on the Writ (with a full Statement of Claim endorsed) for close to a year, if not over a year.  D2’s lawyers had more than enough time to ascertain from D2 what his intended defence would be. While I had a choice between simply extending time and making an unless order, given the delay caused by the Summons, after careful consideration I came to the view that an unless order in terms of the Decision would be substantially more appropriate.  Under Order 1A rule 4 of the RHC this Court must actively manage this case by fixing timetables and controlling its progress.  Assuming this case cannot be settled out-of-court, all parties should try to bring this action to trial the soonest possible and the earlier D2 filed his Defence the better it would be.

Costs

19.  There was no reason why costs should not follow the event in this matter. P was the clear winner and D2 was the clear loser.  The costs of the Summons should be paid by D2 to P.

20.  On the question of Certificate for Counsel, in my judgment it was reasonable, necessary and proper for the parties to engage Counsel to argue the Summons substantively, given the importance of the forum issue for both parties. Indeed, both parties engaged Counsel, and both Counsel had been extremely helpful to this Court.

21.  On the quantum of costs, P claimed HKD 266,830 in total and D2 took issue with it.  The main item in dispute was P’s claim of Counsel Fee in the sum of HKD 200,000.  D2 suggested that a sum of HKD 80,000 would be more appropriate.  Whilst I had no doubt Mr Law deserved to be paid HKD 200,000 by reason of his 21 years of experience and resulting competence, the short point made by Mr Lam, which I accepted, was that someone substantially more economical to deploy could have done the job just as competently.  For that reason, I would only allow HKD 100,000 as Counsel Fee payable by D2.  Making various other minor adjustments to the sums claimed by P, the proper quantum of costs payable by D2 to P for the Summons was assessed by me as HKD 136,830.

Final Remarks

22.  As had been accurately pointed out by Mr Law, much of the affidavit evidence adduced by D2 was wholly irrelevant to the Summons.  Matters such as D2’s year of birth, his career progression since 1977, and what happened to various Mainland Chinese corporations which were not parties to this action simply did not assist this Court in the determination of the Summons.

23.  Practitioners are reminded that in drafting or settling affidavit evidence in support of court applications, the requirements of the law must be borne in mind.  Relevant materials should be included, while irrelevant materials should be excluded.  Overloading the Court with irrelevant facts simply does not assist.  For applications made on forum non conveniens grounds in particular, practitioners should bear in mind what was aptly said by the Court of Appeal in the Greenwood case referred to above.

24.  I thank both Counsel for their most able assistance.