ASIA JET PARTNERS LTD v. WILD WING LLC AND OTHERS

HCA 73/2018

[2019] HKCFI 402

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 73 OF 2018

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D E C I S I O N

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A.   INTRODUCTION

1.  Before the Court at the hearing was the 3^rd and 4^th Defendants’ Summons dated 21 February 2018 (the “Summons”), by which the 3^rd and 4^th Defendants applied for the following orders:

1.1   Any service of the Writ upon the 3^rd and 4^th Defendants be set aside;

1.2   A declaration that the Writ has not been duly served upon the 3^rd and 4^th Defendants;

1.3   A declaration that in the circumstances of the case, the Court has no jurisdiction over the 3^rd and 4^th Defendants in respect of the subject matter of the claim, or the relief or remedy sought in this action; and

1.4   The proceedings as against the 3^rd and 4^th Defendants be stayed.[1]

2.  As will be further explained in Section B2 below, the Plaintiff had in the first instance applied for leave to issue and serve the Writ out of the jurisdiction on each of the four Defendants, but shortly thereafter the Plaintiff amended its application to apply for leave to serve the Writ out of the jurisdiction on the 1^st and 2^nd Defendants only.  In other words, at that time the Plaintiff decided not to proceed with its application for leave to serve out with respect to the 3^rd and 4^th Defendants. 

3.  Subsequently, the Plaintiff indicated that it wishes to pursue its application for leave to serve the 3^rd and 4^th Defendants out of the jurisdiction, and by paragraph 6 of the Order of Master Ho dated 9 March 2018, the learned Master directed that the Plaintiff’s ex parte application for leave to serve the Writ outside the jurisdiction on the 3^rd and 4^th Defendants be considered after the determination of the Summons. 

4.  However, at the hearing before me on 31 October 2018, both parties invited me to deal with the Plaintiff’s application for leave to serve out on an inter partes basis, rather than to leave it to be dealt with on an ex parte basis after I determine the Summons, and I stated that I would accede to that request.  Thus, as well as determining the Summons, I also deal with the Plaintiff’s application for leave to serve the Writ outside the jurisdiction on the 3^rd and 4^th Defendants. 

B.   BACKGROUND

B1.   Factual background

5.  The Plaintiff is a company incorporated in Hong Kong. 

6.  The 1^st and 2^nd Defendants are both companies incorporated in Delaware in the U.S., but which were dissolved and liquidated at the end of 2017.[2] 

7.  The 3^rd and 4^th Defendants are not resident in Hong Kong.  The 3^rd Defendant is resident in the PRC, and travels frequently to the U.S.[3]  The 4^th Defendant is resident in the U.S.[4]  The 3^rd and 4^th Defendants were the “managers” of the 1^st and 2^nd Defendants.[5]  According to the Delaware law expert evidence adduced by the 3^rd and 4^th Defendants, “managers” are akin to directors.[6] 

8.  By a Sale and Purchase Agreement dated 29 July 2016, Asia Jet Partners Holdings Ltd (“AJPHL”) agreed to sell the entire share capital of the Plaintiff to Hong Kong Airlines Corporate Jet Management Limited (“HK Jet”), which was later renamed Deerjet (Hong Kong) Business Jet Management Limited.  The parties agreed that the Plaintiff would enter into new aircraft management agreements, and this was one of the matters that closing of the Sale and Purchase Agreement was conditional upon.[7] 

9.  The 3^rd and 4^th Defendants emphasise that by acquiring the entire share capital of the Plaintiff, HK Jet acquired not only the two aircraft that are central to the present proceedings (which are known as N188AJ and N688AJ respectively, and which will be referred to collectively as the “Two Aircraft”), but also other assets as set out in paragraph 17(e)(ii) of the 4^th Defendant’s 2^nd Affidavit dated 4 May 2018 (the “4^th Defendant’s 2^nd Affidavit”),[8] including the Plaintiff’s customers and target clients database. 

10.  The Plaintiff entered into aircraft management agreements dated 30 August 2016 with the 1^st and 2^nd Defendants respectively in relation to the Two Aircraft (the “AMAs”).  The AMAs include the following terms:

10.1   By Clause 12 of the Major Commercial Terms of each of the AMAs,[9] subject to the termination provisions, the term of the AMAs was five years. 

10.2   The termination provisions are set out in Clause 15 of the General Terms and Conditions of the AMAs.[10]

10.3   In particular, Clause 15.1 of the General Terms and Conditions of the AMAs defines what “Client Termination Events” are, and under Clause 15.1(d) one such event is when “Client [ie the 1^st and 2^nd Defendants] sells or otherwise disposes of Aircraft and Client provides Manager [ie the Plaintiff] with ninety (90) days notice thereof”.  Clause 15.3 of the General Terms and Conditions of the AMAs sets out the remedies available to the 1^st and 2^nd Defendants upon the occurrence of a Client Termination Event, and under Clause 15.3(a), upon the occurrence of a Client Termination Event, “Client [ie the 1^st and 2^nd Defendants] may by a written notice to Manager [ie the Plaintiff] terminate this agreement with immediate effect”. 

10.4   Clause 15.2 of the General Terms and Conditions of the AMAs defines what “Manager Termination Events” are, and under Clause 15.2(c) one such event is “Client [ie the 1^st and 2^nd Defendants] fail to pay to [sic] any amount payable to Manager [ie the Plaintiff] under this Agreement on its due date provided notice and a reasonable time to remedy or cure have been provided”.  Clause 15.4 of the General Terms and Conditions of the AMAs sets out the remedies available to the Plaintiff upon the occurrence of a Manager Termination Event, and under Clause 15.4(a), upon the occurrence of a Manager Termination Event, “Manager may by a written notice to Client suspend Manager’s performance of this Agreement with immediate effect during which period of suspension Client shall continue to pay the Monthly Management Fee to Manager and reimburse Manager for all costs and expenses incurred in relation to the Aircraft”.  Further, under Clause 15.4(b), upon the occurrence of a Manager Termination Event, “Manager may by a written notice to Client terminate this Agreement with immediate effect”. 

10.5   Paragraph 1 of Appendix A to the AMAs[11] states that subject to reasonable availability of the Two Aircraft, the Plaintiff would provide the 1^st and 2^nd Defendants with 240 hours per year in third party revenue charter hours by way of minimum charter hours. 

11.  The Plaintiff contends for an implied term that under the AMAs, the 3^rd Defendant, as the ultimate beneficial owner of the Two Aircraft, would not refuse, without valid reason, to grant permission for charter flights arranged by the Plaintiff.  See the Statement of Claim dated 5 January 2018, paragraph 23.[12] 

12.  On 23 September 2016, the entire share capital of the Plaintiff was transferred from AJPHL to HK Jet. 

13.  According to the Plaintiff, from around January or February 2017 onwards, the 1^st and 2^nd Defendants fell into arrears with respect to payment of the scheduled fees and costs and expenses in respect of the Two Aircraft in breach of Clauses 7 and 8 of the Major Commercial Terms of AMAs.[13] 

14.  At around this time, the 3^rd Defendant expressed dissatisfaction to the Plaintiff about the charter revenue generated by the Plaintiff.  The Plaintiff accepts that at this time, it was falling short of achieving the annual 240 charter hours on a pro rata basis.[14] 

15.  N188 AJ was not available for charter since 24 March 2017 when it started its scheduled maintenance at a repair facility in Singapore.[15]

16.  On 14 April 2017, the 4^th Defendant notified the Plaintiff that the AMAs would be terminated in 90 days’ time as the 1^st and 2^nd Defendants were disposing of the Two Aircraft.[16] 

17.  On or about 26 April 2017, the Plaintiff notified the Defendants of the suspension of the Plaintiff’s performance of the AMAs with immediate effect because (on the Plaintiff’s case) of the 1^st and 2^nd Defendants’ failure to pay their outstanding scheduled fees and costs and expenses.[17] 

18.  On or about 29 April 2017, N688AJ was flown out of Hong Kong to the U.S.  The Plaintiff complains that this was done without prior notification to it, whilst the 3^rd and 4^th Defendants emphasise that N688AJ was flown by pilots and flight crew employed by the Plaintiff.  N688AJ has since remained in the U.S. and under the management of another charter operator.[18]

19.  The Plaintiff’s case is that from around early May 2017, the 3^rd Defendant had started refusing, without any valid reason, to grant permission for confirmed charter flights on N188AJ arranged by the Plaintiff, and the Plaintiff’s belief is that this was deliberate and wrongful conduct on the part of the 3^rd Defendant aimed at making it difficult for the Plaintiff to meet the annual goal of 240 charter hours.[19]

20.  On or about 10 May 2017, N188AJ was flown from a scheduled maintenance event at a Gulfstream authorised repair facility in Singapore to the U.S.  The Plaintiff complains that this was done without prior notification to it, whilst the 3^rd and 4^th Defendants emphasise that N188AJ was flown by pilots and flight crew employed by the Plaintiff.[20] 

21.  On or about 22 May 2017, the 1^st and 2^nd Defendants sold the Two Aircraft to Kaneohe Estates, LLC (“Kaneohe Estates”).[21]  The Plaintiff’s investigations have revealed that the beneficial owner of Kaneohe Estates is the 3^rd Defendant.[22]  On the other hand, the 3^rd and 4^th Defendants emphasise that the sale of the Two Aircraft to Kaneohe Estates was duly recognised by the U.S. Department of Transportation Federal Aviation Administration (“FAA”).[23] 

22.  On or about 24 June 2017, Kaneohe Estates agreed to sell N188AJ to Summerwood Aviation LLC, which the Plaintiff accepts appears to be an independent third party buyer.[24] 

23.  On or about 19 September 2017, Kaneohe Estates completed the sale of N188AJ to Summerwood Aviation LLC and CCH Aviation LLC.  The Plaintiff also accepts that CCH Aviation LLC appears to be an independent third party buyer.[25] 

24.  Despite the issuance of several reminders to the 1^st and 2^nd Defendants, the outstanding balances that they owed to the Plaintiff remained unpaid, and on 13 July 2017, the Plaintiff sent termination notices to each of the 1^st and 2^nd Defendants, notifying them of: (1) the end of their 90-day notice period for termination of the respective AMAs; and (2) the Plaintiff’s exercise of its rights to terminate the AMAs in accordance with Clause 15.4(b) of the General Terms and Conditions of the AMAs due to the 1^st and 2^nd Defendants’ failure to pay their outstanding scheduled fees and costs and expenses to the Plaintiff.[26] 

25.  On or about 15 November 2017, Kaneohe Estates agreed to sell N688AJ to Executive Aircraft Solutions LLC, which the Plaintiff accepts appears to be an independent third party buyer.[27] 

26.  On or about 10 January 2018, Kaneohe Estates completed the sale of N688AJ to Executive Aircraft Solutions LLC. 

B2.   Procedural background

27.  The first step which the Plaintiff took in these proceedings was to apply ex parte, by an Affirmation dated 5 January 2018 and filed on 10 January 2018, for leave to serve the Writ issued on 10 January 2018 on all four Defendants out of the jurisdiction.[28] 

28.  The address given on the Writ for the 3^rd and 4^th Defendants is “c/o Old Peak Limited, 28 Hennessy Road, Suite 901, 9th Floor, Wanchai, Hong Kong” (the “Wanchai Address”), and on or about 12 January 2018, the Writ was delivered by hand to the 3^rd and 4^th Defendants (who were not present) at the Wanchai Address.[29] 

29.  The 3^rd and 4^th Defendants are of the view that the Writ was not validly served upon them at the Wanchai Address as it is not the residential address of either of them, and neither of them were in Hong Kong on 12 January 2018.  Nevertheless, in order to avoid any possibility of default judgment being entered against them, the 3^rd and 4^th Defendants each filed an Acknowledgement of Service dated 24 January 2018.[30]  As explained in paragraph 8 of the 4^th Defendant’s 1st Affidavit,[31] the 3^rd and 4^th Defendants filed their Acknowledgement of Service on the basis set out in Order 12 rule 7 of the Rules of the High Court. 

30.  At paragraph 9 of White’s 2^nd Affidavit, the Plaintiff referred to Order 10 rule 1(5) of the Rules of the High Court,[32] and at paragraph 11 the Plaintiff explained that its legal representatives had advised it that the rules governing service are for the purpose of ensuring that proceedings are brought to the notice of the defendant, and in the present case the 3^rd and 4^th Defendants clearly had full knowledge of the proceedings as they had instructed legal representatives and had each filed an Acknowledgement of Service and made a sworn affidavit in support of the Summons.[33] 

31.  After receiving the Acknowledgements of Service from the 3^rd and 4^th Defendants, the Plaintiff did not continue to pursue its application for leave to serve out with respect to the 3^rd and 4^th Defendants, and proceeded to apply for leave to issue and serve the concurrent Writs out of the jurisdiction on the 1^st and 2^nd Defendants only.  Leave to serve out with respect to the 1^st and 2^nd Defendants was granted by Master Ho on 2 February 2018.[34]  However, no leave to serve out was granted with respect to the 3^rd and 4^th Defendants. 

32.  On or about 21 February 2018, the 3^rd and 4^th Defendants took out the Summons.[35]

C.   ISSUES

33.  The following issues arise from the parties’ applications and submissions:

33.1   Has there been valid service on the 3^rd and 4^th Defendants?

33.2   If the answer to question 1 above is “no”, should the Court nevertheless cure any irregularity in service under Order 2 rule 1 of the Rules of the High Court? 

33.3   If the answer is “no” to question 1 above or to both questions 1 and 2 above, should the Court grant leave to the Plaintiff to serve the Writ on the 3^rd and 4^th Defendants out of the jurisdiction? 

33.4   If the answers to questions 1, 2 or 3 above is/are “yes”, should the Court stay these proceedings on the ground of forum non conveniens? 

D.   ISSUE 1: HAS THERE BEEN VALID SERVICE ON THE 3^RD AND 4^TH DEFENDANTS?

34.  Mr Yuan Shan Cao, appearing for the Plaintiff, accepts that the attempt to serve the 3^rd and 4^th Defendants by leaving the Writ at the Wanchai Address is irregular service.^[36] However, he argues that by filing the Acknowledgements of Service, the 3^rd and 4^th Defendants are deemed to have been duly served by virtue of Order 10 rule 1(5).^[37] 

35.  In my view, Mr John Scott SC, appearing with Mr Christopher Chain, for the 3^rd and Defendants, are plainly correct that the Plaintiff cannot rely on the deeming provision in Order 10 rule 1(5).

36.  Order 10 rule 1(5) states:

“Subject to Order 12, rule 7, where a writ is not duly served on a defendant but he acknowledges service of it, the writ shall be deemed, unless the contrary is shown, to have been duly served on him and to have been so served on the date on which he acknowledges service.” (emphasis added)

37.  As can be seen above, Order 10 rule 1(5) specifically states that it is subject to Order 12 rule 7.  Order 12 rule 7 states:

“Acknowledgment not to constitute waiver (O. 12, r. 7)

The acknowledgment by a defendant of service of a writ shall not be treated as a waiver by him of any irregularity in the writ or service thereof or in any order giving leave to serve the writ or extending the validity of the writ for the purpose of service.”

38.  As noted in paragraph 12/8/1 of Hong Kong Civil Procedure 2019:

“The policy underlying rr.7 and 8 is that a defendant should not be regarded as having submitted to the jurisdiction of the court, by reason only of the fact that he appeared in the proceedings for the purpose of…contesting the jurisdiction of the court…”

39.  In light of Order 12 rule 7, I do not consider that the fact that the 3^rd and 4^th Defendants have filed Acknowledgements of Service means that the Writ has been, or is deemed to have been, duly served on them.  In my view, there has not been valid service on the 3^rd and 4^th Defendants. 

E.   ISSUE 2: SHOULD THE COURT NEVERTHELESS CURE ANY IRREGULARITY IN SERVICE UNDER ORDER 2 RULE 1 OF THE RULES OF THE HIGH COURT?

40.  Mr Cao invites me, in the event that I am not with the Plaintiff on Issue 1, to cure any irregularity in service under Order 2 rule 1.  He submits that in determining whether to exercise my discretion under Order 2 rule 1, I should focus on two factors.  First, he invites me to consider the question of whether the Writ has come to the notice of the 3^rd and 4^th Defendants.  He argues that since they have chosen to acknowledge service in order to protect their position against the possibility of default judgment being entered against them, they cannot at the same time complain about irregularity of that service.  Secondly, Mr Cao invites me to consider whether the irregularity in service has caused any prejudice to the 3^rd and 4^th Defendants.^[38] 

41.  On the other hand, Mr Scott disagrees that the Court has jurisdiction to cure the irregular service of the Writ under Order 2 rule 1.  He argues, based on paragraph 20 of 3D-Gold Jewellery Holdings Limited v PricewaterhouseCoopers (a firm) [2014] 4 HKC 528, that the failure to properly obtain leave to serve out of the jurisdiction is a substantive irregularity, and not a mere technical defect that the Court can cure under Order 2 rule 1.  Mr Scott also argues that this is in any event not an appropriate case for the Court to exercise any discretion that it may have to cure the irregular service of the Writ. 

42.  I do not agree with Mr Scott that 3D-Gold Jewellery Holdings Limited v PricewaterhouseCoopers (a firm), supra, assists him on the question of whether I have jurisdiction under Order 2 rule 1 to cure the defect in the present case.  That case did not concern a situation where there was defective service of a writ because of failure to obtain leave to serve out, and in my view it does not shed any light on: (1) whether a defect by way of failure to obtain leave to serve out is a “substantive” or a “technical” defect as referred to in paragraph 20 of the judgment; or (2) whether such a defect would be capable of being cured under Order 2 rule 1. 

43.  In my view, failure to obtain leave is an irregularity which is capable of being cured under Order 2 rule 1, but the Court will not lightly exercise its discretion to do so.  See Bank of China (Hong Kong) Ltd v Regal Link Investment Ltd [2009] 3 HKLRD 203, paragraph 37, citing the English Court of Appeal’s decision in Leal v Dunlop Bio-Processes International Ltd [1984] 1 WLR 874; China Shanshui Cement Group Ltd v Mi Jingtian [2018] HKCFI 1553, paragraph 184.^[39] 

44.  As to the Court’s discretion to cure irregular service, I agree with Mr Cao that whilst the Court of Appeal in Bank of China (Hong Kong) Ltd v Regal Link Investment Ltd, supra, had referred to the Court having discretion under Order 2 rule 1 to cure irregular service under “exceptional circumstances” (see paragraph 37), the Courts have subsequently explained that the criterion of “exceptional circumstances” is too stringent, and a Court may exercise its discretion under Order 2 rule 1 where there is “good cause” or “good reason”.  See Bank of China (Hong Kong) Ltd v Chow Tat Wah, HCA 11324/1999, 26 February 2002, paragraphs 14 to 17; Tan Kah Eng v Tan Eng Khiam [2012] 1 HKLRD 329, paragraphs 38 to 40.  Having said that, as Mr Scott points out, the discretion to cure irregularity should be exercised with caution where service out of this jurisdiction is concerned, and any prejudice that might have been caused to the defendant is a material consideration.  See Bank of China (Hong Kong) Ltd v Chow Tat Wah, supra, paragraph 17. 

45.  Whilst Mr Cao emphasises that the 3^rd and 4^th Defendants clearly have notice of the present proceedings, the evidence is that they were not in Hong Kong when service was purported to be made on 12 January 2018,^[40] and under such circumstances it is well-established that a defendant’s notice of the proceedings is neither here nor there.  See Tsai Wen Chin v Zhao Yie, HCA 1191/2011, 18 September 2012, paragraphs 6 to 9; Bank of China (Hong Kong) Ltd v Regal Link Investment Ltd, supra, paragraph 30.  In my view, the case cited by Mr Cao, Hongkong & Shanghai Banking Corporation Ltd v Ong Tong Sing Lawrence & Ors [2008] 3 HKC 421, paragraphs 34 and 35, is not apposite as that case does not concern the situation where service was purported to be made on a foreign defendant when he was not in Hong Kong. 

46.  I also do not agree with Mr Cao that the fact that the 3^rd and 4^th Defendants filed Acknowledgements of Service can be a factor which assists the Plaintiff with respect to the Court’s exercise of discretion under Order 2 rule 1.  As explained in Section D above, the rules are clear that a defendant can acknowledge service without waiving irregularities in service. 

47.  As to whether there is good cause or reason for me to cure the irregularities in service, I take into account the following:

47.1   The 3^rd and 4^th Defendants are not amenable to the jurisdiction of the Hong Kong courts unless there is leave to serve out under Order 11 rule 1.  As the Court of Appeal emphasised in Bank of China (Hong Kong) Ltd v Regal Link Investment Ltd, supra, paragraph 31, this is an essential point. 

47.2   A Court should not exercise its discretion under Order 2 rule 1 more favourably than under the rules that the relevant party would otherwise have had to comply with, and Order 2 rule 1 should not be used as entry through the back door.  See Bank of China (Hong Kong) Ltd v Regal Link Investment Ltd, supra, paragraph 38, with Order 6 rule 8 being the “front door” in that case; Hong Kong Civil Procedure 2018, paragraph 2/1/2. 

47.3   In the present case, the Court should not exercise its discretion under Order 2 rule 1 more favourably than under Order 11 rule 1. See for example Bank of China (Hong Kong) Ltd v Chow Tat Wah, supra, paragraphs 24 and 25.  Otherwise, the 3^rd and 4^th Defendants would suffer prejudice. 

47.4   I do not agree with Mr Cao that the answer to the front door and back door issue is that “if D3 and D4 think that P has no reasonable cause of action then they are at liberty to apply to strike out P’s case”.^[41] In my view, Mr Cao’s submission neglects the essential point that 3^rd and 4^th Defendants are not amenable to the jurisdiction of the Hong Kong courts unless the Plaintiff is granted leave to serve out.  I do not consider that the burden ought to be shifted to the 3^rd and 4^th Defendants in the way that he suggests. 

48.  Thus, in my view I should not decide to cure the irregularity in service under Order 2 rule 1 without having regard to the question of whether leave to serve out should be granted to the Plaintiff under Order 11 rule 1.  Issue 3 below therefore arises not only from the parties’ request at the hearing that I determine the Plaintiff’s application for leave to serve out, but also as part of my determination as to whether I should exercise my discretion to cure the irregularity in service.  For the reasons explained in Section F below, I decline to grant leave to serve out, and thus I also decline to cure the irregularity in service under Order 2 rule 1, otherwise the Plaintiff would be permitted to enter through the back door. 

F.   ISSUE 3: SHOULD THE COURT GRANT LEAVE TO THE PLAINTIFF TO SERVE THE WRIT ON THE 3^RD AND 4^TH DEFENDANTS OUT OF THE JURISDICTION?

49.  There is some overlap between Issue 3 (the Plaintiff’s application for leave to serve out) and Issue 4 (the Defendant’s application for a stay on the ground of forum non conveniens), but the burden of proof is different.  In the Plaintiff’s application for leave to serve out, the burden of proof is on the Plaintiff (even where the 3^rd and 4^th Defendants challenge jurisdiction in an application to set aside the issue and service of the writ at an inter partes hearing pursuant to Order 12 rule 8), whereas in the 3^rd and 4^th Defendants’ application for a stay, the burden of proof is on the 3^rd and 4^th Defendants.  See Hong Kong Civil Procedure 2019, paragraph 11/1/10; Order 11 rule 4(2). 

50.  In order for the Plaintiff to obtain leave to serve out, the Plaintiff must show a good arguable case that its claim against the 3^rd and 4^th Defendants falls within one of the gateways for service out under Order 11 rule 1(1), and that there is a serious issue to be tried.  See Hong Kong Civil Procedure 2019, paragraphs 11/1/8 and 11/1/8C. 

51.  Order 11 rule 1(1)(f) is the only basis that the Plaintiff relies upon for seeking leave to serve the 3^rd and 4^th Defendants outside the jurisdiction.

51.1   The Plaintiff’s claim against the 3^rd Defendant is founded on: (a) the tort of procuring the breach of the AMAs; (b) the tort of unlawful means conspiracy; and (c) the tort of lawful means conspiracy.  The Plaintiff’s case is that the damage was sustained within the jurisdiction.  See the Statement of Claim, paragraphs 45 to 48^[42]; White’s 1^st Affidavit, paragraph 56(c).^[43] 

51.2   The Plaintiff’s claim against the 4^th Defendant is founded on: (a) the tort of unlawful means conspiracy; and (b) the tort of lawful means conspiracy.  The Plaintiff’s case is that the damage was sustained within the jurisdiction.  See the Statement of Claim, paragraphs 47 to 48^[44]; White’s 1st Affidavit, paragraph 56(d).^[45]

52.  As Mr Scott summarised in his skeleton, “The crux of P’s claims against D3 and D4 is the allegation that the disposals of the aircraft by D1 and D2 were sham disposals.”^[46]  This has not been disputed by the Plaintiff. 

53.  As I understand it, whenever the parties in this case refer to “sham”, they use it to mean “not bona fide”.  The parties have not used the term “sham” in the traditional sense referred to in Snook v London and West Riding Investments Ltd [1967] 2 QB 786, 802, namely where: (1) the parties intended that the documents or acts they have done would not create the legal rights or obligations they appear to create; and (2) it was intended that the documents or acts would mislead a third party into believing the parties had created those rights and obligations.  See also Hui Cheung Fai and Another v Daiwa Development Ltd and Others, HCA 1734/2009, 8 April 2014, paragraph 71. 

F1.   Tort of procuring breach of contract under Hong Kong law

54.  The Plaintiff has alleged that the following acts constituted wrongful intervention by the 3^rd Defendant which prevented performance of the AMAs and caused a breach of the AMAs:

54.1   The 3^rd Defendant refused to grant permission for charter flights organised by the Plaintiff from early May 2017;

54.2   On or about 29 April 2017, the 3^rd Defendant ordered N688AJ to be flown from Hong Kong to the U.S., where it has since remained; and on or about 10 May 2017, the 3^rd Defendant ordered N188AJ to be flown from Singapore to the U.S., where it has since remained; and

54.3   The Plaintiff alleges that the 3^rd Defendant effected the disposals of the Two Aircraft by the 1^st and 2^nd Defendants, which was a sham ploy to cause the breach or wrongful termination of the AMAs. 

See the Statement of Claim, paragraph 45(c).[47]

55.  The only reference to what constitutes breach of the AMAs in the sub-paragraphs of paragraph 45(c) is in sub-paragraph (iii), ie paragraph 54.3 above.  Thus, it can be seen that the alleged sham disposals are central to the breach of the AMAs that the Plaintiff complains of in these proceedings. 

56.  Turning to Clause 15.1(d) of the General Terms and Conditions of the AMAs, I agree with Mr Scott that on the face of the clause, it does not say that there can be no sale of the Two Aircraft to a company associated with the previous vendors. 

57.  Mr Cao tries to get around that by arguing that although Clause 15.1(d) of the General Terms and Conditions of the AMAs refers to the 1^st and 2^nd Defendants “sell[ing]” or “otherwise dispos[ing] of” the Two Aircraft, in fact the sale or disposal needs to be bona fide and for value.^[48]  Upon my request during the hearing for clarification about this, Mr Cao stated that he was arguing that there is an implied term that the sale or disposal needs to be bona fide. 

58.  However, no such implied term is pleaded in the Statement of Claim.  I do not consider it sufficient for Mr Cao to simply say at the hearing that he may need to amend his pleading in the future.  I need to determine the application for leave to serve out based on what is presently before me. 

59.  Whilst Mr Cao emphasises that he has set out in the Statement of Claim the basis for why the Plaintiff says that there were sham disposals of the Two Aircraft, what is not apparent to me from the Statement of Claim is the basis upon which it is said that there is a breach of the AMAs upon there being disposals of the Two Aircraft which are (taking the Plaintiff’s claim to its highest) not bona fide.  As mentioned above, there is no qualification to the references to sale or disposal in Clause 15.1(d) of the General Terms and Conditions of the AMAs. 

60.  Mr Scott makes a further point that a director acting bona fide and within the scope of his authority cannot be held liable for procuring or inducing a breach of a contract between the company and a third party.  In light of my views on the construction of Clause 15.1(d) of the General Terms and Conditions of the AMAs, it is not strictly necessary for me to deal with this point.  I agree with Mr Scott that there is such a legal principle (see paragraph 17 of East Asia Satellite Television (Holdings) Limited v New Cotai LLC [2011] 3 HKLRD 734), but given that there is a dispute as to whether there were sham disposals and whether the 3^rd Defendant was acting bona fide, I prefer not to rely on this further point put forward by Mr Scott. 

61.  If I am wrong in my view about the legal viability of the Plaintiff’s case that the 1^st and 2^nd Defendants breached the AMAs by wrongfully terminating the AMAs, and if there arises the question of whether there is a good arguable case that the disposals of the Two Aircraft were not bona fide disposals for value, I would briefly observe as follows:

61.1   I accept Mr Scott’s submission that the burden of proof in proving a sham falls on the Plaintiff, and that such burden is a heavy one.  See Chan Chun Fai v Lee See Wo, HCMP 1318/2017, 21 December 2012, paragraphs 79-80; Re H & others (minors) Sexual Abuse: Standard of Proof [1996] AC 563, 586. At the same time, I bear in mind that in an application for leave to serve out, all that the Plaintiff has to establish is a good arguable case. 

61.2   It is conspicuous that the 3^rd and 4^th Defendants, who are the managers of the 1^st and 2^nd Defendants, have given very little detail about the sale of the Two Aircraft by the 1^st and 2^nd Defendants to Kaneohe Estates.  There is no information as to the price at which the sale was made, for example, and no transaction documents have been exhibited despite the Plaintiff having highlighted this omission at paragraph 34 of White’s 2^nd Affidavit.[49]  Whilst the 3^rd and 4^th Defendants make the point that under Clause 15.1(d) of the General Terms and Conditions of the AMAs, a disposal would have been sufficient, and there need not even have been a sale,[50] the fact is that the 3^rd and 4^th Defendants’ case is that there were bona fide sales of the Two Aircraft to Kaneohe Estates (rather than, for example, a disposal at no consideration), yet they have only made a bare assertion in this regard.  I am of the view that there is a good arguable case that the sales of the Two Aircraft to Kaneohe Estates were not bona fide and for value.

61.3   Mr Scott has highlighted that the sale of the Two Aircraft to Kaneohe Estates was a sale duly recognised by the FAA, and the 4^th Defendant has explained at paragraphs 31 to 33 of his 1^st Affidavit that the FAA only recognises bona fide changes in records of ownership.[51] I bear this in mind, but given that the threshold for the Plaintiff at this stage is only to show a good arguable case, I do not consider that the mere fact that the sale to Kaneohe Estates was recognised by the FAA negates what I consider to be a good arguable possibility that the sale was not bona fide. 

61.4   I note the 3^rd and 4^th Defendants’ evidence that the two aircraft were sold for good commercial reasons[52] and were placed with Kaneohe Estate for proper purposes, including maintenance and upgrades as well as marketing.[53]  I also note the evidence that relatively soon after the Two Aircraft were sold to Kaneohe Estates, the Two Aircraft were sold to third parties that the Plaintiff accepts appear to be independent.  However, I do not consider that these factors are sufficient to detract from my view that (if I am wrong on the construction of Clause 15.1(d)) the Plaintiff has a good arguable case against the 3^rd and 4^th Defendants on the question of whether the sale of the Two Aircrafts to Kaneohe was bona fide and for value. 

62.  However, even if the Plaintiff has a good arguable case that the 1^st and 2^nd Defendants’ termination of the AMAs was in breach of the AMAs, I have difficulty in understanding how the 3^rd Defendant procured the 1^st and 2^nd Defendant’s breach of the AMAs by virtue of his alleged wrongful intervention pleaded at paragraph 45(c) of the Statement of Claim.^[54] 

62.1   In terms of timing, I agree with Mr Scott that it is difficult to see how the 3^rd Defendant’s alleged refusal to grant permission for charter flights from early May 2017^[55] “caused” the allegedly wrongful termination of the AMAs since the 1^st and 2^nd Defendants had already given notice to terminate the AMAs on or about 14 April 2017.  Similarly, the ordering of the Two Aircraft to be flown to the US on or about 29 April 2017 and 10 May 2017 respectively^[56] also occurred only after the 1^st and 2^nd Defendants had given notice of the termination of the AMAs. 

62.2   In his oral submissions, Mr Cao argued that during the three-month window between service of the notice of termination of the AMAs and the conclusion of the contracts, the 1^st and 2^nd Defendants were required to continue performing their obligations under the AMAs.  However, I do not consider that there is a good arguable case that the abovementioned acts pleaded at paragraphs 45(c) of the Statement of Claim “caused” a breach of the AMAs. 

62.2.1   First, I find it instructive that in the Statement of Claim, the only breach of the AMAs alleged of the 1^st and 2^nd Defendants (other than the outstanding scheduled fees and costs and expenses) is the wrongful termination of the AMAs.  See the Statement of Claim, paragraphs 43 and 44.^[57] 

62.2.2   Secondly, and importantly, the Plaintiff had, in a letter dated 25 April 2017 which it emailed to the Defendants under cover of an email dated 26 April 2017, stated that it suspended the Plaintiff’s performance of the AMAs.^[58] In that letter, the Plaintiff had referred to the 4^th Defendant’s “request that [the Plaintiff] continue to provide our aircraft management services to you uninterrupted for the remaining period of the AMA up to its termination date for the Aircraft.  Under normal circumstances this would not be an issue.  However, you are in default of numerous payments to us which has violated the payment terms as noted in the AMA.”  Then the Plaintiff complained about the 1^st and 2^nd Defendants’ failure to make timely payments, and stated that the Plaintiff exercised its rights under Clause 15.4(a) of the General Terms and Conditions of the AMAs to suspend its performance of the AMAs with immediate effect until all outstanding payments have been settled.  Thus, even if the 3^rd Defendant was the person who ordered that the Two Aircraft be flown to the U.S. on or about 29 April 2017 and 10 May 2017 respectively, and even if it is correct that the 3^rd Defendant refused to grant permission for charter flights organised by the Plaintiff in early May 2017, I do not consider that the Plaintiff has shown that there is a good arguable case that these acts “caused” a breach of the AMAs: the 3^rd Defendant performed those acts only after the Plaintiff had suspended its performance of the AMAs by its letter dated 25 April 2017. 

63.  In light of the above, in my view the Plaintiff has not shown that it has a good arguable case against the 3^rd and 4^th Defendants under Hong Kong law with respect to the tort of procurement of breach of contract. 

F2.   Unlawful means conspiracy under Hong Kong law

64.  I agree with Mr Scott that since the Plaintiff relies on procuring breach of contract as the unlawful act in the Plaintiff’s claim against the 3^rd and 4^th Defendants for unlawful means conspiracy (see paragraph 47(a) of the Statement of Claim^[59]), Section F1 above applies.  I do not consider that the Plaintiff has a good arguable case against the 3^rd and 4^th Defendants under Hong Kong law with respect to the tort of unlawful means conspiracy. 

F3.   Lawful means conspiracy under Hong Kong law

65.  As to the Plaintiff’s claim against the 3^rd and 4^th Defendants for lawful means conspiracy, as Mr Scott points out, this claim does not add much as the Plaintiff relies on the same acts as it does for its claim for procuring breach of contract.  See paragraph 48 of the Statement of Claim.^[60]  Again, Section F1 above applies. 

66.  A key difference between the tort of procuring breach of contract and the tort of lawful means conspiracy is the requirement of the 3^rd and 4^th Defendants’ sole or predominant intention of injuring the Plaintiff.  The Plaintiff’s case is that such intention can be inferred from the primary facts.  The Plaintiff has referred to the facts which it says show that the sale of the Two Aircraft to Kaneohe Estates were sham transactions, and has also alleged that the 3^rd and 4^th Defendants’ motive was “to engineer the sham disposals in order to absolve D1 and D2 from their contractual obligations under the AMAs”.^[61]  As Mr Scott has put it, it appears that the Plaintiff is relying on an inference of malicious intent, which in the circumstances can only arise from the allegation that there was a sham transaction which the Plaintiff says is in breach of the AMAs.^[62] 

67.  In light of my view that the sale of the Two Aircraft was permissible under Clause 15.1(d) of the General Terms and Conditions of the AMAs, I agree with Mr Scott that the Plaintiff does not have a good arguable case in establishing its case on intention to injure. 

F4.   Double actionability rule

68.  There is a dispute between the parties as to whether the double actionability rule applies.  The 3^rd and 4^th Defendants rely on the double actionability rule to argue that the Plaintiff must show a good arguable case that its claims against the 3^rd and 4^th Defendants are viable under Delaware law as well as Hong Kong law, and the 3^rd and 4^th Defendants’ case is that the Plaintiff cannot do so.^[63]  On the other hand, the Plaintiff seeks to rely on the exception to that rule as set out in Red Sea Insurance Co Ltd v Bouygues S.A. and Others [1995] 1 AC 190.^[64]

69.  I agree with Mr Scott that in light of the way that the Plaintiff has mounted its claim, namely by complaining that the 3^rd and 4^th Defendants (who, as discussed above, are the managers of the 1^st and 2^nd Defendants) have caused the 1^st and 2^nd Defendants to wrongfully terminate the AMAs, the Court should consider the position under Delaware law as to whether a manager can be liable for actions taken in his capacity as a manager.  In that regard, the 3^rd and 4^th Defendants have adduced an Expert Report dated 20 February 2018 prepared by Mr Michael Whittaker, a partner in a Delaware law firm, Messrs. Potter Anderson Corroon LLP, who opines that a manager would not be so liable.^[65] 

70.  The Plaintiff has not adduced expert evidence to challenge the expert evidence on Delaware law adduced by the 3^rd and 4^th Defendants,^[66] and the only argument that the Plaintiff makes with respect to Delaware law is that it need not be considered because of the Red Sea exception.  I have considered the various ties with Hong Kong that Mr Cao has drawn to my attention,^[67] but I do not consider that those ties are sufficiently strong to show that there is a good arguable case that the present case falls within the exception to the double actionability rule on the basis that Hong Kong has the most significant relationship with the occurrence of the torts and with the parties, or that Hong Kong is in substance the place where the causes of action arose. 

71.  Thus, whilst I do not consider that there is evidence to substantiate Mr Scott’s oral submission that the 3^rd and 4^th Defendants’ actions all occurred in Delaware (and in that regard I agree with Mr Cao’s submission that the 3^rd and 4^th Defendants have given evidence that they were not in Hong Kong on the various relevant dates, but not that they were in Delaware on those dates^[68]), in light of my above discussion I am of the view that the Plaintiff does not have a good arguable case that the double actionability rule does not apply. 

72.  I see no reason to doubt the view of the 3^rd and 4^th Defendant’s expert that under Delaware law, the 3^rd and 4^th Defendants would not be liable for acts that they carry out as manager of the 1^st and 2^nd Defendants, and it has not been suggested that they carried out any acts in any other capacity or that they were acting without authority. 

73.  Thus, in my view, the Plaintiff has not shown that there is a good arguable case that the double actionability rule does not apply, and the Plaintiff also has not shown that it has a good arguable case with respect to the merits of its case under Delaware law. 

F5.   Whether damage was sustained in Hong Kong

74.  The Plaintiff’s case is that it has sustained damage in Hong Kong because of the 3^rd and 4^th Defendants’ wrongful acts, and as can be seen from paragraph 51 above, the Plaintiff seeks to rely on this to bring its claims against the 3^rd and 4^th Defendants under Order 11 rule 1(1)(f).^[69]

75.  In considering whether damage is sustained in Hong Kong, it is sufficient if some significant damage has been sustained here.  See Dynasty Line Ltd v Sukamto Sia [2009] 4 HKLRD 454, paragraph 33. 

76.  In terms of showing that there is a good arguable case that damage was sustained in Hong Kong, the Plaintiff has asserted at paragraph 59(c) of White’s 1^st Affidavit that “The damage to AJPL was sustained in Hong Kong.”^[70] The Plaintiff then explained at paragraph 54 of White’s 1^st Affidavit^[71] that:

“As a result of the wrongful termination of the Wild Wing AMA and the Asia Wing AMA, AJPL has been deprived of the management fees in respect of N188AJ and N688AJ and the profits from arranging charter flights on both aircrafts from 14 April 2017 until the expiry of both aircraft management agreements (ie, 31 August 2021), namely for a period of around 4 years and 5 months (or around 53 months). The loss of net profits in respect of both aircraft management agreements for this period of time is estimated by AJPL’s management to be USD1,234,809.”^[72]

77.  When I asked Mr Cao at the hearing as to what evidence there is that the Plaintiff suffered damage in Hong Kong (as opposed to anywhere else in the world), Mr Cao submitted that it was a “matter of common sense”.  With respect, I do not agree that such a submission is sufficient.  Unless there are matters with respect to which the Court can take judicial notice, it is for the Plaintiff to adduce evidence in support of its contentions.

78.  As non-receipt of a payment to be made in the jurisdiction is felt in the jurisdiction,^[73] I explored with Mr Cao at the hearing whether there are any contractual provisions to show that there are payments which the Plaintiff should have received in Hong Kong had it not been for what the Plaintiff says are the torts committed by the 3^rd and 4^th Defendants.  To that end, Mr Cao drew my attention to a Hong Kong bank account of HK Jet referred to at Clause 10.4 of the General Terms and Conditions of the AMAs.^[74]  However, as Mr Scott pointed out, that bank account is for the receipt of costs and expenses that the 3^rd and 4^th Defendants need to reimburse to the Plaintiff under Clause 10.3 of the General Terms and Conditions of the AMAs, and Clause 10.4 is not about income that the Plaintiff ought to have received.  I do not consider that this assists the Plaintiff in showing that it suffered damage in Hong Kong as a result of the torts allegedly committed by the 3^rd and 4^th Defendants. 

79.  Mr Cao has sought to bolster his case at paragraph 18 of his 14.11.18 supplemental submissions by saying that “The income from the charter flights would be received by P in Hong Kong; hence the profits would be generated in Hong Kong.”  At paragraph 20 of those submissions, Mr Cao lists a number of other matters, such as the fact that the Plaintiff is a Hong Kong company, with its base of operations in Hong Kong, and that the two aircraft were based in Hong Kong before they were flown to the U.S.  Mr Cao also stated at paragraph 20(d) of his 14.11.18 supplemental submissions that “P’s standard form aircraft charter quotation stipulates that payment for the charter flight must be made by P’s client (the charterer) to P’s bank account in Hong Kong.” However, the problem is that this is not in the evidence.  In its evidence, the Plaintiff has not referred to, let alone exhibited, its standard form aircraft charter quotation, or any similar document.  Whilst the parties filed submissions on 14 and 21 November 2018 because I had requested that the parties make further submissions on, inter alia, the Plaintiff’s contention that it has suffered damage in the jurisdiction,^[75] that was of course not an invitation for parties to refer to evidence that is not before the Court. 

80.  At paragraph 4 of Mr Cao’s further supplemental submissions dated 21 November 2018, he stated that “it was not apparent to P that the place where the damage was suffered was a live issue, particularly given that Hong Kong Airlines Corporate Jet Management Limited (currently known as Deerjet (Hong Kong) Business Jet Management Limited) had inherited P’s invoicing methodology from Asia Jet Partners Holdings Limited.  The fact that payments for charter flights would be paid to P’s Hong Kong bank account was known to D3 and D4.”  Further, perhaps realising the Plaintiff’s evidential difficulties, at paragraph 5 Mr Cao proposed that “If this Court deems necessary and grants leave, P will file an affidavit producing its standard aircraft charter quotation and a few past invoices and related remittance advices.”  However, I do not accept that the Plaintiff has in any way been taken by surprise, and I do not consider that it would be appropriate for me at this stage to take up Mr Cao’s “offer” of a further affidavit. 

81.  The burden is plainly on the Plaintiff to adduce evidence to make good its case that its claims fall within Order 11 rule 1(1)(f) when applying for leave to serve out.  Given that the Plaintiff says that it has sustained damage in Hong Kong, the Plaintiff needs to show that there is a good arguable case that such assertion is correct.  It is insufficient for the Plaintiff to allege that the 3^rd and 4^th Defendants should know certain matters already, especially when applications for leave to serve out are usually dealt with ex parte and the Court has to assess the application based on the materials before it without input from the defendant(s). 

82.  Indeed, in the present case, one of the grounds put forward by the 3^rd and 4^th Defendants for their Summons was “The pleaded causes of action against the 3^rd and 4^th Defendants did not occur within Hong Kong and no damage was sustained in Hong Kong.” (emphasis added)  Thus, I find it surprising for there to be a suggestion that the Plaintiff did not realise that it was a live issue as to the question of whether the Plaintiff has suffered damage in Hong Kong. 

83.  Further, at the hearing I had expressly asked Mr Cao about what evidence there is to show that there is damage within the jurisdiction.  Mr Scott had also submitted at the hearing that although the Plaintiff had submitted that damage was suffered in Hong Kong, there was no evidence and no contractual clause that pins the damage to Hong Kong.  I do not see how it can be said that it was not apparent to the Plaintiff that this was a live issue. 

84.  I would add that although Mr Cao has in his further supplemental submissions dated 21 November 2018 mentioned the possibility of the Plaintiff filing a further affidavit, he has not taken out any such application.  Thus, I do not need to determine any such application.  I must determine the applications before me based on the evidence that has been properly adduced. 

85.  I agree with Mr Scott that the fact that the Plaintiff is a Hong Kong company is insufficient for showing that there is a good arguable case that it has suffered damage in Hong Kong.  The fact that a corporation’s loss is felt where its books are made up does not mean that is the place where the damage occurred, otherwise a corporation would in most economic loss cases be able to sue in the courts of its own domicile.  See Dolphin Maritime & Aviation Services Ltd v Sveriges Angfartygs Assurans Forening [2009] 2 Lloyd’s Rep. 123, paragraphs 30, 31, 60;^[76] Hong Kong Civil Procedure 2019, paragraph 11/1/28D. 

86.  Based on the evidence presently available to me, I do not consider that there is sufficient evidence which shows a good arguable case that the Plaintiff has suffered damage in Hong Kong.  For this reason also, I am of the view that the Plaintiff has not shown that it has a good arguable case under Order 11 rule 1(1)(f). 

F6.   Serious issue to be tried

87.  In light of my concerns about the merits of the Plaintiff’s case as discussed in Sections F1 to F5 above, I do not consider that there is a serious issue to be tried. 

F7.   Stay on forum non conveniens grounds

88.  Given my above views, it is not strictly necessary for me to consider the 3^rd and 4^th Defendants’ application for a stay of the present proceedings on the ground of forum non conveniens. Nevertheless, in case I am wrong in my earlier discussions, I briefly consider the question of whether I would grant the stay sought by the 3^rd and 4^th Defendants (assuming that the Court has jurisdiction over the 3^rd and 4^th Defendants in these proceedings). 

89.  I agree with Mr Cao that in the application for a stay, the burden would be on the 3^rd and 4^th Defendants to establish a case for the stay.  See Hwoo Huang Linda v Fu Being San [2013] 1 HKLRD 259, paragraph 49. 

90.  Whilst Mr Cao complains that the 3^rd and 4^th Defendants’ application for a stay is defective because the Summons does not identify a particular court in the U.S. in favour of which a stay is sought, I am of the view that the 3^rd and 4^th Defendants have sufficiently identified in their affidavit evidence that the stay is sought in favour of the Delaware courts. 

90.1   Although Mr Cao referred me to Hwoo Huang Linda v Fu Being San, supra, paragraphs 52 and 53, in support of his submission, I agree with Mr Scott that that case was different because not only did the summons only refer to the “Court of the United States of America” (see paragraph 53), the affidavit evidence did not take the matter further either (see paragraph 54). 

90.2   By contrast, it is clear to me from the affidavit evidence in the present case that the 3^rd and 4^th Defendants are seeking a stay in favour of the Delaware courts.  Whilst it would have been better for the Summons to refer to the Delaware courts, in my view it is permissible for me to have regard to the affidavit evidence, especially bearing in mind the underlying objectives set out in Order 1A rule 1. 

91.  Nevertheless, I do not agree with the 3^rd and 4^th Defendants’ submissions in support of their application for a stay.  In particular:

91.1   I do not agree with Mr Scott that the fact that proceedings in Delaware are needed for the restoration of the 1^st and 2^nd Defendants (which is, in my view, a discrete application) means that Delaware is the distinctly more appropriate forum for the present action.

91.2   I do not consider it to be particularly significant that the 3^rd and 4^th Defendants are not resident in Hong Kong, but travel frequently to the U.S.^[77]  There is no evidence as to where in the U.S. they frequently travel to (it may or may not be to Delaware), and in any event, given the ease of travel in this modern day and age as well as the possibility (in an appropriate case) of the giving of evidence by video link, I do not consider the question of location to be a particularly important one. 

91.3   Similarly, I agree with Mr Cao that the 3^rd and 4^th Defendants’ submission that some of their intended witnesses are based in the U.S. is not a strong factor for the purposes of determining the appropriate court.^[78] 

91.4   Importantly, it is not sufficient for the 3^rd and 4^th Defendants to argue that Hong Kong is not the appropriate forum, and it is for them to show which other available forum is clearly or distinctly more appropriate than Hong Kong.  See Hwoo Huang Linda v Fu Being San, supra, paragraph 49.  For example, whilst I agree with Mr Scott that the evidence does not show that the torts complained of by the Plaintiff against the 3^rd and 4^th Defendants were substantially committed within Hong Kong, in my view the 3^rd and 4^th Defendants have not shown that the Delaware courts are the appropriate forum.  In particular, I do not agree with Mr Scott’s submission that if the Plaintiff wishes to show that its claims against the 3^rd and 4^th Defendants’ claims are sustainable as a matter of Delaware law, then the relevant legal arguments under Delaware law should be examined by a Delaware court.  There is no suggestion or evidence that there is any difficult question of foreign law that could not be dealt with by a Hong Kong court with the assistance of foreign law experts.  See Hong Kong Civil Procedure 2019, paragraph 11/1/10PA. 

92.  For these reasons, I would not grant the stay sought by the 3^rd and 4^th Defendants if the Court has jurisdiction over them in these proceedings. 

G.   CONCLUSION

93.  In the premises:

93.1   I make an order in terms of paragraphs 2 and 3 of the Summons, and make the following declarations:

93.1.1   A declaration that the Writ has not been duly served upon the 3^rd and 4^th Defendants;^[79] and

93.1.2   A declaration that in the circumstances of the case, the Court has no jurisdiction over the 3^rd and 4^th Defendants in respect of the subject matter of the claim, or the relief or remedy sought in this action. 

93.2   I dismiss the Plaintiff’s application for leave to serve the Writ outside the jurisdiction on the 3^rd and 4^th Defendants. 

94.  The 3^rd and 4^th Defendants have been overall successful, but have not succeeded on all issues.  In my view, it would be fair and just to make a costs order nisi that 3/4 of the 3^rd and 4^th Defendants’ costs of this action (including the costs of the Summons and of the Plaintiff’s application for leave to serve out) be paid by the Plaintiff, to be taxed if not agreed, with certificate for two counsel. 

95.  Although Mr Cao submitted that Mr Scott could have dealt with this case on his own, in light of the complexity of the issues I give certificate for two counsel. 

96.  Unless any of the parties applies to vary the same by Summons, the costs order nisi shall be made absolute 14 days from today.