廣東里水鮮果批發市場有限公司 v. YIP LAI FONG

HCA2559/2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO.2559 OF 2003

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J U D G M E N T

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1. There are two summonses before the court. The first to be dealt with, though not the first in time, is brought under Order 18, rule 19 and Order 12, rule 8 of the Rules of the High Court, as well as the inherent jurisdiction of the court. The second is brought under Order 14 and by order of the Master has been adjourned for directions until after the hearing of the Order 18 summons.

2. In the Order 18 summons the defendant applies for :

(a)	an order that the plaintiff's name be struck out on the ground that these proceedings were instituted without proper authority, and consequent thereon these proceedings be dismissed;
(b)	alternatively an order that the question whether these proceedings were instituted without proper authority be tried as a preliminary issue;
(c)	still alternatively, an order that these proceedings be stayed pending the outcome of HCA No.1282 of 2003 where the defendant herein is the 1st plaintiff; or
(d)	a declaration under Order 12, rule 8 that the court has no jurisdiction over the defendant in respect of the subject matter of the claim;
(e)	extension of time (not pursued);
(f)	extension of time for the filing of affirmation evidence in the Order 14 proceedings; and
(g)	that costs be provided for.

3. It is important to note that, on the face of the summons, the defendant seeks the first three alternative reliefs as her first choice and only thereafter raises the question of jurisdiction.

4. The background is this. The defendant and her ex-husband, a Mr Wu, are shareholders in one Full Billion Shipping Ltd ("Full Billion"). She holds 4,000 of the 5,000 issued shares thereof on trust for herself and 1,000 of those shares on trust for Mr Wu. So they beneficially own 50% of the issued share capital. The other 50% is held by one Sin Tung Hing (Mr Sin). The defendant and Mr Sin are the directors of Full Billion.

5. Before mid-June 2002, Full Billion held 80% of the shares in Hung Kong (Fresh Fruit) Trading Ltd ("Hung Kong") and Sun Rising Development (HK) Ltd ("Sun Rising") held 20% of the shares therein. Full Billion and Sun Rising were the directors of Hung Kong.

6. Hung Kong in turn owned 90% of the shares in the plaintiff which is a Mainland company operating a fruit market, the Lishui Market in Nanhai. Two other Mainland interests held 5% each.

7. In mid-June 2002, Full Billion sold its 80% shareholding in Hung Kong to Many Profit Investment Ltd ("Many Profit"). Sun Rising likewise sold its 20% shareholding in Hung Kong to Many Profit. So Many Profit became the sole owner of Hung Kong and the 90% beneficial owner of the plaintiff.

8. On 19 June 2002, the defendant and Mr Wu presented to the court a petition under section 168A of the Companies Ordinance, Cap.32 against full Billion, Many Profit and a Miss Tang. Injunctions were obtained but later the petition was struck out. The defendant lodged two appeals in this matter which are still pending before the Court of Appeal.

9. On 8 April 2003 the defendant and Mr Wu commenced a derivative action against Mr Sin, one Yau Wai Ping, Many Profit and Full Billion and this action is still in its early stages. The matter at issue in it is the validity of the agreement for the sale of Full Billion's shares in Hung Kong to Many Profit.

10. In this action, the plaintiff is claiming against the defendant for RMB7,589,300 which it says the defendant took from it in September and October 2002, without its consent. The defendant does not dispute that she took the money, in three lots, and signed IOUs. She says in an affirmation filed in HCMP No.2423 of 2002 that she was entitled to draw the money as loans to herself and her husband which would eventually be set off against profit distribution.

11. This Writ was issued on 9 July 2003 and purportedly served on the defendant at a Hong Kong address by registered post dated 11 July 2003. At that time she was out of the jurisdiction, in California, USA. Her solicitors wrote to the plaintiff's solicitors and pointed out that the Writ was not served. But the plaintiff's solicitors refused to enter into any dialogue with the defendant's solicitors unless they confirmed that they had instructions to act for her in these proceedings. The defendant then instructed her solicitors to accept service.

12. The defendant's case on jurisdiction is that the only way that the plaintiff has sought to bring her within the jurisdiction is by relying on Order 11, rule 1(1)(a) of the Rules of the High Court. But she does not come within that provision, for she is neither domiciled nor ordinarily resident in Hong Kong. She has ordinarily resided in California with her children since 1995. In the past two years, she has come to Hong Kong on a number of occasions in connection with legal proceedings over the Lishui Market and because her ex-husband was wrongly incarcerated on the Mainland between August 2002 and July 2003. She says that the address in Shun Lee Estate at which the Writ was served is in fact her sister's home and she only uses it as a correspondence address in Hong Kong.

13. In support the defendant has produced immigration records which show that she has passed through Hong Kong on 12 occasions between 19 August 2002 and 6 June 2003. Mostly she did not stop, or only stayed for a day or two but between October 2002 and January 2003 and between March and June 2003 she remained in Hong Kong for about three months. She also produces documentary evidence that the tenant of the Shun Lee Estate address is in fact her sister's husband, as well as documentary evidence in respect of her property in California.

14. The plaintiff's solicitor deposes that he believes that the defendant is domiciled and ordinarily resident in Hong Kong because she has deposed that she came to Hong Kong in 1979, she has a Hong Kong Identity Card and she has on various occasions in various company and other documents given her address as the Shun Lee Estate address.

15. Mr Chain for the defendant argues that there is nothing to contradict the defendant's assertions and they should be accepted : Tay Bok Choon v. Tahansan Bhd. On the criteria applied by Kwan J in Re Kok Hiu Pan, ex parte Wing Lung Bank Ltd [2002] 3 HKLRD 20, she is not ordinarily resident in Hong Kong. Though she has not actually said, in terms, that she intends to reside in California indefinitely there is evidence from which this can be inferred.

16. For the purposes of Order 12, rule 8 the onus of proof is on the defendant. I accept that, on the criteria referred to, she cannot be regarded as ordinarily resident in Hong Kong. She left here some years ago and has no dwelling of her own here. Possession of an identity card as a permanent resident is neutral as to ordinary residence. The time she has spent here recently is not enough to establish ordinary residence.

17. As to domicile, the position is less clear. Domicile of choice may be acquired by residence and the intention of permanent or indefinite residence. See Dicey & Morris on the Conflict of Laws, 13th Ed., p.117. Intention to make an abandonment or change of domicile must be proved by satisfactory evidence : Marchioness of Huntly v. Gaskell [1906] AC 56 (H.L. (Sc)). See also Re Cartier, decd [1952] SASR 280. There is no evidence of the defendant's domicile of origin; she only says that she came to Hong Kong in 1979 but, having come here, she resided for many years and obtained permanent resident status which at least goes some way to evincing an intention to remain permanently or indefinitely. She seeks to establish abandonment of domicile in Hong Kong, and the acquisition of domicile of choice in the USA. But she has not given any evidence of intention to remain there permanently or indefinitely. Nor indeed, if she had a different domicile of origin has she given any evidence of lack of intention to acquire Hong Kong domicile while she stayed here. There is no extrinsic evidence such as application for citizenship or permanent resident status from which the intention to reside permanently or indefinitely in the USA might be inferred. It is argued that such intention may be inferred from her residence, but I do not think that enough especially given the large number of Hong Kong residents who sought to establish residence in another country prior to 1997 as a safety measure rather than with any intention of remaining. I am not therefore satisfied that the defendant can be regarded as having abandoned Hong Kong domicile.

18. If this is wrong, the question of waiver of the right to challenge the court's jurisdiction remains. It is argued for the plaintiff that she has voluntarily submitted to the jurisdiction. Of course her instruction of solicitors to accept service, or her filing of a notice of intention to defend would not amount to submission to the jurisdiction. But the argument is that by applying for the first three alternative reliefs, she has submitted. Reliance is placed in particular on a passage of Godfrey JA in Lee Fai (t/a Fai Kee Timber) v. Chan Kui [1997] 3 HKC 228 :

"A defendant who invokes or utilises the jurisdiction of the court with a view to his own advantage waive by doing so his right to object to any earlier procedural irregularity (unless fundamental). A defendant who wishes to dispute the jurisdiction of the court must be careful not to take any step in the action which may be regarded as a submission to the jurisdiction of the court."

19. The plaintiff also relies on dicta of Robert Goff LJ in Astro Exito Navegacion S.A. v. W. T. Hsu [1984] 1 LL.L.R. 266 that a person makes a voluntary submission to the jurisdiction if he takes a step in the proceedings which in all the circumstances amounts to a recognition of the court's jurisdiction.

20. Mr Chain says that the various reliefs sought overlap. While an application to strike out might involve submission to the jurisdiction it should not be taken as doing so in this case the question is whether the proceedings were instituted without proper authority.

21. Counsel agree that the proper test is "whether a disinterested bystander with knowledge of the case would have regarded the acts of the defendant, or his solicitors, as inconsistent with the making and maintaining of this challenge" : Sage v. Double A Hydraulics Ltd [1992] TLR 165. I raised the question of whether it was not somewhat artificial to say that the defendant must be taken to have submitted to the jurisdiction when by her summons she sought to challenge it. But as Mr Leong SC for the plaintiff pointed out, it is clear from the affirmation of the defendant's solicitor and her own affirmation which confirms it that the intention was to apply first for relief in respect of striking out or stay and only in the alternative to raise the issue of jurisdiction.

22. I do not see how the defendant can get past this. There is no real dispute that her actions in instructing solicitors to accept service and filing a notice of intention to defend would not amount to submission to the jurisdiction although it has been said that she could have waited for service out of the jurisdiction or otherwise done nothing except, as she did, make her position clear through solicitors so that even if a default judgment were obtained she could confidently expect to have it set aside. Once she was in the proceedings, for the purpose of taking the jurisdictional challenge, she could have done that with no fear of being taken to submit to the jurisdiction. If that did not work she could then have sought the other reliefs. But to seek by way of primary relief, i.e. as a first choice to strike out the plaintiff's name, or to have the issue of authority tried as a preliminary issue, or to have the matter stayed pending the outcome of other proceedings must in my view amount to submission to the jurisdiction.

23. I turn to the primary reliefs sought. The first is striking out. Striking out is for plain and obvious cases. See the dictum of Silke VP in Ha Francesca v. Tsai Kut Kan & Ors (No.1) [1982] HKC 382 at 392. If the question of authority is already a matter of litigation in HCA No.1282 of 2003 I do not see how it can be sufficiently plain and obvious for me to rule on it here. Nor do I see that there should be a trial of this preliminary issue.

24. I was attracted by the idea of stay pending the outcome of HCA No.1282 of 2003. But the parties agree that, even if the defendant wins that case, she will still only have a minority interest in the plaintiff. She and her ex-husband will own 50% of the shares in Full Billion but that only owns 80% of Hung Kong which holds 90% of the plaintiff. It follows that she will still be unable to procure the plaintiff to discontinue this action and she will still be unable to say that this action was brought without proper authority. So in practical terms there is no point in making an order for stay.

25. It follows that the defendant's summons dated 9 September 2003 is dismissed with costs to the plaintiff in any event.

26. So far as the Order 14 summons I make the directions sought by the plaintiff namely :

(a)	The defendant have leave to file a further acknowledgment of service pursuant to Order 12, rule 8(6) within three days of the order to be made herein;
(b)	The defendant have leave to file an affirmation within seven days after the filing of the further acknowledgment of service;
(c)	The plaintiff have leave to file an affirmation in reply within seven days thereafter;
(d)	The summons be adjourned for argument before me on a date to be fixed in consultation with counsel's diaries with 30 minutes reserved, and
(e)	Liberty to apply.