杭州天道實業有限公司 v. CHAU OI FUNG

HCA 488/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 488 OF 2014

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JUDGMENT

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1.  This is an application by the defendant by summons dated 21 July 2014 for an order that:

(1) the plaintiff’s writ of summons and the statement of claim be set aside,

(2) a declaration that in the circumstances of the case the court has no jurisdiction over the defendantin respect of the subject matter of the claim or remedies sought in the action, and

(3) alternatively, a declaration that in the circumstances of the case the court should not exercise any jurisdiction it may have, and  

(4) the proceedings be stayed.

There was other relief sought in the summons which are no longer relevant.

2.  The application is made under O.12; r.8(1) and (2) of the Rules of the High Court. 

3.  The relevant background is that the plaintiff entered into a sale and purchase agreement dated 14 January 2013 (“the contract”) with Sengwei Plastic (Shenzhen) Co Ltd (“Sengwei”). 

4.  The plaintiff is a company established in the Mainland carrying on the business of, inter alia, the production and sale of chemical materials and products.  Sengwei is a wholly foreign-owned enterprise established in the Mainland on 18 December 2008.  

5.  By the contract, Sengwei agreed to purchase from the plaintiff17,600 kg of methyl tin stabilizer (“the goods”) for the total price of RMB964,480.  Pursuant to the contract, the goods were delivered to Sengwei by the plaintiff on 25 January 2013. 

6.  Despite having received the goods and in breach of the contract, Sengwei failed to pay the plaintiff the said sum of RMB964,480.  This led to the plaintiff bringing proceedings against Sengwei in the Mainland. 

7.  By a judgment dated 9 May 2013 (“the judgment”) of the People’s Court of Longgang District, Shenzhen City, Guangdong Province of the PRC, the plaintiff obtained judgment against Sengwei for the said sum of RMB964,480 with interest. 

8.  Despite obtaining the judgment in the PRC Court, the plaintiff has been unable to obtain payment of the judgment sum from Sengwei.

9.  In this action, the plaintiff sues the defendant for damages in the said sum of RMB964,480 with interest.  It is clear that the plaintiff’s cause of action against the defendant is not contractual.  The cause of action is for the tort of procuring a breach of contract on the part of the defendant. 

10.  The plaintiff’s case is that although Sengwei is a wholly foreign‑owned enterprise established in the PRC, its central management and control is vested in the defendant in Hong Kong.  There is no dispute that the defendant is the sole shareholder and director of Sengwei.

11.  It is also the plaintiff’s case that the tort of procuring a breach of the contract was committed by the defendant in Hong Kong.  It is the defendant’s case, however, that she did not participate in the business of Sengwei. 

12.  The plaintiff’s case is denied by the defendant.  Matters have been put in issue in the pleadings and the pleaded issues will have to be resolved at trial. 

13.  As I have said, the application is taken out under O.12; r.8(1) and (2).  At Hong Kong Civil Procedure 2015, marginal note 12/8/2, it is stated:

“If a defendant chooses to make an application under r 8(1) or (2), he should not meanwhile serve a defence, or take any step to defend the case on the merits, or apply for other primary relief; this may be construed as a submission to the jurisdiction or a waiver of irregularity (see Guangtong Li Fruit Wholesale Market Co. Ltd v Yip Lai Fong [2003] 1370 H.K.C.U. 1); but service of a defence will not be so construed where it should not be regarded realistically and fairly as a submission to jurisdiction (see Miruvor Ltd v Panama-Globe Steamer Lines SA & Others [2007] H.K.E.C. 262; it should be made clear in the covering letter serving the defence and the defence itself that the filing and serving of the defence is without prejudice and is merely done as a precaution with no intention to submit to jurisdiction: ABN Amro Bank v Charles Fabrikant Fortgang [2008] H.K.C.U 65); and an application to stay pending the outcome of proceedings in a foreign jurisdiction does not amount to a submission to jurisdiction (see Williams & Glyn’s Bank plc v Astro Dinamico Comp. Naviera SA [1984] 1 W.L.R. 438; [1984] 1 All E.R. 760, HL).”

14.  There is no dispute that the defendant resides in Hong Kong at the address as set out in the defendant’s affirmation.  That is the address where she was duly served with the writ of summons in this action by registered post on 24 March 2014.   

15.  An acknowledgement of service was filed on behalf of the defendant by her solicitors on 11 April 2014.  There can be no dispute that the writ of summons was properly served on the defendant in Hong Kong.

16.  It is not clear what irregularity is relied on by the plaintiff to seek an order to set aside the writ.  Indeed, none has been mentioned by counsel for the defendant. 

17.  The summons to set aside the writ was taken out on 21 July 2014.  On the same day, 21 July 2014, the defendant issued a summons applying for security for costs from the plaintiff. 

18.  The defence was filed one day later, on 22 July 2014.  However, in the defence there is no mention that the defence was filed without prejudice to the application taken out on 21 July 2014.  There was also no covering letter with the defence that was served to indicate that the defence was filed without prejudice to the application taken out on 21 July 2014. 

19.  In my view, by serving an unqualified defence on 22 July 2014, after a jurisdiction challenge was made the day earlier, the defendant has voluntarily submitted to the jurisdiction of the Hong Kong Court. 

20.  Jurisdiction based on valid service within Hong Kong is traditionally known as jurisdiction “as of right” (paragraph 3.006 Johnston’s “The Conflict of Laws in Hong Kong” 2^nd Edn).

21.  I would also observe that, as I have said, on 21 July 2014 the defendant also sought to invoke the court’s jurisdiction by filing a summons to seek an order for security for costs against the plaintiff. 

22.  A party who has submitted to the jurisdiction of the Hong Kong Court should only, in exceptional circumstances, be permitted to contend that the Hong Kong Court should grant a stay on the ground of forum non conveniens by reason of a material change of circumstances beyond his control (paragraph 3.009 Johnston’s “The Conflict of Laws in Hong Kong” 2^nd Edn). 

23.  There is no evidence at all to show that there has been any change of circumstances beyond the defendant’s control that would justify her challenging the exercise of discretion by the court after submitting to the jurisdiction of the Hong Kong Court.

24.  I would also observe that where jurisdiction as of right has been established over the defendant, the presumption is that Hong Kong is the appropriate forum and the onus lies upon the defendant to show that some other available forum is clearly more appropriate (paragraph 3.081 Johnston’s “The Conflict of Laws in Hong Kong” 2^nd Edn). 

25.  The plaintiff’s case is that the tort of procuring breach of the contract was committed in Hong Kong by the defendant. I fail to see why any particular court in the PRC would be an appropriate forum to deal with this cause of action which was committed in Hong Kong.  No evidence has been adduced to show that any particular PRC court would assume jurisdiction over this cause of action.  No evidence has been adduced to show that any particular court in the PRC is an appropriate forum in respect of the plaintiff’s cause of action against the defendant. 

26.  The defendant’s summons dated 21 July 2014 made pursuant to O.12; r.8 of the Rules of the High Court is dismissed. 

(Discussions as to costs)

27.  The summons is dismissed with costs to the plaintiff, such costs to be taxed if not agreed.