XCHRX ROBERT OSBORNE LEE v. WICKY SUYANTO

HCA12913/97

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 12913 OF 1997

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J U D G M E N T

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The appeal

1. The Plaintiff obtained leave from the Master to serve the writ out of jurisdiction on the Defendant. The Defendant (who was originally named as the 1st Defendant in the Action) applied to set aside the writ but failed in his application. He now appeals.

The original claim

2. The writ originally included two Defendants, the Plaintiff had since withdrawn his claim against the 2nd Defendant.

3. The claim against the Defendant is for "damages for breach of contract as evidenced in writing by a letter from Russian Overseas Holdings Limited ("ROH") to the Defendant dated 25th January 1997".

4. The basis for obtaining leave is under O.11, r.1(d)(i) and (iii) of the Rules of the High Court. The Plaintiff must show that there is a good arguable case of the existence of a contract between the parties. The supporting affidavits refer to two letters. The first is dated 25th January 1997. The letter shows that it was written by the 2nd Defendant for and on behalf of ROH. The first paragraph of the letter stated that :

"We refer to your recent discussions with our Mr Nightingale and set out below the basis upon which we are prepared to sell to you the 1,800,000 NTI Shares presently owned by us. These shares are currently in the hands of our broker, Brink, Hudson Lefevre in Vancouver, British Columbia."

This letter, in my view, does not show the existence of a contract between the Plaintiff and the Defendant. The fact that payment was to be made to the account of the Plaintiff does not advance the case that there was a contract between the Plaintiff and the Defendant.

5. In the second letter, an indemnity was given by the 2nd Defendant to the Defendant to indemnify the Defendant and to hold the Defendant harmless against all liabilities or claims made by the Plaintiff in respect of the shares purchased by the Defendant in NTI. In my view, the Plaintiff's case is not in any way improved by the indemnity given by the 2nd Defendant.

6. Neither the supporting affidavit nor the two letters show a good arguable case of the existence of a contract when leave was applied for before the Master.

The amendment

7. However, the writ had since been amended. The Endorsement of Claim was amended to become a Statement of Claim. No issue is being taken on whether this can be done or not. In the Statement of Claim, the Plaintiff claims that he was the beneficial owner of the shares. The shares were nominally registered in the name of ROH. The 2nd Defendant owned and controlled this company. The contract was executed by the 2nd Defendant on behalf of ROH with the knowledge and consent of the Plaintiff. Further affidavits are filed in support of the pleading.

The test

8. In considering whether to set aside the writ, the Court has to consider all the circumstances of the case. The amended writ with the Statement of Claim were served on the Defendant. At this stage the Court is concerned with whether there is a good arguable case. In Attock Cement Co. Ltd. v. Romanian Bank for Foreign Trade [1989] 1 All ER 1189, the Court of Appeal suggested that the Court should reach a provisional or tentative conclusion on all the admissible evidence before him that the plaintiff was probably right on the disputed question of fact before allowing service to stand.

The assessment

9. The Defendant submits that the first letter did not show ROH was a mere agent and there was no explanation why an agent had to provide an indemnity.

10. Whether the Plaintiff could prove that he is actually the beneficial owner of the shares, or whether ROH was merely selling as a nominee, have to be established by evidence at the trial. These contentions cannot be rejected simply by looking at the terms of the two letters. With the assertion of beneficial ownership of the shares by the Plaintiff, the reference in the first letter of paying the money to the account of the Plaintiff has now assumed a clearer indication that the contract was made between the Plaintiff and the Defendant. The second letter came six months after the first letter, if there was indeed a contract between the Plaintiff and the Defendant in the first place, the second letter would not change the position.

11. With reference to the evidence before me, the provisional view must be that the Plaintiff is right that the contract was between him and the Defendant.

12. Each case has to be decided on its own facts. The case of Maritrop Trading Corp. v. Guangzhou Ocean Shipping Co. reported briefly in the Current Law Year Book 1998 at page 193 has to be examined in full. The decision therein may well be based on its own facts.

Appeal dismissed

13. I am satisfied that the Plaintiff has shown a good arguable case for service of the writ out of jurisdiction and the appeal is accordingly dismissed.