XIAMEN FOREIGN SUPPLY GROUP CORPORATION v. HONG TUNG SHENG TRADING AS SOUTH OCEAN ENTERPRISE CO

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REASONS FOR JUDGMENT

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1. Default Judgment was entered by the Plaintiff against the Defendant on the 26th October 1995. Registrar Betts refused to set aside the Default Judgment and an appeal is brought to this court. At the conclusion of the hearing of the appeal, I dismissed the Defendant's appeal and indicated that I would hand down my Reasons later. I now hand down my Reasons for dismissing the Appeal.

2. Sometime probably in 1991 or 1992, Mr. Hong Tung Sheng ("Hong") set up the Defendant company South Ocean Enterprise Company with its office at 10th Floor Tack Building, 48 Gilman Street, Central, Hong Kong and for the sake of convenience I will hereinafter refer to this Defendant company as the "Central Company". The Business Registration of the Central Company showed that it was registered as having commenced its business in July 1992 and that in early 1993, Mr. Ngan Ming joined the Central Company as a partner. Mr. Ngan Ming, otherwise generally known as Ngan Siu Ping ("Ngan"), was a relative of Hong and he was heavily involved with the affairs of the Central Company, not only for the period after he joined as a partner but also for considerable time before such joining.

3. The case of the Plaintiff is that as result of goods sold by the Plaintiff to the Central Company, a very large debt was owing to the Plaintiff and eventually, the Plaintiff sued Central Company and obtained a Judgment from Xiamen Court in China and this Xiamen Judgment was then the subject of claim in this Action by the Plaintiff against Central Company. At the hearing before me by way of appeal, Mr. Lam on behalf of the Defendant Central Company agreed that the Default Judgment entered was regular and that the Default Judgment could only be set aside if he could convince the Court that there is a reasonable prospect of success on the following two issues:-

4. At the suggestion of the Court, Mr. Lam first addressed the Court on the first question of whether Central Company was the defendant in the Xiamen Judgment. The submission of Mr. Lam is that a viable case can be raised that Central Company was not the defendant in the Xiamen Judgment and he relied on a number of factors for his contention. Central to that contention is his reliance on the allegation that Ngan was the sole proprietor of another company, bearing the same name South Ocean Enterprise Company which had been registered under the Business Registration as trading since 1989 from a North Point office. For the sake of convenience I will call this wholly owned Ngan company operating from North Point as the "North Point Company". Ultimately the question boiled down to whether objectively, it could be said that the Xiamen Judgment was against the Central Company or against the North Point Company.

5. What weighed most heavily against Mr. Lam are the contemporaneous documents passing from the Central Company to the Plaintiff (see pages 110 to 135 of Bundle) which are in the form of orders or instructions written to the Plaintiff on the letter-heads of Central Company and in the handwriting of Hong. All these pages (see for example pages 115, 121, 123, 128) are so explicit that I do not see how any Court with any commercial sense will accept the wholly incredible attempt in the 4th Affirmation of Hong to explain away these documents. In his Affirmation, Hong said that he was carrying out all these acts and sending out all these documents merely to assist Ngan to fax the information. Mr. Lam contended that all these documents do not represent the business done by the Central Company with the Plaintiff in buying goods from the Plaintiff. I do not accept the explanation given by Hong which I find to be incredible. I find that the Defendant Central Company has wholly failed to explain away its own documents and this being so, it follows logically that money was owing by the Central Company to the Plaintiff, resulting in the Plaintiff chasing Central Company for payment with Central Company making promises and agreements to pay which were not honoured, thereby ultimately leading to the service of Xiamen proceedings on Central Company and Xiamen Judgment being entered against the Central Company. It can be seen each of the above steps leading to the present desperate situation of the Defendant Central Company always involved two elements, namely Hong and/or the office of Central Company being present or involved in the transaction. The Statement of Claim in the Xiamen proceedings showed clearly at page 30 of the Bundle (Chinese document) that it was directed to the Central Company with its Central address and office telephone number correctly given. This was sent to the Central Company's address in Central and received by the Central Company, resulting in Ngan on behalf of Central Company seeking time from the Xiamen Court (page 88 of Bundle). The Xiamen Judgment at page 81 is to the same effect, directed towards the defendant correctly identified as the Central Company with its Central address again correctly stated. I do not see how in these circumstances it could be legitimately argued that there might be a mistake in the Xiamen Judgment being against some other company. Ngan's name might appear in many documents but that is hardly surprising having regard to his heavy involvement with the Central Company. What is clear is that nowhere did the North Point Company or its address or its letterheads appear in the documents or in the transactions. In my judgment, the Defendant Central Company has wholly failed to convince me that there is a reasonable prospect of its succeeding on its alleged defence of Xiamen Judgment being entered against some company other than the Defendant Central Company.

6. On the jurisdiction issue, Mr. Lam quite properly recognised that once he failed on the "correct company" question, it would be exceedingly difficult for him to put up a viable case on the Xiamen Court not having the jurisdiction to enter the Xiamen Judgment. The evidence clearly showed that Central Company received the Statement of Claim, wrote to the Xiamen Court asking for time and having Judgment entered against it, then appealed to the Xiamen Court against the Xiamen Judgment. In these circumstances, it was therefore quite proper for Mr. Lam not to press on his jurisdiction point as it is quite clear to this Court that the Defendant Central Company had submitted to the jurisdiction of the Xiamen Court.

7. In the circumstances, the appeal fails and must be dismissed with costs which shall be taxed in accordance with Legal Aid Regulations.