Deyi Investment Ltd v. Macjin Info-com Tek., Ltd and Another

HCA 587/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 587 OF 2014

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DECISION
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1.Before the Court are:

(1) an application by Summons dated 7 May 2015 (“Setting Aside Application”) by the 2^nd Defendant, LG Display Co., Limited (“LGD”), to set aside leave for the service of the concurrent Writ of Summons endorsed with a Re-amended Statement of Claim out of the jurisdiction on LGD in South Korea; and

(2) an application by Summons dated 19 August 2015 (“Amendment Application”) by the Plaintiff, Deyi Investment Limited (“Deyi”), to further amend the Re-amended Statement of Claim.

2.The 1^st Defendant, Macjin Info-Com Tek., Limited (“Macjin”), has through its solicitor indicated neutrality on the Setting Aside Application and non-objection to the Amendment Application insofar it is affected by the same.

Bases and evidence upon which leave for service out was sought and granted

3.The ex parte application for leave for service out of the jurisdiction was supported by, inter alia, an Affirmation made on 7 May 2014 (“Mr Ma’s Affirmation”) by Mr Ma Chun Feng, a director of Deyi, which deposed to the application falling within both or either of the following “gateways” under Order 11 of the Rules of High Court:

(1) rule 1(1)(d)(iii), i.e. the claim is brought in relation to a contract which is by its terms or by implication governed by Hong Kong law;

(2) rule 1(1)(d)(iv), i.e. the contract contains a term to the effect that the Hong Kong Court of First Instance shall have jurisdiction to hear and determine any action in respect of it.

4.The contract relied upon by Deyi in invoking these Order 11 rule 1 gateways was an undated “Product Supply Agreement” written in both Chinese and Korean which is agreed between Deyi and Macjin as having been signed by them on 16 September 2013 (“Contract”), for the sale and purchase of 1,000,000 units of “LH400WS1-SD01 Module” (which were iPhone 5 display panels manufactured by LGD though this was not expressly spelt out in the Contract) (“LG Products”) at the unit price of US$21.60 (or total price of US$21,600,000).  Deyi claims damages for breach of the Contract (more particularly, non-delivery of the LG Products) to the tune of US$311,400,000 which is said to be the difference in the price of the LG Products under the Contract and in the market as at December 2013 (being the earliest date on which Deyi could have resold the LG Products under the Contract[i]).

5.The term relied upon by Deyi to bring its claim within Order 11, rule 1(1)(d)(iii) and (iv) read as follows:

“When there is dispute for the above agreement, it should be resolved in accordance with the principle of mutual trust. However, if there is no satisfactory settlement, it should be resolved in accordance with the rules of the Hong Kong International Court.”

6.A copy of the Contract and an uncertified English translation thereof were exhibited to Mr Ma’s Affirmation.  On its face, the only parties to the Contract identified by it were Macjin as supplier and Deyi as purchaser.  The Contract made no mention of LGD at all.

7.Insofar as LGD is concerned, Deyi’s pleaded case before the Master was set out in paragraph 8 of the Re-amended Statement of Claim under the heading of “Agency” as follows:

“The 1^st Defendant had actual, alternatively implied, alternatively apparent authority on the 2^nd Defendant’s behalf in entering into the Said Contract with the Plaintiff.

Particulars

(a) In the course of the negotiations leading to the formation and execution of the Said Contract, various personnel of the 1^st Defendant repeatedly represented to the Plaintiff that the 1^st Defendant was the authorized agent acting for and on behalf of the 2^nd Defendant. These personnel of the 1^st Defendant include:

(i) One J.K. Seo, President (徐振揆，代表理事);

(ii) One Bongho Suh, President (徐奉鎬，社長);

(iii) One Woody D. Cho, Director of Sales Department (趙原得，營業部理事); and

(iv) One Danny Nam, Senior Manager of Sales Department (南大鉉，營業部次長);

(b) The business name cards of all of the aforesaid personnel of the 1^st Defendant given to the Plaintiff before the execution of the Said Contract bear the corporate logo of the LG Corporation or of the 2^nd Defendant as well as the inscription of “LG DISPLAY direct account”;

(c) Before the execution of the Said Contract, one Xie Jun (謝俊) of the Plaintiff informed the aforesaid personnel of the 1^st Defendant that it was the Plaintiff’s intention to negotiate the purchase of the LG Products from the 2^nd Defendant. The said Xie Jun (謝俊) further raised query as to why he was brought to the office of the 1^st Defendant, but not the office of the 2^nd Defendant. The following representations were then made by the 1^st Defendant in response to the Plaintiff:

(i) That the 1^st Defendant is the authorized agent of the 2^nd Defendant to sell all modules of LG displays manufactured by the 2^nd Defendant for and on behalf of the 2^nd Defendant;

(ii) That since the 1^st Defendant is the authorized agent of the 2^nd Defendant, the Plaintiff could only sign contract with them if the Plaintiff wanted to acquire the LG Products of the 2^nd Defendant;

(iii) That the name cards of the aforesaid personnel of the 1^st Defendant all bear the inscription of “LG DISPLAY direct account”;

(iv) In order to prove that the 1^st Defendant is the authorized agent of the 2^nd Defendant, the said Danny Nam (南大鉉) of the 1^st Defendant produced a document to the said Xie Jun (謝俊) of the Plaintiff, which subsequently forms an annex to the Contract Document (“the Annex”).  Then the said Bongho Suh (徐奉鎬) of the 1^st Defendant informed the said Xie Jun (謝俊), inter alia, to the effect that the Annex is a print-out from the internal computer system of the 2^nd Defendant.  It was further represented to the said Xie Jun (謝俊) by the said Bongho Suh (徐奉鎬) that the company name of the 1^st Defendant appears in the Annex as an approved agent in the 2^nd Defendant’s internal system; that signing contract with the 1^st Defendant is equivalent to signing contract with the 2^nd Defendant; and that the 2^nd Defendant would not sign contract with the Plaintiff direct.  Then the said Xie Jun (謝俊) of the Plaintiff requested the Annex to be annexed to the contract to be signed, and the 1^st Defendant agreed to that.  (The Annex subsequently forms an annex to the Contract Document by the 1^st Defendant affixing its company chop/seal thereon); and

(v) That in case of any doubt of the authenticity of the LG Products to be sold by the 1^st Defendant (on behalf of the 2^nd Defendant), the 1^st Defendant could arrange the Plaintiff to inspect the LG Products at the factory premises of the 2^nd Defendant situate at Yantai, Shangdong Province, the PRC; and

(vi) That the LG Products to be sold by the 2^nd Defendant will be delivered to the Plaintiff at the warehouse of the 2^nd Defendant situate in Hong Kong.

(d) The name of the said Bongho Suh (徐奉鎬) of the 1^st Defendant appeared on the Annex and is stated therein as the Section Head (部長) of the 2^nd Defendant; and

(e) The Serial Number of “LH400WSI-SD01” (as aforesaid in paragraph 4 herein) is in fact the serial number designated for the mobile phone under the brand name of “I-Phone 5”.  To the knowledge of the Plaintiff at all material times, the 2^nd Defendant was, and still is a manufacturer of displays for the “I-Phone 5” products, and the 1^st Defendant at all material times was and is not a manufacturer of displays for the “I-Phone 5” products.”

(Emphases added)

8.In terms of evidence, Mr Ma’s Affirmation did not add much.  Between referring to an earlier version of the Statement of Claim and exhibiting the Contract and its English translation, it was simply asserted in paragraph 3 that:

“The Sale Contract was entered into between the Plaintiff and the 2^nd Defendant. It is the Plaintiff’s case that despite the fact that the 1^st Defendant was all along negotiating with the Plaintiff, the 1^st Defendant was merely acting on behalf of the 2^nd Defendant as the 2^nd Defendant’s agent in concluding the Sale Contract with the Plaintiff.”

9.By an Affirmation made on 6 June 2014 (“Mr Xie’s 1^st Affirmation”) by Mr Xie Jun (“Mr Xie”), a manager of Deyi, Deyi also placed before the Master copies of, inter alia, the following documents but without drawing his attention to any particular aspect thereof:

(1) the business name cards of the 4 representatives of Macjin listed in paragraph 8(a) of the Re-amended Statement of Claim (“Name Cards”); and

(2) the internal computer printout of LGD (“Printout”), one copy as it was and one copy with Macjin’s company chop appended, which were incorporated as an annex to the Contract as pleaded in paragraph 8(c)(iv) of the Re-amended Statement of Claim.

Grounds for setting aside leave for service out

10.LGD puts forward 3 grounds for setting aside leave for service on it out of the jurisdiction:

(1) Deyi has failed to show:

(a) first, a good arguable case that the claim against LGD falls within rule 1(1)(d)(iii) or (iv) of Order 11; and

(b) second, a serious issue to be tried as against LGD.

This is so because Macjin did not make the Contract for or on behalf of LGD as Macjin did not have LGD’s authority to do so.  According to LGD, Macjin is merely one of its 700 or so registered customers and has been since 2 August 2010.  As a registered customer, Macjin can purchase from LGD, and resell to others, LGD’s products from time to time, but cannot make contract for or on behalf of LGD.  As LGD was not a party to the Contract, Deyi has no claim against LGD and has never agreed to have any such claim governed by Hong Kong law or subject to the jurisdiction of the Hong Kong Court of First Instance.

(2) Third, Deyi is guilty of material non-disclosure.  The ex parte materials did not point out to the Master that LGD was not a party to the Contract; that all the representations of authority relied on came from Macjin, not LGD; and that, as a matter of law, this would not be sufficient.

The Amendment Application

11.It is accepted on behalf of Deyi that the pleas at paragraph 8 of the Re-amended Statement of Claim as to representations by LGD to Deyi of Macjin’s agency could be clearer.

12.To plead clearly that there were representations by LGD to Deyi of Macjin’s agency, Deyi makes the Amendment Application principally to add an allegation that apart from being the President of Macjin, Mr Bongho Suh (“Mr Suh”) was also the “Section Head and/or General Manager” of LGD as at September 2013 so that the representations as to Macjin’s authority made by Mr Suh were made, or could be treated as being made, also on LGD’s behalf.

13.LGD objects to such amendment as being useless and bound to fail.  According to LGD, Mr Suh ceased to be its employee on 24 August 2012. 

Whether LGD was a party to the Contract

14.There is a large measure of agreement between the parties as to the applicable principles of substantive and procedural laws.

15.First, to justify leave to serve out, a plaintiff has to show, inter alia:

(1) a “good arguable case” that the case falls within one of the gateways provided for in Order 11, rule 1(1), which is a question of “jurisdiction” in the strict sense; and

(2) a serious issue to be tried.

See Hong Kong Civil Procedure 2016,[ii] Volume 1, §§11/1/7 to 11/1/8D.

16.In the instant case, in view of the nature of the specific Order 11, rule 1(1) gateways prayed in aid by Deyi and of the challenge thereto mounted by LGD, these 2 requirements actually converge into a single burden on Deyi to show, on the higher “good arguable case” threshold, that Macjin did make the Contract as agent for and on behalf of LDG, which would be the case only if Macjin did have authority from LGD to do so.

17.It is trite that the authority of an agent may be:

(1) actual (express or implied) where it results from a “manifestation of assent” that the agent should represent or act for the principal expressly or impliedly made by the principal to the agent himself; or

(2) apparent, where it results from such a manifestation made by the principal to third parties.

See Bowstead & Reynolds on Agency, 20^th Edition, Article 22 at §3-001.

18.As set out in paragraph 7 above, Deyi maintains on pleading the formal position that Macjin had actual, implied or apparent authority to enter into the Contract on LGD’s behalf.  

19.Macjin has specifically denied that it is or was LGD’s agent or that it had any actual or implied authority from LGD to enter into the Contract for or on its behalf.  Macjin’s case, in line with that of LGD, is that it has just an account with LGD which merely allows it to buy LGD’s products directly from LGD.

20.Ms Roxanne Ismail SC (leading Mr Roland Lau), Counsel for Deyi, realistically acknowledges difficulty in showing either actual or implied authority (the matter being strictly between Macjin and LGD on which Deyi has not been able to adduce any meaningful evidence) and focuses on putting together a case based on apparent authority.

21.On apparent authority, Macjin has likewise specifically denied that it had represented to Deyi that it was the authorised agent of LGD.  Macjin’s case is that, to the contrary, its personnel had made clear to those representing Deyi that Macjin only had a “direct account” with LGD which allowed it buy the LG Products directly from LGD so Deyi could be assured that the LG Products to be supplied by Macjin would be genuine and authentic products manufactured by LGD.  

22.Deyi and LGD have made competing arguments on Macjin’s credibility.  I cannot resolve such a dispute, being of fact, upon affidavit and I do not propose, nor is it necessary for me, to do so. 

23.Deyi has a very tough case to make even if the disputed allegation of representations as to Macjin’s authority were to be taken in Deyi’s favour.

24.Dealing first with Deyi’s case before the Master, i.e. as presented in paragraph 8 of the Re-amended Statement of Claim (set out in paragraph 7 above), all the oral statements and written documents (i.e. the Name Cards and the Printout) pleaded in paragraph 8 as supporting Macjin’s agency were made/provided by persons identified expressly as staff of Macjin, not LGD.  And the fact that these persons were in the employ of Macjin is reinforced by the Name Cards, each of which shows Macjin’s logo, name, address, telephone and facsimile numbers, website address, etc.  The inclusion of the “LG” logo and/or the words “LG DISPLAY direct account” (or “LG液晶專營代理公司” on what appears to be the Chinese side of Danny Nam’s card)[iii] in smaller print at the top left hand corner does not change the fact that these were Macjin business cards to be given out by Macjin personnel.

25.As a matter of law, while the representation as to the agent’s authority need not be made by the principal himself, it has to be traceable back to the principal or a person with actual authority from the principal to make such representation.  See Bowstead & Reynolds, supra, §8-019.

26.The principle that an agent cannot clothe himself with apparent authority has been the subject of the authoritative discussion in Thanakharn Kaskorn Thai Chamkat (Mahachon) v Akai Holdings Ltd (No 2) (2010) 13 HKCFAR 479 at §§63-70 per Lord Neuberger NPJ; citing with approval Armagas Ltd v Mundogas SA (The Ocean Frost) [1986] AC 717.  As Lord Neuberger explained at §64 (in response to an argument in that case that an agent could clothe himself with authority by his own acts or representations):

“At any rate at first sight, it would appear to require exceptional facts before such an argument could have any chance of success. After all, apparent authority was based on a representation (normally implied) as between the alleged principal and third party as to the authority of the alleged agent, and if the third party could rely on some statement by the alleged agent, made without the authority of the principal, it would be close to pulling oneself up by one’s own bootstraps.”

27.His Lordship further observed at §70:

“I find it very hard indeed to conceive of any circumstances in which an alleged agent, who does not have actual or apparent authority to bind the principal, can nevertheless acquire apparent authority to do so, simply by representing to the third party that he has such authority.”

28.And at §71:

“It is worth adding that…before any representation by the agent could be relied on to assist the contention that he had apparent authority, the court would have to be satisfied that the principal had given the alleged agent apparent authority to make the representation in question.”

29.Deyi does not dispute these principles.  Nor does it claim that this is an exceptional case where the alleged agent Macjin, by making representations as to its own authority, could effectively clothe itself with authority that it did not actually have.

30.Ms Ismail confirms that Deyi’s case on apparent authority is, and has always been, maintained on the basis that the representations as to Macjin’s authority made to Deyi in September 2013 were made not only by Macjin, but also by LGD through its employee, Mr Suh.

31.I am afraid this is not what paragraph 8 of the Re-amended Statement of Claim conveys on a proper reading.

32.Mr Suh was introduced in paragraph 8(a)(ii) just as the President of Macjin.  The only reference to his being or having been in the employ of LGD is in paragraph 8(d).  What is said there is that Mr Suh was mentioned as a Section Head of LGD in the Printout.  What is not said is when Mr Suh occupied such position in LGD.  More specifically, it is not averred that Mr Suh held that position as at September 2013 when the alleged representations of Macjin’s authority were made to Deyi by him (or by others in his presence).  In my view, there is no basis upon which one could deduce that Deyi meant to make such an averment from reading paragraphs 8(c)(iv) and (d) of the Re-amended Statement of Claim.

33.It follows that Deyi has not properly pleaded a viable claim on the Contract against LGD at the date of the Order granting leave to serve out.

34.And I do not think that Deyi should be allowed to fill the gap by simply adding an express allegation that Mr Suh was also LGD’s Section Head/General Manager in September 2013.

35.In deciding whether to grant or refuse an application for the amendment of a pleading, the Court is entitled to have regard to the merits of the case if the merits are so readily apparent without prolonged investigation.  See Hong Kong Civil Procedure 2016, Volume 1, §20/8/6.  

36.Ms Ismail has taken me through the unusual facts of King’s Quality Ltd v A J Paints Ltd [1997] 3 All ER 267, cited in support by the editors of the Whitebook, with a view to putting this principle in context and cautioning the Court against an overzealous investigation into, and conclusion on, merits. 

37.I have no difficulty with this as a matter of general principle.  However, in this particular case, one must not lose sight of the background from which the Amendment Application arises and its purpose.  Given that the amendment sought is essential for grounding an argument that Deyi’s claim against LGD falls within one of the Order 11, rule 1(1) gateways, to my mind, it should not be allowed unless Deyi can show a good arguable case that Mr Suh was LGD’s Section Head/General Manager in September 2013.  In other words, whether the proposed amendment should be allowed and, if so, whether it would ground leave for service on LGD out of the jurisdiction are not different questions.

38.The application of the “good arguable case” standard would necessarily require the Court to scrutinise merits.  It is a high standard, demanding something better than a serious issue to be tried, a triable issue, a prima facie case, an arguable case and reasonable/real prospect of success, to name a few tests adopted in other interlocutory contexts.  Although the Court will not require proof to its satisfaction as at trial on the balance of probabilities, in the context of an application for leave to serve out, it requires an argument on jurisdiction with a good prospect of success.  The plaintiff has to show that its argument that there is jurisdiction must be better than the competing argument that there is no jurisdiction.  The plaintiff is required to make out a “cogent analytical case”.  Reliance on “isolated strands of evidence” and the hope that more will turn up on discovery is not enough.  See Hong Kong Civil Procedure 2016, Volume 1, §11/1/8A.    

39.Where there are disputes of fact going to the question whether there is a good arguable case that the case falls within one of the Order 11, rule 1(1) gateways, even where they cannot be properly resolved on the papers, the Court must reach a provisional conclusion, which necessarily involves analysis of the weight of the evidence based on the inherent probabilities of the claim, the detail and precision of the claim, the consistency of the claim and the evidence in respect of it and whether it is bare claim or one supported by independent evidence.  And it is open to the defendant to seek to show that the evidence of the plaintiff is incomplete or plainly wrong.  See Hong Kong Civil Procedure 2016, Volume 1, §11/1/8B.

40.On the question of Mr Suh’s employment with LGD, both the Senior Manager of LGD’s IT Strategic Account Sales Team and the Manager of LGD’s Human Resources Management Supporting Team have affirmed that Mr Suh’s employment with LGD was terminated in August 2012.  In support, the latter has produced a copy of the “Personal Information Summary” kept by LGD in respect of Mr Suh which details the history of Mr Suh’s employment with LGD and shows that Mr Suh ceased to be in the employ of LGD on 24 August 2012 upon his resignation. 

41.Although the said “Personal Information Summary” was produced on 25 August 2015, i.e. just 2 days before the hearing before me, Deyi does not object to its being looked at by the Court de bene esse.  Ms Ismail has, however, been instructed not to admit this document, questioning for instance why an internal record of a Korean company is kept partly in English.  I am afraid such query does not really advance the analysis of the evidence on Mr Suh’s status vis-à-vis LGD in September 2013.  Incidentally, I observe that the Printout, also an internal record of LGD and upon which Deyi has placed much emphasis, is also written partly in English.

42.There is before me simply no or no credible positive or direct evidence that contradicts the said “Personal Information Summary”.

43.As with the issue whether Macjin had actual or implied authority from LGD, the matter of Mr Suh’s position with LGD is a matter strictly between LGD and Mr Suh on which one would not expect Deyi to be able to lead any positive or direct evidence. 

44.The only piece of evidence produced by Deyi that touches upon Mr Suh’s employment with LGD is the Printout.  This document embodies 1 flowchart in English and 2 tables, one in English and one partly in English and partly in Korean (mainly the names, job titles and departments of the various LGD personnel involved).  These show how Macjin was approved, stage by stage, by LGD back in July and August 2010.  In particular, Mr Suh is stated to be the person granting the “1^st Approval”, a stage that began on 26 July 2010 at 2:21:37 pm and ended on 27 July 2010 at 11:16:20 am.  Mr Suh’s job title and department were set out in Korean.  It transpires from the certified English translation placed before me (which the Master did not have) that Mr Suh was then the General Manager of the “LGDKRA Mobile/OLED Special Business Sales Team” of LGD.

45.Further to what is pleaded in paragraph 8(c)(iv) of the Re-amended Statement of Claim, Mr Xie has elaborated in paragraph 7 of his 2^nd Affirmation made on 16 June 2015 on the provision of the Printout to Deyi in September 2013 and what was said about it at the time:

“As Macjin was then a stranger to Deyi, and it might be a one dollar company, I therefore asked Macjin if there is any documentary proof that Macjin is an authorized agent of LGD. In response to that, the said Danny Nam went away and came back with a copy of an internal computer printout of LGD. There is now shown and produced to me a copy of an internal computer printout of LGD that Danny Nam came back with and marked as exhibit “2XJ-4”. On that computer printout there is no company chop of Macjin. President Bongho Shu (sic) explained to me that it is an internal document of LGD and it is a flow-chart showing the approval procedure that Macjin has become an authorized agent of LGD; that his name (Bongho Shu (sic)) is shown in that flow-chart as the 1^st Approval, and that I could feel free to contact those named personnel of LGD (including President Bongho Sub (sic)) by telephone at the telephone numbers as appearing on the flow-chart to confirm if Macjin is in fact an authorized agent of LGD. By then, I accepted Macjin is an authorized agent of LGD. And I requested that the internal document of LGD “2XJ-4” be formed an annex to the contract of sales to be signed by affixing Macjin’s company seal on that document. Macjin agreed to that. There is now shown and produced to me a copy of “2XJ-4” which has been chopped with the company seal of Macjin marked as “2XJ-5”. (Clause 4-8 of the Sales Contract states that: “All documents provided are sealed with the company signature chop of [Macjin]”.”

46.I do not see how the Printout assists Deyi.  Other than the dates during which the various stages of LGD’s approval process took place, the Printout itself is undated and mentions no other date.  That being the case, the highest that one can put the Printout is that it shows that Mr Suh was in LGD’s employ at least up until July 2010.

47.While I can see some force in Ms Ismail’s suggestion that the Printout must have been provided to the Deyi representatives as setting out the current, rather than the historical, state of affairs if Deyi’s version of the September 2013 events be true, what we are here concerned with is the question of hard fact as to Mr Suh’s employment status (or lack thereof) with LGD in September 2013.  The impression that the alleged agent Macjin intended or might have intended to give to the third party Deyi by the supply of a record of historical facts in 2010 is neither here nor there.

48.Before I leave the Printout, I should mention that while maintaining the primary case that Mr Suh provided this document to Deyi as LGD’s employee, Ms Ismail (referring to Bowstead & Reynolds, supra, §8-018) also raises an issue as to whether the provision of the Printout, admittedly a LGD document, by Macjin could amount to a representation of Macjin’s authority by LGD while noting that there is an issue as to whether Macjin was authorised to pass such document to Deyi.[iv]  It is unnecessary for me to resolve this issue and I do not propose to do so because, in light of the content of the Printout, I do not see how it could be used to prove Macjin’s authority to enter into contracts binding on LGD or how its mere provision by Macjin to Deyi without more, whether with or without authority, could amount to a representation of such authority. The Printoutbears a heading beginning with the reference number “LKR_107092” followed by Macjin’s name in Korean and then the English words “Registered Customer”. It is clear to me that the documents shows only how Macjin was approved by LGD as a registered customer, not as an agent with authority to enter into contracts binding on LGD.

49.For the sake of completeness, I would also note 2 further matters.

50.First, in paragraph 5(a)(ii) of its Reply to Macjin’s Defence, Deyi has pleaded that in about May 2013, Mr Suh, at LGD’s office, in the course of negotiating the sale of LGD’s products to an unrelated third party, provided such party with his name card stating that he was the General Manager of LGD.  Deyi initially relied upon this as evidence of Mr Suh’s employment with LGD in 2013.  However, it has since transpired that the date of May 2013 is wrong.  It should be May 2011.  Once this correction is made, this piece of information falls away in the same way as the Printout.

51.Second, Deyi has also produced a copy of what appears to be Macjin’s “Business Plan” dated 1 September 2013 and written in Korean (“Macjin Business Plan”) in which, according to the certified English translation placed before me, Macjin described itself as being “[r]egistered as LG Display agent” in 2010 on the page entitled “Company Profile” and as the “authorised agent of LG Display” on the page entitled “Summary of Business”. The page entitled “Product Sales Plan” specifically mentioned an iPhone 5G 4-inch panel with the model number LH400WSI-D01 manufactured by LGD. 

52.Insofar as this document emanated from Macjin, and not LGD, it is caught by the principles of agency law set out in paragraphs 25 to 28 above.

53.However, Mr Xie claims, without identifying the source from which he obtained this information, that Macjin had submitted the Macjin Business Plan to LGD in about September 2013.  Deyi makes the point that LGD was aware that Macjin was holding itself out as LGD’s agent.  Save that it received a copy of Macjin’s said “Company Profile” for its record, LGD denies having received, or been aware of the existence of, the Macjin Business Plan.  LGD also disputes the use of the words “agent” and “authorised agent” in the certified English translation and contends that the correct translation should be “official distributor” or “official dealer” though it has not put before me any duly certified competing translation.  Leaving aside the dispute as to the translation, I think Deyi is seizing on the words “agent” and “authorised agent” without paying regard to the actual context in which they were used.

54.As noted in Bowstead & Reynolds, supra, §1-031:

“A supplier of the goods of a manufacturer, whether on a retail or wholesale basis, who has some form of concession as a regular stockist, distributor or franchisee is often described as “agent”, “selling agent”, “main agent” and the like, for the manufacturer of the goods he supplies.  Although it is possible that he is an agent in the common law sense, it is nowadays much more likely that he actually buys from the manufacturer and resells to his own customer.”

55.As I see it, this is indeed what the Macjin Business Plan would convey if one reads the words “agent” and “authorised agent” in context.  Page 4 summaried Macjin’s business as follows:

“[Macjin] is the authorised agent of [LGD] which receives LCD Cells and LCD Panels to A1-Class produced at [LGD]’s factory in China (Nanjing, Yantai), and thereafter supplies the same to mobile phone and/or tablet PC manufacturers in China.”

And

“It is a Business Model which receives LCD Cells and LCD Panels used for iPhones and iPads by Apple Inc from [LGD] and subsequently supplies the same to mobile phone and/or tablet PC manufacturers in China, Taiwan and Hong Kong.”

55. For these reasons, I have come to the conclusions that Deyi has not shown a good arguable case that Mr Suh was in LGD’s employ in September 2013 so as to bind LGD to the Contract through the representations of Macjin’s authority as LGD’s agent that are alleged to have been made by Mr Suh. The proposed amendments to the Re-amended Statement of Claim affecting LGD should therefore not be allowed.  It follows that Deyi does not have a good arguable case for invoking Order 11, rule 1(1)(iii) or (iv) against LGD.

Whether Deyi was guilty of material non-disclosure

56.In view of these conclusions, I propose to address the question whether Deyi was guilty of material non-disclosure only briefly for the sake of completeness in case this matter should go further.

57.I find the arguments on the complaint of non-disclosure that LGD was not named as a party to the Contract to be evenly balanced.  The pleading and affirmations placed by Deyi before the Master did not mention the facts that the Contract did not name LGD as a party or that it did not state that Macjin was acting as agent of LGD.  However, such fact is apparent from the Contract itself.  On balance, I am inclined to agree with Ms Ismail. Although documents hidden away in voluminous exhibits are not to be taken as disclosed in an ex parte context, the Contract is a central (indeed the single core) document that the Master (considering the application on paper) would and must inevitably have looked at, in particular to consider the choice of law/choice of forum clauses relied upon to establish applicable “gateways” for service out so that the fact LGD was not named as a party to the Contract could not have escaped him. 

58.As for the complaint of non-disclosure that Deyi relies on representations of authority from Macjin alone and that this is not sufficient as a matter of law to clothe Macjin with authority to bind LGD to the Contract, Ms Ismail does not dispute thatthe duty of full and frank disclosure upon an ex parte applicant encompasses “significant factual, legal and procedural aspects of the case”: East Asia Satellite Television (Holdings) Ltd v New Cotai LLC [2011] 3 HKLRD 734 at §§81-82, per Tang Acting CJHC (as he then was).  Counsel however maintains that there was no non-disclosure because Deyi’s true case is that it relies on representations of authority by LGD by Mr Suh as its Section Head/General Manager.  I have to disagree.  In my view, whether there was non-disclosure has to be determined on the basis of the case that Deyi actually advanced before the Master on its pleading, objectively viewed and understood, and not the case that Deyi subjectively wishes, but failed, to assert.

Orders

59.For the above reasons, I make an order in terms of LGD’s Summons dated 7 May 2015 save as to costs.  I further dismiss the Amendment Application against LGD.  I make an order nisi that Deyi should pay LGD’s costs of both the Setting Aside Application and the Amendment Applications, to be summarily assessed by me.  Deyi shall have 7 days from today to make submissions on LGD’s Statement of Costs dated 24 August 2015 and LGD shall have 7 days thereafter to respond to Deyi’s objections, if any.

60.As between Deyi and Macjin, I allow the Amendment Application.  Given the dismissal of the Amendment Application against LGD, I give Deyi 14 days to file and serve a version of the Re-re-amended Statement of Claim without the proposed amendments affecting LGD. Macjin shall have 21 days thereafter to file and serve its Amended Defence and Deyi shall have 21 days thereafter to file and serve its Amended Reply.  Deyi shall pay Macjin the costs of and occasioned by the amendments, to be taxed if not agreed.

Ms Roxanne Ismail SC and Mr Roland Lau, instructed by Messrs Wan Yeung Hau & Co, for the plaintiff

Mr Ng Man Kin of Messrs Kwok, Ng & Chan for the 1^st defendant

Mr Bernard Man SC, instructed by Messrs Clifford Chance for the 2^nd defendant