Deutsche Bank Ag, Hong Kong Branch v. Zhang Hong Li
Read the full judgment text of CACV 277/2015 on BabelCite. This Court of Appeal judgment was delivered on 19 May 2016 before Hon Lam VP and Kwan JA.
Civil procedure – service of writ out of jurisdiction – substituted service – defendant residing in the Mainland of China – whether Order 11 rule 5A is the exclusive and mandatory provision governing service on Mainland residents – whether Order 65 rule 4 (substituted service) applies to defendants residing in the Mainland – whether substituted service to be effected in Hong Kong on a Mainland resident is within the jurisdiction of the Hong Kong court – whether such order interferes with the sovereignty of the Mainland contrary to the Basic Law and the 'one country, two systems' principle – whether the judge erred in exercising discretion under Order 2 rule 1 to cure any irregularity in the 2nd Order – former employee of plaintiff bank alleged to have breached employment contract, fiduciary duties, and to have conspired to injure the plaintiff by unlawful means – plaintiff obtained leave to issue a concurrent writ for service in the Mainland under Order 11 rule 1(1)(d), (f) and (p) – attempted service under Order 11 rule 5A through judicial authorities of the Mainland at the defendant's residential and business addresses in Beijing failed as nobody answered the door and telephone calls went unanswered – plaintiff obtained order for substituted service by post, email and delivery to defendant's former solicitors, Reed Smith Richards Butler (RB), in Hong Kong – defendant changed solicitors and sought to set aside service and discharge the orders below – whether Article 277 of the Mainland Civil Procedure Law is engaged by service in Hong Kong – the Arrangement for Mutual Service of Judicial Documents in Civil and Commercial Proceedings between the Mainland and Hong Kong Courts – held, Order 11 rule 5A is not exhaustive and there is no conflict with rule 5(1) which expressly applies Order 65 rule 4 to service of a writ notwithstanding that it is served out of the jurisdiction – held, service on RB in Hong Kong was effected in Hong Kong and not in the Mainland, so the Arrangement, Order 11 rule 5A and Article 277 of the Mainland CPL were not engaged – held, the traditional characterisation of service abroad as an assertion of sovereignty and an interference with the sovereignty of a foreign state is no longer a realistic view following Abela v Baadarini, and ordering substituted service in Hong Kong on a Mainland resident does not contravene the Basic Law – held, the judge was entitled to exercise her discretion under Order 2 rule 1 to treat the non-compliance of rules as an irregularity where two of three methods of substituted service might not comply with Order 11 rule 5(2) – held, the proceedings had clearly and manifestly been brought to the attention of the defendant who filed an acknowledgment of service, never sought to set it aside, and engaged solicitors and counsel to contest the proceedings without asserting any prejudice – appeal dismissed with costs on an order nisi basis.
Legal issues: Whether Order 11 rule 5A is mandatory and exhaustive, precluding substituted service on Mainland residents · Whether the method of substituted service on RB's office in Hong Kong contravened the law of the Mainland and Order 11 rule 5(2) · Whether ordering substituted service in Hong Kong on a Mainland resident interferes with Mainland sovereignty contrary to the Basic Law · Whether the judge erred in exercising discretion under Order 2 rule 1 to cure any irregularity in the 2nd Order
Outcome: Appeal dismissed. The Court of Appeal upheld the order of Mimmie Chan J that the substituted service of the concurrent writ on the defendant care of Reed Smith Richards Butler in Hong Kong stands as good and effective service on the defendant.
Cited by 10 cases · Cites 5 cases
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CACV 277/2015 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF APPEAL CIVIL APPEAL NO. 277 OF 2015 (ON APPEAL FROM HCCL NO. 19 OF 2014) ________________________
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________________________ J U D G M E N T ________________________ Hon Lam VP: 1.I have read the judgment of Kwan JA in draft and I respectfully agree with her. There shall be an order in terms of para 86 below. 2.I acknowledge that it is important for the One Country Two Systems principle that our courts should not exercise our jurisdiction to order service in the Mainland in a way that would contravene Mainland sovereignty. However, the crucial question in this appeal is the place at which service was effected in the present case. 3.As analysed by Kwan JA, the service at the office of RB was effected in Hong Kong. So understood, there was no contravention of Order 11 Rule 5(2) and Rule 5A or any law for service in the Mainland. It is similar to service effected in Hong Kong pursuant to Order 10 Rule 2 (on local agent of overseas principal) or Rule 3 (contractual provision for service specifying a local address for service) in respect of a defendant who resides in the Mainland. As such, there is no question of Hong Kong court interfering with the sovereignty of the Mainland authority. 4.It would be a different matter if the Plaintiff had to rely on the other two methods of service pursuant to the 2nd Order (see para 18(a) and (c) below). For the reasons given by Kwan JA at paras 59 to 60 below, I would hold those methods to be invalid as they clearly contravene Order 11 Rule 5(2) and the Mainland law on service. 5.Another important question in this appeal is whether the court should exercise its discretion to order substituted service in Hong Kong when the Defendant was resident in the mainland and RB did not have his instructions to accept service. If the Plaintiff had not made an unsuccessful attempt to effect service in the mode prescribed under Order 11 Rule 5A, it would usually be inappropriate to order substituted service in such a manner. To start with, it must be emphasized that one should not allow the use of substituted service within the jurisdiction on a defendant residing overseas (be it in the Mainland or otherwise) with the effect of circumventing the threshold requirement of Order 11 Rule 1. That rule provides an important safeguard against the improper exercise of jurisdiction over foreign parties. Any attempt to circumvent such safeguard is an abuse of process. 6.Further, without such unsuccessful attempt, the court cannot be satisfied that it is impracticable to serve in accordance with Rule 5A. But as we can see from the history in the present case, this is not the situation here. For the reason given by Kwan JA at para 78 below, the judge was entitled to come to the view that it was impractical for personal service to be effected. 7.On the method of service, the criterion in Order 65 Rule 4(3) is that the step should bring the document to the notice of the person to be served. And this criterion was satisfied in the present case notwithstanding that RB had no instruction to accept service. 8.Whilst it may also be open to a plaintiff to request for method akin to substituted service in the Mainland as discussed by Kwan JA at paras 67 and 68 below, it is a matter of discretion for the court to decide whether in the circumstances of a particular case it should direct the plaintiff to pursue such possibility before resorting to a mode of substituted service to be effected in Hong Kong. It should perhaps be mentioned that in most cases, in respect of service upon a defendant residing in the Mainland, the usual mode of substituted service by advertisement in newspapers in Hong Kong cannot bring the proceedings to his attention and it is therefore not a viable option. 9.On the facts of the present case, as explained by Kwan JA, I do not regard the learned judge to have erred in the manner in which she exercised her discretion. The appeal falls to be dismissed accordingly. Hon Kwan JA: 10.This appeal raised an issue on substituted service of a writ on the defendant who is a PRC national residing in the Mainland of China. By the decision of Mimmie Chan J on 27 November 2015 (“the Decision”), it was ordered that the service of the concurrent writ of summons on a firm of solicitors in Hong Kong, Messrs Reed Smith Richards Butler (“RB”), pursuant to the order of the judge dated 3 June 2015 do stand as good and effective service on the defendant. On 16 December 2015, the judge gave leave to the defendant to appeal against her order under the Decision. The background 11.The relevant background matters may be stated as follows. 12.On 8 August 2014, the plaintiff issued a writ of summons in this action (HCCL 19/2014) against the defendant, its former employee, with a general indorsement of claim. It was marked not for service out of jurisdiction. The plaintiff claimed against the defendant that he acted in breach of his duties under his employment contract and his fiduciary duties, that he made misrepresentations in the course of his employment and conspired to injure the plaintiff by unlawful means. On the same day, the plaintiff applied for leave to issue a concurrent writ and to serve the same on the defendant in the Mainland, pursuant to Order 11 rule 1(1)(d), (f) and (p) of the Rules of the High Court. 13.On 21 August 2014, the judge made an order (“the 1st Order”) giving leave to the plaintiff to issue a concurrent writ and to serve a copy of it and a sealed copy of the 1st Order out of the jurisdiction upon the defendant at a residential address in Beijing or elsewhere in the PRC. Pursuant to the 1st Order, the concurrent writ was issued on 26 August. 14.On 29 August 2014, the plaintiff’s solicitors made a request through the Registrar of the High Court for service of the concurrent writ on the defendant in the Mainland, pursuant to Order 11 rule 5A. 15.On 23 October 2014, the plaintiff’s solicitors made a further request through the Registrar that the writ and sealed copy of the 1st Order also be served on the defendant at a business address which is a bank in Beijing where the plaintiff worked currently. 16.On 21 January 2015 and 10 March 2015, the plaintiff’s solicitors wrote to the Registrar requesting the court to enquire with the PRC authorities as to the status of service and to provide the return form on the service if it had been effected. 17.On 21 April 2015, the plaintiff’s solicitors received two letters from the Registrar advising that service of the documents could not be effected on the defendant at the residential address or the business address and enclosing a letter and a form from the Higher People’s Court of the Beijing Municipality, setting out particulars of the unsuccessful attempts to serve the defendant. In short, two representatives of the PRC court attempted service at the residential address on 4 and 12 March 2015. Nobody answered the door on both days and the representatives left messages. On 5 and 12 March 2015, the representatives contacted the defendant and his secretary at the reception desk of the business address and the telephone calls went unanswered. The representatives left a message on each occasion. 18.As the plaintiff was unable to effect service of the concurrent writ, it applied for substituted service pursuant to Order 65 rule 4, alleging that the defendant was evading service. On 3 June 2015, the judge made an order for substituted service (“the 2nd Order”) that service of the concurrent writ be effected by:
shall be deemed to be good and sufficient service of the court documents upon the defendant on the day of completing such posting, delivering and emailing as aforesaid. 19.On 4 June, the plaintiff effected substituted service on the defendant pursuant to the 2nd Order, including delivering by hand the court documents to RB, who were at the time the solicitors on record for the defendant in another action (HCCL 2/2011) in which he sued as the first plaintiff and judgment was pending. 20.RB filed an acknowledgment of service (“AS”) on behalf of the defendant on 2 July 2015 acknowledging service of the concurrent writ and stating that the defendant intends to contest the proceedings. The plaintiff served the statement of claim on RB on 15 July 2015. 21.On 29 July 2015, a notice of change of solicitors was filed for the defendant, stating that the current solicitors were appointed to act as the solicitors for the defendant in place of RB in this action. 22.On 11 September 2015, the defendant issued a summons which resulted in the Decision. By this summons, the defendant sought an order that the service of the concurrent writ on him be set aside; an order declaring that the concurrent writ has not been duly served on him; an order that the 1st Order and the 2nd Order be discharged or set aside; a declaration that the court has no jurisdiction over him in respect of the subject matter of the claim or the relief or remedy sought in the action; and an order staying the proceedings. 23.In short, the defendant contended that pursuant to Order 11 rule 5A, the writ should be served “through the judicial authorities of the Mainland of China”. Accordingly, Order 11 rule 5(1) has no application and the court has no jurisdiction under Order 11 to disregard or bypass rule 5A by the 1st Order or the 2nd Order. Further or alternatively, insofar as Order 11 rule 5(1) authorises substituted service of a writ on a person to be served in the Mainland of China, it is in contravention of the Basic Law and is beyond the jurisdiction of the court. The 1st and 2nd Orders should also be discharged or set aside on the ground that the plaintiff had failed to discharge its onus to show that this action does come within Order 11 rule 1(1)(d), (f) and (p). The Arrangement and Order 11 rule 5A 24.Before I go to the judge’s reasoning in the Decision, it will be convenient to mention the Arrangement for Mutual Service of Judicial Documents in Civil and Commercial Proceedings between the Mainland and Hong Kong Courts (“the Arrangement”). 25.Before the reunification, between 1991 and 1997, service of judicial documents between the Mainland and Hong Kong was governed by the Hague Convention. The Convention continues to apply to Hong Kong as part of the PRC after 30 June 1997 but being an international agreement, the Convention no longer applies for the service of judicial documents between the Mainland and Hong Kong after the reunification. 26.Article 95 of the Basic Law provides that the HKSAR may, through consultations and in accordance with law, maintain juridical relations with judicial organs in other parts of China, and they may render assistance to each other. Pursuant to this article, on 14 January 1999, the Chief Judge of the High Court signed a memorandum for the Arrangement with the Supreme People’s Court. This was to re-establish reciprocal arrangement for the service of judicial documents generally along the lines of the arrangement prior to the reunification, and which reflected the principles of the Convention[1]. The Arrangement came into effect in the Mainland and Hong Kong on 30 March 1999. 27.The Arrangement contained inter alia the following provisions:
28.Order 11 rule 5A was added to the Rules of the High Court to implement the Arrangement. The material provisions of rule 5A read as follows:
29.Amendments were also made to Order 11 rule 5 and the material provisions as amended read as follows:
30.According to the available statistics[7], over the years the number of judicial documents from the Mainland served in Hong Kong and those from Hong Kong served in the Mainland under the Arrangement[8] are as follows:
The Decision 31.The judge held in §6 there is no basis to set aside the 1st Order. The plaintiff has established a good arguable case that its claims fall within Order 11 rule 1(1)(d), (f) and/or (p), that a serious triable issue has been established and that the case is a proper one for the exercise of the discretionary power to grant leave for service out of Hong Kong. Besides, the 1st Order only granted leave to issue a concurrent writ for service on the defendant in the Mainland. It did not specify how the writ was to be served. No issue was raised on appeal against this part of the Decision. 32.Turning to the dispute whether Order 11 rule 5 and Order 65 rule 4 can apply to the service of the concurrent writ in this case, the judge thought it appears to have become academic, as the inescapable fact is that whatever irregularity there might have been in the service of the concurrent writ on the defendant, and despite the fact that such service was effected pursuant to the 2nd Order, the writ was indeed brought to the attention of the defendant, who filed an AS on 2 July 2105, and he never sought to set aside the AS (§7). 33.Before the judge and on appeal, Mr Russell Coleman, SC for the plaintiff did not seek to uphold the substituted service on the defendant by post and email to the defendant’s addresses on the Mainland, and only sought to rely on the fact of service on RB in Hong Kong (§9). 34.At §§8 to 14, the judge considered the exercise of discretion under Order 2 rule 1 on the non-compliance of rules, noting in §§11 and 15 that Mr Andrew Liao, SC, who appeared for the defendant throughout[12], had not raised any argument that Order 2 rule 1 is not applicable or as to why the court should not exercise its discretion under that rule. On appeal, Mr Liao has taken a different position that non-compliance with the law of the Mainland as to service would be a ground for the court not to exercise its discretion under Order 2 rule 1. 35.Having expressed agreement with the observations of Stone J in Transamerica Occidental Life Insurance Co (Hong Kong Branch) v King Sound Industry Co Ltd [2005] 1 HKLRD 125 at §§41, 44 and 45 – that proceedings have come to the notice of the defendants and if and in so far as there is some technical failure, that falls to be cured under Order 2 rule 1 – the judge took the view that the proceedings have “clearly and manifestly been brought to the attention of the defendant”. She said further in §§12 and 13:
36.For the above reasons, the judge decided to exercise her discretion under Order 2 rule 1 and to order that the service of the concurrent writ on RB in Hong Kong, as acknowledged by RB on behalf of the defendant on 2 July 2015, do stand as good and effective service. 37.As to the contention that the service effected was in contravention of the law of the Mainland, specifically Article 277[13] of the Civil Procedure Law (“CPL”), which provides that no foreign authority or individual shall, without permission from the competent authorities of the PRC, serve process within the territory of the PRC, the judge held in §15 there is no question of contravention of, or non-compliance with, the law of the Mainland when the concurrent writ is served on the defendant in Hong Kong. 38.The judge noted Mr Liao’s acceptance that Order 11 rule 5A(1) and the Arrangement only apply to a case where “a writ is to be served on a person to be served in the Mainland of China”, and Article 277 of CPL applies only to service of process “within the territory of the PRC”. She did not regard any order for substituted service on the defendant in Hong Kong as a device to evade the Arrangement reflected in Order 11 rule 5A (§15). Hence, she did not find it necessary to decide whether substituted service can ever be ordered in respect of a defendant who is in the Mainland (§16). Nevertheless, the judge expressed disagreement with the contention that Order 11 rule 5 and Order 65 rule 4, to which reference is made in Order 11 rule 5(1), can have no application to service of writs on defendants in the Mainland (§16). 39.She dealt with Mr Liao’s arguments on this succinctly in §17:
The defendant’s arguments on appeal 40.Mr Liao complained that the judge has failed to pay regard to the defendant’s case and that the Decision contained no detailed analysis of the material provisions. This was advanced as an independent ground of appeal. I do not think the judge has failed to give reasons for a conclusion essential to her decision. The critical issue was that the judge did not regard an order for substituted service on the defendant in Hong Kong as a device to evade the Arrangement and Order 11 rule 5A, as the Arrangement and rule 5A only apply to a case where “a writ is to be served on a person to be served in the Mainland of China.” Having arrived at that view, the judge did not find it necessary to address at length Mr Liao’s arguments on the construction issue of rule 5A and the Basic Law. There is no merit in this independent ground of appeal. 41.Another submission of Mr Liao may also be disposed of shortly. This relates to his construction of Order 11 rule 5A(1). I set out this provision again with the material words in italics for ease of understanding:
42.The phrase “to be served” appeared twice in this provision. Mr Liao argued that this phrase when used a second time should be construed as describing or qualifying the person to be served, not the place where that person is to be served, and should not be understood to mean that the service of the writ is to take place in the Mainland. 43.Mr Coleman submitted to the contrary. He reasoned that if the phrase which appeared a second time is to be removed, this may give rise to some ambiguity. The repetition of “to be served” makes it clear that the place of service of the writ is to be in the Mainland. 44.I would agree with Mr Coleman. The Chinese version of rule 5A is even clearer:
45.Mr Liao accepted that if a Mainland resident happens to be in Hong Kong, the writ can be served on him in Hong Kong, and if he has properly instructed a solicitor to accept service and thus voluntarily submits to jurisdiction, service can be effected on his authorized agent in Hong Kong. But that was not the situation here. Mr Liao’s primary contention was that substituted service is not permissible having regard to the mandatory wording in Order 11 rule 5A, which is the exclusive and mandatory provision governing service on Mainland residents. By virtue of rule 5A(1), “the writ shall be served through the judicial authorities of the Mainland of China”, so other modes of service are thereby excluded. His alternative submission and fallback position was that even if substituted service may be ordered to effect service on a Mainland resident, the mode of service must comply with the law of Mainland China, as Order 11 rule 5(2) provides that “nothing in this rule, rule 5A or any order or direction of the Court made by virtue of it shall authorize or require the doing of anything in a country or place in which service is to be effected which is contrary to the law of that country or place.” 46.Mr Liao asked the court to note that the plaintiff did not seek to support paragraphs (a) and (c) of the 2nd Order (ordering substituted service of the documents by post and by email to the defendant’s addresses in the Mainland). He reiterated that to order substituted service by delivering the writ to RB’s office in Hong Kong is effectively to bypass rule 5A. RB would have to send the documents delivered to its office to the defendant in the Mainland to bring them to his attention. In so doing, that would contravene the law of Mainland China, namely Article 277 of CPL, which provides that except for the circumstances mentioned in that provision, no foreign authority or individual shall, without permission of the competent authorities in the Mainland, serve process within the Mainland. 47.Mr Liao submitted further that service of a writ out of the jurisdiction is not merely bringing the process to the attention of the defendant. He cited Cecil v Bayat [2011] 1 WLR 3086 in which Stanley Burnton LJ said at §61 that service out of the jurisdiction is more than that as it is an exercise of the power of the court and an exercise of sovereignty within a foreign state, requiring the defendant, if he is to dispute the claim, to file an acknowledgment of service and to participate in litigation in a foreign state. At §§62 to 64, Stanley Burnton LJ cited various dicta in these cases:
48.Hence, Mr Liao submitted that Order 11 rule 5A should be construed against the matrix of the Basic Law which enshrines the principle of “one country, two systems” and the Hong Kong courts are not permitted to direct service of process on a Mainland resident in a manner that would interfere with the sovereignty of the PRC. He pointed out that the PRC, like many sovereign states, has declared against the whole of Article 10 of the Hague Convention[14]. 49.Lastly, Mr Liao submitted that the judge was wrong to exercise her discretion under Order 2 rule 1 to cure any irregularity in the 2nd Order for the non-compliance of rules, as that provision cannot apply in cases of lack of jurisdiction or where there is fundamental irregularity that goes to jurisdiction. If substituted service is permissible where Order 11 rule 5A applies 50.I will first deal with the primary position of Mr Liao, which is that on a proper construction of Order 11 rule 5A, substituted service may not be ordered by the Hong Kong court because this provision is mandatory and exhaustive and it cannot have been the legislative intention that Order 65 rule 4 could be deployed to bypass Order 11 rule 5A and circumvent the Arrangement. 51.I do not propose to recite the established tenets of construction relied on by Mr Liao and the many authorities he cited in support of these tenets – the use of the word “shall” in Order 11 rule 5A(1) denoting a mandatory requirement; the principle of generalibus specialia derogant (special provisions override general ones) such that the specific provision of rule 5A(1) should override the general provision in rule 5(1) where the two provisions cover the same subject matter; and the rule against rendering specific provisions redundant. These principles may be useful in providing guidance to construction but they do not dictate the court’s approach. 52.It is correct that there is no mention of substituted service in the Arrangement and Order 11 rule 5A makes no reference to Order 65 rule 4. Mr Liao relied on the opinion of Mr Kong Qingjiang (孔慶江), the defendant’s expert in PRC law that “for the service of Hong Kong writs or other Hong Kong judicial documents in the Mainland to be legally binding, one must adopt the methods prescribed in the Arrangement.” This opinion expressed by Mr Kong is not relevant to the proper construction of Hong Kong law as regards Order 11 rule 5A. It would also appear to be at odds with PRC law in a case decided by the Higher People’s Court of Guangdong ((2004) 粵高法民三終字第152號) on 15 November 2005[15]. The question there was whether PRC judicial documents had been validly served on the appellant in Hong Kong, and the appellant raised the argument that the judicial documents had not been served in accordance with the Arrangement. The PRC court rejected the argument, holding that the Arrangement did not specify that all PRC judicial documents must be served under the Arrangement and the PRC courts are free to choose an efficient way to serve the documents taking into account the circumstances of each case. 53.In my view, the wording of Order 11 rule 5(1) is clear. It provides that “subject to the following provisions of this rule, Order 10, rule 1(1), (4) and (5) and (6) and Order 65, rule 4 shall apply in relation to the service of a writ notwithstanding that the writ shall be served out of the jurisdiction”. The effect of this is that subject to the provisions that follow in rule 5, a writ served out of the jurisdiction must be served personally on a defendant, and if it appears impracticable for any reason to effect personal service, substituted service may be ordered. Rule 5(2) then makes it clear that “nothing in this rule, rule 5A or any order or direction of the Court made by virtue of it shall authorize or require the doing of anything in a country or place in which service is to be effected which is contrary to the law of that country or place.” The requirement of personal service mentioned in rule 5(1) is qualified by rule 5(3), which provides that (a) the writ need not be served personally so long as it is served in accordance with the law of the country or place in which service is effected, and (b) need not be served by the plaintiff or his agent if it is served by a method provided for by rule 5A, 6 or 7. I reject Mr Liao’s contention that Order 65 rule 4 does not apply to the service of process on a Mainland resident merely because rule 5(1) does not specifically mention rule 5A, unlike rule 5(2), (3) and (5). 54.There is no conflict between the general provision in rule 5(1) and the specific provision in rule 5A(1). The latter applies to the situation where service of a writ is to be effected in the Mainland of China, and provides that the writ must be served through the judicial authorities of the Mainland. This is to give effect to §2 of the Arrangement (requests for service shall be made through the various Higher People’s Courts in the Mainland) and §6 (service of judicial documents shall be effected in accordance with the law of the place in which the entrusted party is situated). The relevant law of the Mainland is Article 277 of the CPL, which governs the service of process within the territory of the PRC. 55.If substituted service is ordered to be effected outside the Mainland, the Arrangement and rule 5A will not be engaged. But if substituted service is ordered to be effected in the Mainland, the Arrangement and rule 5A will apply. There is specific provision for this in rule 5A(3)(c), which provides that “if a particular method of service by the judicial authorities of the Mainland of China is desired by the person making the request”, an indication of that particular method must be contained in the request for service lodged with the Registry of the High Court. As Mr Coleman has submitted, there is no redundancy or bypassing of any rule. 56.I would add this. As the objective of substituted service is to bring knowledge of the writ to the defendant by such means that would reach him in all reasonable probability, in the case of a person residing on the Mainland, one would expect the methods of substituted service to involve service in the Mainland in most instances. 57.I agree with the judge in §17 of the Decision that in a proper case, substituted service of the writ may be ordered on a defendant residing in the Mainland. The judge has recognised that it may be open to a defendant to argue that the manner of service actually effected under the order for substituted service is contrary to PRC law, by reference to Order 11 rule 5(2). Substituted service to be effected in the Mainland 58.As mentioned above, the plaintiff has not sought to support the methods of substituted service to be effected in the Mainland as provided in the 2nd Order. Strictly speaking, here we are not concerned with substituted service in the Mainland that may be ordered by the Hong Kong court. But as submissions on this have been made at some length, it is appropriate that I should endeavour to address this issue. 59.Where substituted service is to be effected in the Mainland, the order or direction made by the Hong Kong court must not contravene the law of the PRC, as provided in Order 11 rule 5(2). The Arrangement and Rule 5A are engaged, and that means the applicant, who has obtained an order for substituted service, must lodge in accordance with rule 5A(3)(c) a request with the Registry of the High Court. If a particular method or methods of service is desired to be made by the judicial authorities in the Mainland, the request must indicate the same. 60.Mr Liao referred us to the decision of Deputy High Court Judge B Chu (as she then was) in Director of Social Welfare v HSP, HCMP 598/2013, 9 August 2013, at §§43, 70, 71 and 79. In that case, it was held that service of the originating summons by substituted service should comply with Order 11 rules 5 and 5A and service in the Mainland would have to be effected through the judicial authorities of the Mainland. In §79, the court noted there was no evidence that service by registered post to the last known addresses of the party to be served in the Mainland was in accordance with the laws of the Mainland and hence it was not clear whether the method of substituted service as ordered had complied with the laws of the Mainland. This seems to me to be the correct approach. 61.Here, we have some evidence of alternative modes of service in the CPL and in Interpretation No. 5 [2015] of the Supreme People’s Court on the Application of the Civil Procedure Law adopted on 18 December 2014. 62.Relevant provisions in Section 2 of the CPL that provide for alternative modes of service are found in Articles 86, 87, 88, 90 and 92. 63.Article 86 governs the situation where the person to be served refuses to receive process or his or her cohabiting adult family member refuses to receive process. The process server may leave the process at the domicile[16] of the person to be served upon compliance with certain steps as specified in that provision. 64.Article 87 provides that with the consent of the party to be served, a People’s Court may serve process by fax, email and other means capable of confirming receipt by the person to be served, except for a judgment. 65.Article 88 provides that where direct service of process is difficult, service may be entrusted to another People’s Court or be conducted by post. If process is served by post, the date of receipt stated on the service acknowledgment shall be the date of service. 66.Article 90 provides that where the person to be served is incarcerated, process shall be served on the person through the incarceration facility. 67.Article 92 provides that where the whereabouts of the person to be served is unknown or service of process is not possible by other means set out in Section 2, process may be served by public announcement and process shall be deemed to be served 60 days after the date of public announcement. The reasons for and the course of service of process by public announcement shall be recorded in the case file. 68.By Article 138 of Interpretation No. 5 [2015] of the Supreme People’s Court, it is provided that for the service of process by announcement, an announcement shall be posted on the bulletin board of the court or at the domicile of the person to be served. An announcement may also be published in newspaper, information networks and other media. Where a People’s Court posts an announcement at a domicile of the person to be served, the process of posting shall be recorded by photograph, video and other means. 69.The defendant’s expert in PRC law, Mr Kong, referred to some of the above provisions in his opinion and apparently accepted that judicial documents from Hong Kong courts may be served in the Mainland by methods other than direct delivery. He only stipulated that “the Higher People’s Court in the Mainland must have officially accepted the entrustment of the Hong Kong High Court before the relevant Mainland court can choose a method of service on its own discretion for delivering documents.” 70.On the available materials, there are clearly ways and means by which substituted service to be effected in the Mainland can be made to comply with the Mainland laws. It is up to an applicant to adduce suitable evidence to satisfy the court in Hong Kong and a Higher People’s Court in the Mainland that the alternative method or methods by which process is proposed to be effected in the Mainland by the judicial authorities is appropriate in all the circumstances. Substituted service to be effected in Hong Kong 71.I turn to consider the situation in the present case, in which substituted service was ordered to be served on the office of RB in Hong Kong, when RB had not been authorised by the defendant to accept service. There are two issues here: is this within the jurisdiction of the Hong Kong court and if so is it appropriate to so order. 72.As mentioned earlier, it may not be usual to order substituted service in Hong Kong for a defendant residing in the Mainland, but I see no reason why such an order is not within the jurisdiction of the Hong Kong court. I reject Mr Liao’s submission that the order is in contravention of the Arrangement or rule 5A as RB would have to forward the writ to the defendant in the Mainland to bring it to his attention, so in that sense there would be service on the defendant in the Mainland not effected through the judicial authorities. As submitted by Mr Coleman, the same could be said if RB had been authorised to accept service for the defendant. It could not be suggested in that situation there was contravention of PRC law for RB to send the writ to the defendant in Beijing. 73.As for the submission that such an order is inappropriate as an interference with the sovereignty of Mainland jurisdiction, I note that even in Cecil v Bayat, Stanley Burnton LJ accepted at §65 that substituted service, other than the mode of service permitted under the Hague Convention, may be permitted in special and exceptional circumstances. In general, the desire to avoid the delay inherent in service by the methods permitted under the Convention would not be a sufficient reason for an order for service by an alternative method (§§66 and 67). But service by alternative means may be justified by facts as where there are grounds for believing that the defendant has sought or will seek to avoid personal service (§68)[17]. 74.The various dicta quoted by Stanley Burnton LJ on the interference with sovereignty of a foreign jurisdiction in earlier cases must now be read in light of the judgment of Lord Sumption JSC in Abela v Baadarini [2013] 1 WLR 2043 at §53 (with whom Lord Neuberger of Abbotsbury PSC, Lord Reed and Lord Carnwath JJSC agreed):
75.Lord Clarke of Stone-cum-Ebony JSC expressed separate agreement with the approach of Lord Sumption. He said this at §45:
76.I consider that the statements of Lord Sumption apply by and large to the kind of situation we are concerned with. Hong Kong has always adopted the doctrine of forum non conveniens. The Arrangement, which reflected the principles of the Hague Convention, re-established the reciprocal arrangement for the service of judicial documents generally along the lines as before. So taking a realistic view of the situation, it is correct to say that in the great majority of cases where service on a person in the Mainland of China is authorised, there will have been either a contractual submission to the jurisdiction of the Hong Kong court or else a substantial connection between the dispute and Hong Kong. Similarly, litigation between the residents of the Mainland and Hong Kong has become a routine incident of our commercial life. To adopt the words of Lord Sumption, service on a person in the Mainland should be regarded as a pragmatic decision in the interests of the efficient conduct of litigation in an appropriate forum. And to paraphrase Lord Clarke in the passage quoted, our rules on methods of service have the legitimate sensibilities of the Mainland jurisdiction in mind, in that nothing in our rules or any court order made by virtue of the rules authorises or requires the doing of anything contrary to the laws of the Mainland. 77.For the above reasons, I reject Mr Liao’s arguments that to order substituted service to be effected in Hong Kong would be to interfere with the sovereignty of the Mainland courts and would thereby contravene the Basic Law. 78.On the available evidence, there is sufficient material to find that a case for substituted service was made out in that it would appear impracticable for personal service to be effected on the defendant in Beijing. The representatives of the Higher People’s Court in Beijing attempted to effect personal service twice at the defendant’s work place. They contacted the defendant and his secretary by telephone at the reception desk of his business address and the calls went unanswered. There was no reason to think that the defendant did not receive the messages left for him on each of those occasions. He did not respond to any of the messages. 79.Although RB had not been authorised to accept service in this action, RB remained the solicitors on record for the defendant in another action in which he sued as one of the plaintiffs. There was reason to think that by delivering the writ to RB’s office marked to the attention of the defendant care of RB, the writ would have come to the notice of the defendant in all reasonable probability. 80.There is no issue on appeal that the plaintiff has established a good arguable case that its claims fall within Order 11 rule 1(1)(d), (f) and/or (p). 81.I see no basis to impugn the order for substituted service to be effected in Hong Kong made in the exercise of the judge’s discretion. The exercise of discretion under Order 2 rule 1 82.The judge exercised her discretion under Order 2 rule 1 insofar as there was non-compliance of the rules to cure any irregularity that may arise, for the reasons given in §§12 and 13 of the Decision. 83.I do not find it necessary to deal with the arguments that the AS filed by RB constituted an implied warranty they had instructions to accept service mentioned in §9 of the Decision. There is sufficient material for the judge to exercise her discretion in favour of the plaintiff without relying on these arguments. 84.For the reasons I have given earlier, I reject Mr Liao’s submission that the discretion in Order 2 rule 1 may not be invoked for want of jurisdiction. I reject the argument that the entirety of the 2nd Order should be set aside because parts of the order do not comply with Order 11 rule 5(2) as they contravene PRC law. The fact that the 2nd Order provided for three methods of substituted service and two of them do not appear to comply with rule 5(2) is just the kind of situation where the failure to comply with the rules should be treated as an irregularity and should not nullify the proceedings. 85.I agree with the judge for the reasons she gave in §§12 and 13 of the Decision, there is no basis to interfere with the exercise of her discretion. Conclusion 86.I would dismiss the appeal with an order nisi that the defendant should pay the plaintiff’s costs of this appeal.
Mr Andrew Liao SC, Mr Nigel Aiken SC, Mr Kenneth C K Chow, Ms Grace Tam and Mr William Tse, instructed by Waller Ma Huang & Yeung, for the Defendant (Appellant) Mr Russell Coleman SC, instructed by Allen & Overy, for the Plaintiff (Respondent) [1] Brief for the Legislative Council in January 1999 relating to the Rules of the High Court (Amendment) Rules 1999, §3. [2] This reads: “A writ must be served personally on each defendant by the plaintiff or his agent.” [3] This reads: “Where a defendant’s solicitor indorses on the writ a statement that he accepts service of the writ on behalf of that defendant, the writ shall be deemed to have been duly served on that defendant and to have been so served on the date on which the indorsement was made.” [4] This reads: “Subject to Order 12, rule 7, where a writ is not duly served on a defendant but he acknowledges service of it, the writ shall be deemed, unless the contrary is shown, to have been duly served on him and to have been so served on the date on which he acknowledged service.” [5] This reads: “Every copy of a writ for service on a defendant shall be sealed with the seal of the High Court and shall be accompanied by a form of acknowledgment of service …” [6] This is the provision governing substituted service, rule 4(1) provides if “it appears to the Court it is impracticable for any reason” to serve any document which is required to be served personally, substituted service may be ordered. [7] As published in Hong Kong Civil Procedure 2015, vol 2, §E8/10 [8] On 16 March 2009, the Several Provisions of the Supreme People’s Court on the Issues Concerning the Service of Judicial Documents of Hong Kong-and Macao-related Civil and Commercial Cases (“the Provisions”) came into force. The Provisions only apply where the court, in the process of hearing a civil or commercial case relating to Hong Kong or Macao, serves the relevant judicial documents upon a party who has his domicile in Hong Kong or Macao. The Provisions provide for two instances where the PRC court may directly serve the PRC judicial documents on the party in the Mainland. [9] As reported by Li Guoguang, Vice-President of the Supreme People’s Court at a seminar in Beijing in May 2002, and quoted in an article “Inter-Regional Conflict of Laws under “One Country, Two Systems”: Revisiting Chinese Legal Theories and Chinese and Hong Kong Law, with Special Reference to Judicial Assistance” by Guobin Zhu in [2002] HKLJ 615 at 668 to 669. [10] An interview given by Huang Songyou, Vice-President of the Supreme People’s Court on 29 June 2007 [11] The PRC Legal Daily (Fazhi Ribao) on 6 July 2009 [12] With Mr Nigel Aiken, SC, Mr Kenneth Chow, Ms Grace Tam and Mr William Tse [13] The full provision reads: “Judicial assistance shall be requested and provided through the channels prescribed in an international treaty concluded or acceded to by the People’s Republic of China; or in the absence of such a treaty, shall be requested and provided through diplomatic channels. A foreign embassy or consulate to the People’s Republic of China may serve process on and investigate and collect evidence from its citizens but shall not violate the laws of the People’s Republic of China and shall not take compulsory measures. Except for the circumstances in the preceding paragraph, no foreign authority or individual shall, without permission from the competent authorities of the People’s Republic of China, serve process or conduct investigation and collection of evidence within the territory of the People’s Republic of China.” [14] Article 10 reads: “Provided the State of destination does not object, the present Convention shall not interfere with –
[15] Cited in Hong Kong Civil Procedure 2015, vol 2, §E8/10 [16] “Domicile” is defined in Article 3 of Interpretation No. 5 [2015] of the Supreme People’s Court to mean a citizen’s place of permanent residence. [17] There is a difference in the wording between CPR rule 6.15(1) and our Order 65 rule 4. The former provides for “good reason” for the court to order an alternative mode of service, the latter provides for substituted service if “it appears to the Court it is impracticable for any reason” to effect personal service. [18] Our equivalent provision is Order 11 rule 5(2). |
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