Guangzhou Steel Trading Co. Ltd. v. Gga Trading Ltd

HCA 2584/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2584 OF 2014

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BETWEEN

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DECISION

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1.There are before the court the following four applications (collectively “Applications”):

(1) the defendant’s application by summons dated 29 March 2016 to strike out the plaintiff’s claim and discharge the Injunction (defined in paragraph 9 below) pursuant to Order 18, rule 19(1)(d) and Order 29, rule 1 and under the inherent jurisdiction of the court on the ground that this action has been pursued without the plaintiff’s authority and is therefore an abuse of process (“Strikeout Application”);

(2) an application by Lu Siwei (盧思惟) (“Lu”) by summons dated 25 May 2016 to be joined as the 2^nd plaintiff to this action (“Joinder Application”) on the ground that she is the true beneficial owner of the fund that is the subject matter of the plaintiff’s claim herein;

(3) the plaintiff’s application by summons dated 20 July 2016 for leave to cross‑examine Gao Guo‑ping (高國平) (“Gao”) and Wang Wen‑fei (黃文飛) (“Wang”) upon their respective affirmations filed on 29 April 2015 (“Gao Affirmation”)[1] and 30 March 2016 (“1^st Wang Affirmation”)[2] on behalf of the defendant at the substantive hearing of the Strikeout Application (“Cross‑examination Application”); and

(4) the defendant’s application by summons dated 23 August 2016 to adjourn the aforesaid three applications pending the outcome of the appeal by Chen Chao (陳超) (“Chen”) and He Chao Jing (何朝京) (“He”) from the decision of the People’s Court in the Huangbu District (黄埔區), Guangzhou (“PRC Court”) in Case (2015) 穂蘿法行初字第36號 (“Case 36”) (“Adjournment Application”).

2.Lu has, through her counsel, clarified that she has taken out the Joinder Application only out of abundance of caution in case the court should accede to the Strikeout Application.

BACKGROUND RELEVANT TO THE APPLICATIONS

The plaintiff’s claim and the defendant’s ground of defence

3.The plaintiff is a company incorporated in the PRC on 31 July 2009.

4.It maintained an account No 11014659671002 (“Ping An Account”) with Ping An Bank (平安銀行), Panyu branch in Guangzhou (“PAB”).  The Ping An Account was operable by, inter alia, the use of the stamp chops of “廣州納瑧貿易公司財務專用章” and of “黃文康” (“Chops”).

5.On 5 December 2014, a transfer (“Subject Fund Transfer”) of RMB16,000,000 (“Fund”) was made from the Pang An Account to an account No 652402082838 held with The Hongkong and Shanghai Banking Corporation Limited (“HSBC Account”) in the name of the defendant, a company incorporated in Seychelles on 8 May 2014 and of which one Li Zhigang (李志剛) (“Li”) is the sole director and shareholder.

6.The Subject Fund Transfer was described in the relevant fund transfer application form as being a “進口鋼板制品預付貨款” (“advanced payment for imported steel plates”).  

7.However, according to the plaintiff,[3] the plaintiff had no business operation prior to the share acquisition to be mentioned in paragraph 13 below, nor did it have any business or trading relationship with the defendant.  It is the plaintiff’s pleaded case that Li was at the material time employed by the plaintiff as a personal assistant to one Yang Dawei (楊大偉) (“Yang”), a director and one of the beneficial shareholders of the plaintiff, and that the Subject Fund Transfer was effected by Li by the unauthorised use of the Chops.

8.On 7 December 2014, having been alerted to the Subject Fund Transfer on the previous day after it had been completed, the plaintiff made a complaint about the same to the Hong Kong Police Force, following which the HSBC Account (with the Fund still in it) has been frozen pending police investigation. 

9.On 20 December 2014, the plaintiff issued the writ of summons in this action to claim for the return of the Fund.  In the meantime, the plaintiff had on 18 December 2014 obtained an ex parte Mareva injunction covering the Fund in the HSBC Account.  Such injunction was continued by successive orders of this court until 25 June 2015 when Mr Justice Chung discharged the same but re‑granted a fresh Mareva injunction in substantially the same terms (“Injunction”) until the determination of this action for the reasons set out in his Lordship’s Reasons for Decision dated 16 July 2015.

10.In defence, the defendant denies that Li was an employee of the plaintiff; that he was involved in the Subject Fund Transfer; or that there was no trading relationship between the plaintiff and the defendant.  It is the defendant’s case that the Subject Fund Transfer was effected by Wang, the plaintiff’s then legal representative, for the plaintiff in performance of a contract No KES1410A25 entered into by Wang on the plaintiff’s behalf on 15 October 2014 to purchase from the defendant 300,000 kg of steel spring (“Goods”) at the price of RMB16,200,000, for which the defendant had issued to the plaintiff an invoice No chg141015038 of the same date. According to the defendant, the plaintiff had taken delivery of and accepted the Goods.  More particularly, the defendant had directed one Honston International Logistics Co Ltd, a storage company in Hong Kong which had been storing the Goods for the defendant, to issue to the plaintiff a collection receipt dated 15 October 2014 with which the plaintiff could collect the Goods; and the plaintiff had caused its agent to inspect the Goods and accepted and acknowledged acceptance of the same, also on 15 October 2014.

Changes in the plaintiff’s shareholders and legal representative and PRC legal proceedings in relation thereto

11.Prior to 29 October 2014, all the shares in the plaintiff were held in the name of Wang who was also the plaintiff’s legal representative.

12.The records kept by the Luogang (蘿崗) branch of the Guangzhou Industry and Commerce Administration Bureau (“廣州市工商行政管理局”) (“Bureau”) show that it had approved the following subsequent changes regarding the plaintiff:

(1) First, on 3 November 2014, the Bureau approved a transfer of 99% of the shares in the plaintiff from Wang’s name to that of Chen so that the plaintiff’s shares became held as to 99% by Chen and 1% by Wang.

(2) Second, on 31 December 2014, the Bureau approved a transfer of 98% of the shares in the plaintiff from Chen’s name back into that of Wang so that the plaintiff’s shares became held as to 99% by Wang and 1% by Chen.

(3) Third, on 12 January 2015, the Bureau approved

(a) a transfer of 1% the shares in the plaintiff from Wang’s name into that of He so that the plaintiff’s shares became held as to 98% by Wang, 1% by Chen and 1% by He; and 

(b) the replacement of Wang by He as the legal representative of the plaintiff.

13.In her 2^nd affirmation dated 24 May 2016 (“2^nd Lu Affirmation”), made in opposition to the Strikeout Application, Lu has deposed to the following:

(1) In about June or July 2014, Lu told a director of the Guangzhou branch of Bank of East Asia Limited that she was desirous of purchasing a PRC shell company with a current licence to conduct overseas trading so that she could start trading through the company immediately after acquiring the same.

(2) That person introduced Li to Lu.  Li told Lu that he had a company that fulfilled her requirement (which turned out to be the plaintiff); that the plaintiff’s shares, though legally held by his relative, were beneficially owned by him and that the plaintiff had not commenced operation yet.

(3) On 12 October 2014, Li gave Lu the online security key and password of the Ping An Account.  Lu made several fund transfers through such account and became satisfied with its status. 

(4) Li agreed to sell and Lu agreed to buy the plaintiff at RMB50,000 which was paid by Lu to Li on 16 October 2014.  This payment is evidenced by a document entitled “交易對手流水查詢” and dated 14 April 2016 issued by the bank with which Lu held the account from which she made the online remittance to Li’s account with Guangzhou Huanan branch of the Industrial and Commercial Bank of China on 16 October 2014.

(5) On 29 October 2014, Wang (who held the shares in the plaintiff on trust for Li and was then the plaintiff’s legal representative) and Chen (who was the nominee of Lu and others to whom Lu has given beneficial shares in the plaintiff namely, Yang, one Nashun and one Yuan Gui Qin (袁貴琴) (“Yuan”)) completed the formalities for the sale and purchase of the shares in the plaintiff at the office of Guangdong Sheng Chen Law Firm in the presence of one Zhang Xi Mou (張新茂) (“Lawyer Zhang”).  Li and Gao as well as one Chen Hai Shan (who were brought along by Li) were also in attendance.

(6) Two sets of documents were executed, one dated 29 October 2014 for the transfer of 99% of the shares in the plaintiff (“99% Share Transfer”) and one undated for the transfer of the remaining 1% (“1% Share Transfer”).

(7) Only the former set of documents were submitted to the Bureau for approval and only the 99% Share Transfer was legally effected because a 100% change in shareholding would necessitate an immediate change of the legal representative of the company which would in turn require a fresh application for a licence to trade overseas, thereby defeating the purpose of the acquisition. It was however acknowledged by Wang in front of Lawyer Zhang that he was holding the remaining 1% share and the office of legal representative solely on behalf of Lu.  Wang signed the undated documents relating to the 1% Share Transfer to protect Lu’s interest.

(8) On the same occasion, Li and Wang also passed the business licence, company certificate, company chop and account chop of the plaintiff and Wang’s legal representative’s personal chop to Chen.

(9) The 99% Share Transfer was approved by the Bureau, as evidenced by a “准予變更登記(備䅁)通知書” dated 3 November 2014.

(10) After the discovery of the Subject Fund Transfer, on 9 January 2015, Lu decided to complete the 1% Share Transfer in favour of He.  This was approved by the Bureau, as evidenced by a “准予變更登記(備䅁)通知書” dated 12 January 2015.

(11) Then, in about early April 2015, Chen discovered that someone had forged her signature on certain documents dated 23 December 2014 similar to those effecting the 99% Share Transfer to effect a transfer of 98% of the plaintiff’s shares from her name back into that of Wang (“98% Share Transfer”), which transfer had been approved by the Bureau by a “准予變更登記(備䅁)通知書” dated 31 December 2014 (“98% Share Transfer Approval Notice”).

(12) On 3 April 2015, Chen commenced proceedings by a “行政起訴狀” against the Bureau in the PRC Court under Case (2015) 穂蘿法行初字第50號 (“Case 50”) to set aside the 98% Share Transfer Approval Notice and to restore the shareholding of the plaintiff as it was before 31 December 2014.

(13) By the PRC Court’s notice dated 10 April 2015, Wang and the plaintiff were added as third parties to Case 50.

14.By a judgment dated 10 August 2016 (“Case 50 Judgment”), the PRC Court:

(1) found the documents pertaining to the 98% Share Transfer submitted to the Bureau (namely, the plaintiff’s shareholders’ resolution dated 23 December 2014 approving the 98% Share Transfer and amended articles of association following such transfer) to be false because what purported to be Chen’s signatures on those documents and the sample signature submitted by Chen came from different hands; and

(2) set aside the 98% Share Transfer Approval Notice.

15.The PRC Court, however, dismissed Chen’s other claims, most noticeably, that for the restoration of the plaintiff’s shareholding to what it was before 31 December 2014.

16.According to the Case 50 Judgment, despite having been joined as third parties and lawfully summonsed by the court, the plaintiff and Wang refused or failed to attend court without proper reasons, nor did they otherwise present evidence or make representation, and Case 50 was heard on 19 July 2016 in their absence.

17.There is no explanation for Wang’s inaction in Case 50.  However, I was given to understand that an appeal against the Case 50 Judgment was intended.

18.On the other hand, by the 1^st Wang Affirmation, Wang claims to be the 99% majority shareholder and the legal representative of the plaintiff.  He discovered shortly after 12 January 2015 that he had been unlawfully removed as the majority shareholder and legal representative of the plaintiff, whereupon he issued a claim against the Bureau for approving and registering such changes.

19.In this regard, the records produced by the defendant show that on 10 March 2015, Wang commenced proceedings also by a “行政起訴狀” against the Bureau in the PRC Court under Case 36 to set aside the approval that the Bureau had given on 12 January 2015 to the changes to the plaintiff’s membership, legal representative and articles of association and to restore Wang’s shareholding in the plaintiff and his position as the plaintiff’s legal representative as it was before 12 January 2015.

20.By a judgment dated 19 December 2015 (“Case 36 Judgment”), the PRC Court:

(1) found that what appeared to be Wang’s signatures on the documents submitted to the Bureau for approval of the 1% Share Transfer and the change of the plaintiff’s legal representative from Wang to He were forged; and

(2) set aside the Bureau’s administrative act of registering changes to the plaintiff’s membership, legal representative and articles of association on 12 January 2015.

21.Similarly, I note that the PRC Court dismissed Wang’s other claims, which included one for the restoration of his shareholding in the plaintiff and position as the plaintiff’s legal representative as it was before 12 January 2015.

22.According to the Case 36 Judgment:

(1) the plaintiff, He, Chen and Yuan had been joined as third parties;

(2) Chen and Yuan attended court through their legal representatives; and

(3) despite having been joined as third parties and lawfully summonsed by the court, the plaintiff and He refused or failed to attend court without proper reasons, nor did they otherwise present evidence or make representation, and Case 50 was heard on 17 August 2015 in their absence. 

23.In this connection, according to the Affirmation of He dated 13 May 2015 (“He Affirmation”), he was unaware of the commencement and pendency of Case 36 before reading the Gao Affirmation which, in paragraph 22 thereof, referred to Case 36 and exhibited a copy of the “行政起訴狀” therein.  Lu has also deposed to being first alerted by her solicitors to the commencement of Case 36 by Wang because of the Gao Affirmation.  Upon reading the Gao Affirmation, He approached the PRC Court which told him that it had decided to terminate the proceedings in Case 36 after communicating with the Commercial Crime Unit of the Guangzhou Municipal Public Security Bureau which had arrested Wang upon the plaintiff’s complaint and that a formal notice would be issued by the court to the plaintiff in due course.

24.According to the 2^nd Lu Affirmation, Yuan first learnt that Case 36 had in fact not been dismissed but would soon go to trial shortly before 17 August 2015.  Though she was not formally a party to the case, Lu asked Yuan (her fellow beneficial shareholder of the plaintiff) to represent her at such trial as she was away during that time. 

25.Chen and He have since lodged an appeal against the Case 36 Judgment.

Source of the fund

26.The statements of the Ping An Account exhibited to the He Affirmation show that such account only had a credit balance of RMB734.45 on 5 December 2014 before the transfers to be mentioned in the next paragraph.

27.On 5 December 2014, four sums of RMB3,500,000, RMB3,500,000, RMB500,000 and RMB8,500,000 (totalling RMB16,000,000) were transferred to the Ping An Account. 

28.It seems clear to me that the Fund was sourced from these four deposits.

29.According to paragraph 67 of the 2^nd Lu Affirmation, these four deposits came from two sources:

(1) RMB7,500,000 (RMB3,500,000 + RMB3,500,000 + RMB500,000) from the proceeds of sale of the stock investments made by Yuan on behalf of Lu; and

(2) RMB8,500,000 from a loan borrowed by Lu from one Chen Le Mei (陳樂媚).

In support, Lu has produced a Chinese agreement made on 20 November 2013 between Lu and Yuan for joint stock investment; a “交易對手流水查詢” dated 25 April 2016 showing two transfers of RMB3,500,000 each from Lu to Yuan on 21 November 2013; three PAB deposit slips showing the transfers of RMB3,500,000, RMB3,500,000 and RMB500,000 from Yuan to the plaintiff in the Ping An Account on 5 December 2014; a Chinese loan agreement dated 4 December 2014 between Lu and the said Chen Le Mei; and a PAB deposit slip showing another transfer of RMB8,500,000 from Yuan to the plaintiff in the Ping An Account on 5 December 2014.  The last mentioned deposit represented the loan from the said Chen Le Mei.  However, the transfer was made from Yuan because the said Chen Le Mei had transferred the advanced sum to Yuan first.

30.Lu has further deposed in paragraphs 66, 68 and 69 of the 2^nd Lu Affirmation that the said total sum of RMB16,000,000 was deposited into the Ping An Account for the sole and specific purpose of being transferred to an account No 390601755883 held with Hang Seng Bank Limited by Kesheng Mechanical Equipment Company Limited (“Kesheng”), a Hong Kong company beneficially wholly owned by Lu.  In support, Lu has produced a Chinese agreement dated 4 December 2014 between Yuan (as Lu’s agent) and the plaintiff by which the latter undertook to transfer the sum of RMB16,000,000 to be transmitted to the Ping An Account on the next day to Kesheng’s said account immediately upon receipt.  Lu would not have caused RMB16,000,000 to be paid into the Ping An Account if the plaintiff had not been 100% beneficially owned by her and her associates.  On 5 December 2014, Lu asked Li to attend PAB’s Panyu branch with He who brought along with him the Chops to process the transfer to Kesheng.  Having been alerted about the Subject Fund Transfer, on about 6 December 2014, Lu attended the bank to view the CCTV footage of 5 December 2014 and found that after Li and He had left, Li returned to the bank to substitute the application form for the transfer in favour of Kesheng with another document which turned out to be the application form for the Subject Fund Transfer.

DISCUSSIONS

31.I believe it is logical to deal with the Applications in the following order:

(1) first, the Adjournment Application;

(2) second, the Strikeout Application and the Cross‑examination Application (which would arise if there is to be a trial of the question of the plaintiff’s authorisation of the present action); and

(3) third, the Joinder Application (which would arise if the Strikeout Application is allowed).

The Adjournment Application

32.The Strikeout Application is premised upon Wang being the 99% shareholder of the plaintiff and his not having authorised this action as such.

33.In support, the defendant puts forward the Case 36 Judgment as determining that Wang is the majority shareholder of the plaintiff so that the outcome of the appeal from that judgment would affect the Strikeout Application.  This is so because the Strikeout Application would very likely be withdrawn if Wang should fail to resist Chen and He’s appeal from the Case 36 Judgment.  See paragraph 11 of the skeleton submission for the defendant.

34.With respect, the defendant has misconstrued the scope of Wang’s claim in Case 36 and therefore overstated the relevance and significance of the Case 36 Judgment. 

35.Properly read and analysed, on the plaintiff’s shareholding, the only claim made by Wang in Case 36 and the only disposition made by the PRC Court in the Case 36 Judgment was the setting aside of the Bureau’s approval and registration of the 1% Share Transfer.  The only transaction put in issue and disposed in Case 36 was the 1% Share Transfer.  Wang made no claim regarding, and the PRC Court was thus not concerned with, the validity of either the 99% Share Transfer or the 98% Share Transfer (notwithstanding that the body of the Case 36 Judgment did note Wang’s allegation that he had never transferred his shares in the plaintiff to anyone and his query regarding the authenticity of the documents pertaining to the sale and purchase of the shares in the plaintiff produced by Yuan).

36.In my view, what may potentially be relevant is the outcome of Wang’s intended appeal from the Case 50 Judgment which sets aside the Bureau’s approval and registration of the 98% Share Transfer, the transaction which last constituted Wang the majority shareholder of the plaintiff.  

37.Though this is not the basis upon which the Adjournment Application is made, I have for the sake of completeness considered whether, but I am not persuaded that, the parties hereto should await the outcome of Wang’s intended appeal from the Case 50 Judgment. 

38.First, I have no explanation as to why Wang (despite having been joined and summonsed by the PRC Court as a third party) did not appear in Case 50 with the result that such case was resolved against his interest by the PRC Court without his evidence or representation.  The defendant’s present predicament can be said to be of Wang’s creation.

39.Second, I have not been shown any material that suggests that Wang’s intended appeal from the Case 50 Judgment has prospects.  Nor have I been given any estimate as to when such appeal can be expected to be ruled on.

40.Third, unlike the position that it has taken on the appeal from the Case 36 Judgment (see paragraph 33 above), the defendant was not forthcoming when I asked its counsel, Ms Candy Tang, whether the defendant would accept the outcome of Wang’s intended appeal from the Case 50 Judgment (to which the defendant would not be a party) and withdraw the Strikeout Application if such appeal should be dismissed.

41.Fourth, in any event, Case 50 did not involve a direct claim by Chen against Wang to set aside the 98% Share Transfer.  I am not familiar with, and neither party has attempted to explain to me, the nature of the claim in Case 50 or its consequences.  In the absence of assistance, such claim appears on its face to be an administrative action against the government authority having the function to approve and register changes to, inter alia, the shareholding of a company.  The only order made by the Case 50 Judgment was the setting aside of the 98% Share Transfer Approval Notice. 

42.What is not clear to me is whether a successful appeal from such an order by Wang would necessarily pre‑empt Chen from having a second bite of the cherry so to speak by raising a direct claim against Wang on the validity of the 98% Share Transfer.

43.For these reasons, I am not convinced that the plaintiff should be made to wait for Wang to prosecute the appeal from the Case 50 Judgment.

The Strikeout Application and the Cross‑examination Application

44.It is well established that:

(1) A contention that an action is not authorised by the named plaintiff must be raised by way of an application to strike out the name of the plaintiff, and finally resolved, at the outset under the inherent jurisdiction of the court, as opposed to being raised as a point of defence and left to be determined at trial together with the substantive issues between the parties.

(2) Unlike the ordinary case to strike out a pleading under Order 18, rule 19(1), the court seised of an application to strike out the name of the plaintiff for want of authority should not dismiss the application because the affidavit evidence does not disclose a “plain and obvious” case of a lack of authority.

(3) An application to strike out of this nature requires a definitive determination by the court before the incurrence of further time and costs by the parties in proceeding with the action.

(4) The burden lies with those suing in the name of the plaintiff to prove authorisation.

(5) The question of authority is a question of fact (or sometimes a mixed question of fact and law).

(6) Depending on the affidavit evidence that has been adduced by the parties:

(a) The court may summarily dispose of the objection raised by the defendant if it is plainly bad on the affidavit evidence.

(b) Conversely, the court can summarily strike out the name of the plaintiff if the evidence placed by those suing in the name of the plaintiff is utterly unbelievable.

(c) In other cases, the court would have to give directions for the determination of the application.  Where it is impossible to make a finding of fact on affidavit evidence, the court should in particular consider directing the cross‑examination of the deponents of the affidavits/affirmations that have been filed by the parties on the issue of authority.

(7) In assessing whether a factual dispute as to authority should go to trial, an analogy can be drawn with an application for summary judgment under Order 14 in which a distinction is drawn between an assertion of fact that is unbelievable and one that should not be believed.

See A Cheung J’s judgment in Kammy Town Limited v Super Glory Corporation Limited, HCA 3524/2003, unreported, 14 January 2005, following Airways Ltd v Bowen [1985] BCLC 355 (CA) and the other cases cited in paragraph 10.

45.On these notes, I turn to the affidavit evidence that has been placed before me by the parties on the issue of the plaintiff’s authorisation.

46.I believe it is not unfair for me to say that the Strikeout Application is grounded entirely upon Wang’s assertion that he is the 99% shareholder of the plaintiff.  Save for the Case 36 Judgment, the defendant has not sought to support such claim in any other way.  For the reasons already set out in paragraph 35 above, the reliance on the Case 36 Judgment is misconceived.

47.I have in paragraph 13 above summarised the affidavit evidence, including documentary evidence, adduced by those pursing this action in the plaintiff’s name in answer to the defendant’s challenge to their authority to use the plaintiff’s name.  The defendant has chosen not to file and serve any affirmation in reply despite having secured leave to do so.[4] 

48.In my opinion, the version of events presented by the 2^nd Lu Affirmation, uncontroverted by any reply evidence from the defendant, shows Wang’s claim to a majority shareholding of the plaintiff to be plainly incredible and therefore bad.  Those pursing this action in the plaintiff’s name have in my view discharged the burden on them to prove authorisation, without the need for a trial.

49.At the hearing, upon realising that the court could dispose of the Strikeout Application in favour of those suing in the plaintiff’s name in a summary manner on the present state of the affidavit evidence, Ms Tang belatedly made an oral application for adjournment of the Strikeout Application to allow the defendant to file and serve reply affirmation(s). 

50.I have given such application serious consideration but have, on balance, come to the conclusion that I should refuse it in proper exercise of my case management duty and power.

(1) The indulgence sought by the defendant is not to be granted as a matter of course, but should be grounded upon evidence that credibly explains the failure to file and serve reply evidence in accordance with the timetable agreed between the parties and indorsed by the court and (preferably) also gives an outline of the belated reply evidence so as to demonstrate relevance and to assure the court that it would not be a waste of time to give the defendant another chance.  I have not been provided with any such explanation or outline of evidence.

(2) Insofar as it might be thought that it would be sufficient to refer to the Case 36 Judgment, I repeat paragraph 35 above and question how such a view can possibly be taken.

(3) The defendant is not helped by the fact that it has delayed for almost a year in taking out the Strikeout Application on 29 March 2015 when it is apparent from paragraphs 21 and 22 of the Gao Affirmation that the defendant had been in touch with Wang and obtained a copy of the “行政起訴狀” dated 10 March 2015 lodged by Wang in Case 36, and thereby being alerted to the issue as to whether this action had been properly authorised on behalf of the plaintiff, at the latest in 2015.  The defendant took about 3 months even after the PRC Court gave the Case 36 Judgment.  A point on lack of authority must be taken by a defendant at the earliest opportunity (see Kammy Town Limited, supra, paragraph 11).  By delaying the Strikeout Application, the defendant has encouraged those suing in the plaintiff’s name to incur further time and resources to prepare this action for trial by for example making discovery and compiling witness statements, while the defendant itself has held off making any or any meaningful preparatory efforts.[5]

51.The Strikeout Application should be dismissed summarily.

52.Given the summary disposal of the Strikeout Application, the Cross‑examination Application does not arise.

The Joinder Application

53.Given the indication mentioned in paragraph 2 above and the summary dismissal of the Strikeout Application, I assume that Lu would not proceed with the Joinder Application.

ORDERS

54.To conclude, I dismiss the Strikeout Application and the Adjournment Application and make an order nisi that the defendant should pay to the plaintiff the costs occasioned by these applications, such costs to be taxed if not agreed on a party and party basis with Certificate for Counsel for the hearing on 1 September 2016.

55.Save as to costs, I make no order on the Cross‑examination Application and the Joinder Application.  On costs, I direct the parties to lodge and exchange written submissions within 14 days from the date hereof on what costs orders I should make on these applications and to lodge and exchange written submissions in reply to each other within seven days thereafter.

Mr Lawrence Cheung and Ms Leona Chan, instructed by Francis Kong & Co, for the plaintiff and Madam Lu Siwei

Ms Candy Tang, instructed by George Chan & Co, for the defendant