Bocom International Holdings Co Ltd v. Red Victory Group Ltd and Another

HCA 2603/2018

[2019] HKCFI [1701]

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2603 OF 2018

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Before: Master Lai in Chambers (open to public)

Date of Hearing: 25 June 2019

Date of Decision: 25 June 2019

Date of Reasons for Decision: 9 July 2019

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REASONS FOR DECISION

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Introduction

1.This is an application for default judgment by the plaintiff against the defendants under Order 13 rule 6 and Order 19 rule 7 of the Rules of High Court (the “RHC”) (the “Application”). 

2.I had at the hearing on 25 June 2019 dismissed the Application.  I said that I should give reasons for my aforesaid decision in due course.  I set out below my reasons for my aforesaid decision. 

Background

3.I set out below the plaintiff’s pleaded case against the defendants. 

4.By an assignment agreement dated 15 April 2013 (the “Agreement”), the plaintiff as vendor sold to the 1^st defendant as purchaser a debt and corresponding security due from Wongs Investment Development Holdings Group Limited and its guarantor, a Huang Xian You (the “Assets”).  The Agreement was signed by both the 1^st defendant (as purchaser) and the 2^nd defendant (as guarantor). 

5.By a deed of guarantee and indemnity also dated 15 April 2013 (the “Guarantee”), the 2^nd defendant agreed to secure and indemnify the plaintiff in respect of the 1^st defendant’s obligations under the Agreement. 

6.Both the Agreement and the Guarantee provided for the courts of Hong Kong to have exclusive jurisdiction to settle any dispute arising out of or in connection with the Agreement or the Guarantee, as the case might be. 

7.The consideration for selling the Assets by the plaintiff to the 1^st defendant was paid partly by cash and partly by shares in a company listed in the Stock Exchange of Hong Kong Limited (the “Company”).  The cash consideration was $125,000,000.  The share consideration was shares representing 4.9% of all issued share capital (on a fully-diluted basis) of the Company (the “Shares”). 

8.The Agreement contained anti-dilution protection requiring the 1^st defendant to transfer such additional number of issued shares of the Company (the “Additional Shares”) to the plaintiff or its nominees during the three years from the date of transfer of the Shares so as to maintain the shareholding interests of the plaintiff or its nominees at 4.9% of all issued share capital (on a fully-diluted basis) of the Company or to pay to the plaintiff an amount equivalent to the market value of the Additional Shares on the date of announcement of such dilutive event (the “Anti-Dilution Covenant”). 

9.The 1^st defendant paid the cash consideration to the plaintiff in accordance with the Agreement.  The 1^st defendant also transferred the Shares to the plaintiff on about 18 October 2016.  As such, the Anti-Dilution Covenant would be in force until 18 October 2019. 

10.On about 3 March 2017, the board of the Company (of which the 2^nd defendant was and still is a director and the Chairman) announced a proposal to raise funds of not less than $283,210,000 by way of rights issue (the “Rights Issue”) on the basis of 5 rights shares for every 1 share held in the Company at $0.12 per rights share. 

11.The Rights Issue would have dilutive effect on the plaintiff’s shareholding in the Company.  The plaintiff required the 1^st defendant to perform the Anti-Dilution Covenant. 

12.On about 13 June 2017, the plaintiff issued to the 1^st defendant (copied to the 2^nd defendant) a letter giving the 1^st defendant the following three options: 

(1) to transfer to the plaintiff the Additional Shares;

(2) to pay the requisite subscription price to the plaintiff to enable the plaintiff to subscribe for the Additional Shares; or

(3) to subscribe for the Additional Shares and transfer the same to the plaintiff thereafter.

13.The defendants did not perform any of the aforesaid options proposed by the plaintiff.  The plaintiff pleaded that as a result of the completion of the Rights Issue, the plaintiff’s shareholding in the Company was diluted from 4.9% to 0.82% of the issued share capital of the Company. 

14.On 13 September 2017, the plaintiff’s solicitors issued demand letters to the defendants demanding for the immediate transfer of the Additional Shares to the plaintiff.  The defendants did not transfer the Additional Shares to the plaintiff as demanded.  Hence, this action. 

Procedural history of this action

15.The plaintiff issued the writ herein on 6 November 2018, amended it on 19 November 2018 and re-amended it on 14 January 2019. 

16.In this action, the plaintiff seeks the following relief:

(1) an order that the defendants do forthwith transfer to the plaintiff or its nominees 115,643,380 shares in the Company (ie the Additional Shares) or such amount of shares such that the shareholding of the plaintiff in the Company could be maintained at 4.9% of its issued share capital;

(2) all necessary account and inquiries, including an account of any dividends declared by the Company; and an order for payment of all sums found due and owing upon the taking of the said accounts;

(3) further or in the alternative, damages and/or equitable compensation; and

(4) interest and costs.

17.No acknowledgement of service of the writ, the amended writ or the re-amended writ had been filed by the defendants. 

18.On 4 June 2019, the plaintiff took out the Application. 

19.In the summons for the Application the plaintiff seeks judgment against the defendants for the following:

(1) the defendants do forthwith transfer to the plaintiff or its nominees 115,643,380 shares in the Company or such amount of shares such that the shareholding of the plaintiff in the Company could be maintained at 4.9% of its issued share capital;

(2) there be all necessary account and inquiries, including an account of any dividends declared by the Company; and an order for payment of all sums found due and owing upon the taking of the said accounts;

(3) interlocutory judgment that the defendants do pay to the plaintiff damages and/or equitable compensation (to be assessed) and interest thereon pursuant to sections 48 and 49 of the High Court Ordinance (Cap 4) and/or the equitable jurisdiction (to be assessed); and

(4) costs of the action including the costs of the Application be to the plaintiff.

Service of the process on the defendants

20.The plaintiff referred to the following clauses in the Agreement and the Guarantee for service of the process on the defendants (the “Appointment Clauses”):

“Each of the Purchaser [ie the 1^st defendant] and the Guarantor [ie the 2^nd defendant] irrevocably appoints Dacheng Law Office of Room 1915, 19^th Floor, COSCO Tower, 183 Queen’s Road Central, Hong Kong (Attention: Mr Guo JinKai) to receive, for it/him and on its/his behalf, service of process in any proceedings in Hong Kong. Such service shall be deemed completed on delivery to the process agent (whether or not it is forwarded to and received by the Purchaser and/or the Guarantor, as the case may be). If for any reason the process agent ceases to be able to act as such or no longer has an address in Hong Kong, each of the Purchaser and the Guarantor irrevocably agrees to appoint a substitute process agent reasonably acceptable to the Vendor [ie the plaintiff], and to deliver to the Vendor a copy of the new agent’s acceptance of that appointment, within 5 days.” (Clause 17.4 of the Agreement)

“Service of process

Without prejudice to any other mode of service allowed under any relevant law, the Guarantor [ie the 2^nd defendant]:-

(a) irrevocably appoints Dacheng Law Office of Room 1915, 19^th Floor, COSCO Tower, 183 Queen’s Road Central, Hong Kong (Attention: Mr Guo JinKai) as its agent for service of process in relation to any proceedings before the Hong Kong courts in connection with this Deed [ie the Guarantee]; and

(b) agrees that failure by a process agent to notify the Guarantor of the process will not invalidate the proceedings concerned; and

agrees that if for any reason the process agent ceases to be able to act as such or no longer has an address in Hong Kong, the Guarantor irrevocably agrees to appoint a substitute process agent reasonably acceptable to the Vendor [ie the plaintiff], and to deliver to the Vendor a copy of the new agent’s acceptance of that appointment, within 5 days.” (Clause 20.2 of the Guarantee)

21.To support its contention that the original process had been validly served to the defendants, the plaintiff filed an affidavit of Dai Yuk Yee Evelyn (“Dai’s Affidavit”) on 4 June 2019. 

22.In Dai’s Affidavit Ms Dai Yuk Yee Evelyn (“Ms Dai”) stated that pursuant to Order 10 rule 3(1) of the RHC, service of the writ on the process agent appointed by the defendants under the Agreement and the Guarantee would be deemed to be effective service on the defendants. 

23.Ms Dai further stated that prior to issuance of the writ in this action, Dacheng Law Office appeared to have merged with Dentons in January 2015 with the merged firm called “Dentons”.  As such, the plaintiff issued the writ stating the defendants’ appointed process agent as “Messrs. Dentons (formerly Dacheng Law Office)” with the address “Suite 3201, Jardine House, Central, Hong Kong”, being the office address of Dentons. 

24.On 12 November 2018, the plaintiff’s solicitors arranged to serve two sealed copies of the writ on Dentons at its aforesaid office address. 

25.On 12 November 2018, the plaintiff’s solicitors received a letter from Dentons saying that Dentons and Dacheng Law Office were two separate and unrelated legal entities.  Dentons referred the plaintiff’s solicitors to the decision of Chow J dated 17 April 2018 made in Dacheng International Legal Services Ltd v Sze Yeuk Lung Benedict [2018] 2 HKLRD 818.

26.Ms Dai stated that the decision in the Dacheng case (supra) transpired that since around 2010, Dacheng Law Office was the Hong Kong branch office of the PRC law firm, Beijing Dacheng Law Offices LLP (“Dacheng Beijing”).  In around December 2014, the relationship between Dacheng Law Office and Dacheng Beijing broke down.  Thereafter, Dacheng Law Office continued to operate under the same name and did not form part of Dacheng Beijing’s global merger with Dentons in January 2015. 

27.The plaintiff’s solicitors’ enquiries with the Law Society of Hong Kong (the “Law Society”) and the Business Registration Office suggested that Dacheng Law Office had on or about 3 May 2018 changed its name to “Y L Sze & Co” with a “Mr Sze Yeuk Lung, Benedict” as the sole proprietor of the firm. 

28.As such, on 19 November 2018, the plaintiff’s solicitors amended the writ to state the defendants’ appointed process agent as “Y L Sze & Co” instead of Dentons, and to amend the corresponding address. 

29.On 19 November 2018, the amended writ was served to Y L Sze & Co at Room 1915, 19^th Floor, COSCO Tower, 183 Queen’s Road Central, Hong Kong, marked for the attention of “Mr Guo JinKai” (“Mr Guo”).

30.On 11 January 2019, the plaintiff received a letter from Mr Guo dated 9 January 2019 (“Guo’s Letter”) saying that Mr Guo and Dacheng Law Office had ceased to act as the process agent of the defendants under the Agreement and the Guarantee with effect from 8 May 2013 and that Dacheng Law Office had already ceased practice. 

31.Ms Dai stated that according to the circulars published by the Law Society dated 29 July 2013 and 19 August 2013 and para 17 of the decision in the Dacheng case (supra), Dacheng Law Office was converted from a registered foreign firm to a Hong Kong law firm on 23 July 2013.  In the 2014 Law List, Dacheng Law Office was listed amongst the list of solicitors’ firms in Hong Kong with Mr Guo listed as a foreign lawyer of the firm. 

32.Ms Dai submitted that as business registration records showed that Dacheng Law Office changed its name to “Y L Sze & Co” on about 3 May 2018, it appeared that Dacheng Law Office had not ceased practice as alleged by Mr Guo. 

33.Ms Dai stated that according to the records of the Law Society, Mr Guo was practising as a foreign lawyer at a Hong Kong law firm, Patrick Mak & Tse.

34.On 14 January 2019, the plaintiff re-amended the writ to correct an error on the name of the 1^st defendant. 

35.On 25 February 2019, the plaintiff’s solicitors arranged to serve the re-amended writ (endorsed with the statement of claim) on Y L Sze & Co (marked for the attention of Mr Guo) and on Mr Guo at Patrick Mak & Tse. 

36.Ms Dai submitted that by reason of the matters stated in Dai’s Affidavit, she believed that pursuant to Order 10 rule 3(1) of the RHC, the re-amended writ was deemed to have been duly served on the defendants on 25 February 2019. 

37.Ms Dai further submitted that the deadline for the defendants to file their acknowledgement of service forms was 11 March 2019 and the deadline for the defendants to file their defence was 8 April 2019.  The defendants had not filed acknowledgement of service nor defence.  As such, the plaintiff sought default judgment against the defendants.

38.The plaintiff also filed affirmations of service by its service clerks giving particulars of the services referred to in Dai’s Affidavit.  These particulars have not been disputed and are not in issue for the Application.

Discussion

39.The issue before me is whether the original process had been validly served on the defendants. 

40.The plaintiff referred to Order 10 rule 3(1) of the RHC which provides that:

“(1) Where –

(a) a contract contains a term to the effect that the Court of First Instance shall have jurisdiction to hear and determine any action in respect of a contract or, apart from any such term, the Court of First Instance has jurisdiction to hear and determine any such action, and

(b) the contract provides that, in the event of any action in respect of the contract being begun, the process by which it is begun may be served on the defendant, or on such other person on his behalf as may be specified in the contract, in such manner, or at such place (whether within or out of the jurisdiction), as may be so specified,

then, if an action in respect of the contract is begun in the Court and the writ by which it is begun is served in accordance with the contract, the writ shall subject to paragraph (2) [which has no concern in this case], be deemed to have been duly served on the defendant.”

41.To determine whether the original process had been validly served on the defendant pursuant to Order 10 rule 3(1) of the RHC, the court has to ask: “Who was the process agent for the defendants?” 

42.Mr Law contended that Mr Guo was the process agent. 

43.Mr Law submitted that Mr Guo admitted in Guo’s Letter that he was the process agent appointed.  Mr Law further submitted that “Dacheng Law Office” was not a legal entity but only a trade name.  Mr Law contended that the parties could not and would not appoint a ‘trade name” as the process agent. 

44.Mr Law submitted that the re-amended writ (endorsed with the statement of claim) was served upon Mr Guo on 25 February 2019 at the address of Y L Sze & Co because Dacheng Law Office changed its name to Y L Sze & Co. Further, on 25 February 2019, the re-amended writ (endorsed with the statement of claim) was also served on Mr Guo at his address at Patrick Mak & Tse from which Mr Guo was at the material times practicing as a foreign lawyer. 

45.Mr Law submitted that the re-amended writ (endorsed with the statement of claim) had been validly served to the defendants pursuant to Order 10 rule 3(1) of the RHC. 

46.With respect, I do not agree that Mr Guo by himself was the process agent appointed for the defendants in the Agreement or the Guarantee. 

47.Appointments of process agent in both the Agreement and the Guarantee were in identical words as follows:

“appoints Dacheng Law Office of Room 1915, 19^th Floor, COSCO Tower, 183 Queen’s Road Central, Hong Kong (Attention: Mr Guo JinKai)” (See para 20 above)

48.If the process agent appointed under the Agreement or the Guarantee was Mr Guo, it was not necessary for the Appointment Clauses to refer to “Dacheng Law Office”.  The appointment could be simply “appoints Mr Guo JinKai” as agent for the defendants for service of process for Hong Kong proceedings. 

49.Furthermore, “Dacheng Law Office” was not only a trade name but also the name of a law firm.  According to Ms Dai, Dacheng Law Office was a registered foreign firm in Hong Kong as at the date of the Agreement and the Guarantee (ie 15 April 2013) and had converted into a Hong Kong law firm shortly thereafter on 23 July 2013. 

50.I have no dispute with Mr Law that a firm is not a legal entity. However, a firm though not a legal entity, can sue and be sued in the name of the firm in Hong Kong. Legal proceedings in Hong Kong can also be served on a firm.  (See Order 81 rule 1, rule 3 and rule 9 of the RHC.)

51.Hong Kong courts also recognize the authority of a solicitors’ firm in Hong Kong to accept service of legal proceedings on behalf of a defendant. (See Order 10 rule 1(4) of the RHC.) 

52.As such, a firm, although not a legal entity, may act as a process agent for the purpose of legal proceedings in Hong Kong.  I do not agree to Mr Law’s contention that the parties could not and would not appoint Dacheng Law Office as the process agent.  The parties had clearly chosen to appoint Dacheng Law Office, a firm, with the qualification discussed below as the defendants’ process agent for this transaction. 

53.Mr Law also relied on Guo’s Letter to support his aforesaid contention. I am of the view that Guo’s Letter does not assist the plaintiff.  Firstly, Guo’s Letter does not have the effect contended by Mr Law.  Secondly, the view of the “process agent” (assuming that Mr Guo was the process agent) is neither here nor there.  The appointment was a contractual matter between the plaintiff and the defendants.  Mr Guo (even assuming that he was the process agent) was not a party to the Agreement or the Guarantee. 

54.In Guo’s Letter, Mr Guo stated that:

“本人 [ie Mr Guo] 在擔任大成律師事務所 [ie Dacheng Law Office] 的合伙人及海外注册律師期間，曾受紅勝集團有限公司〔紅勝公司〕[ie the 1^st defendant] 委托，擔任貴公司在2013年4月15日與紅勝公司簽署的《債權轉讓契約》及其相關的《股份抵押契約》和王民良先生 [ie the 2^nd defendant] 的《擔保》中擔任法律程序文件代理人〔process agent〕。

但直至2013年5月8日，紅勝公司未能按約定支付律師服務費，故自2013年5月8日起，大成律師事務所及本人與紅勝公司的委托關係已經解除及不再擔任紅勝公司及王民良先生的法律程序文件代理人。

另外，大成律師事務所在2013年4月15日至2013年5月8日期間，是在香港律師會注册的海外律師事務所，該所后來亦已結業。現該地址上的律師行與該地址上原大成律師事務所并無法律上的關系，… …”

55.In Guo’s Letter, Mr Guo did not say that he was appointed as the process agent of the defendants in his personal capacity.  He referred to the appointment when he was the partner and registered foreign lawyer of Dacheng Law Office (本人在擔任大成律師事務所的合伙人及海外注册律師期間). He also stated that the agent relation between “Dacheng Law Office and himself” (大成律師事務所及本人[Emphasis added]) on the one hand and the 1^st defendant on the other hand had been terminated with effect from 8 May 2013 and “Dacheng Law Office and himself” no longer acted as process agent of the defendants (大成律師事務所及本人[Emphasis added] … … 不再擔任紅勝公司及王民良先生的法律程序文件代理人).  I do not accept Mr Law’s contention that: “Guo admits that he is [by himself] the process agent appointed: Guo’s letter”.  To the contrary, Mr Guo clearly stated in Guo’s Letter that it was “Dacheng Law Office and himself” together being appointed process agent of the defendants. 

56.In Cargill International Trading Pte Ltd v Uttam Galva Steels Ltd [2018] EWHC 974 (Comm), Poppwell J pointed out in para 24 that:

“The Court’s task is to ascertain the objective meaning of the language which the parties have chosen to express their agreement. The Court must consider the language used, and ascertain what a reasonable person, that is a person who has all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract would have understood the parties to have meant.”

57.After considering the language used in the Appointment Clauses, I am of the view that neither “Dacheng Law Office” on its own nor Mr Guo on his own was appointed as process agent of the defendants under the Agreement and the Guarantee.  The wording of the Appointment Clauses clearly stated that the process agent was “Dacheng Law Office of [address] (Attention Mr Guo JinKai)”. It was not only “Dacheng Law Office” nor only “Guo JinKai”.  It had to be both, ie “Dacheng Law Office” with which Mr Guo was working. 

58.Mr Law urged me not to construe the Appointment Clauses literally but purposefully.  Mr Law contended that the purpose of the Appointment Clauses was to appoint a process agent for the defendants within jurisdiction to facilitate service of legal proceedings in Hong Kong to save the costs and troubles for the plaintiff to serve the legal proceedings out of jurisdiction. 

59.In Jumbo King Ltd v Faithful Properties Ltd & Ors [1999] 3 HKLRD 757 Lord Hoffmann pointed out at 773F-774B that:

“The construction of a document is not a game with words. It is an attempt to discover what a reasonable person would have understood the parties to mean. And this involves having regard, not merely to the individual words they have used, but to the agreement as a whole, the factual and legal background against which it was concluded and the practical objects which it was intended to achieve. Quite often this exercise will lead to the conclusion that although there is no reasonable doubt about what the parties meant, they have not expressed themselves very well. Their language may sometimes be careless and they may have said things which, if taken literally, mean something different from what they obviously intended. In ordinary life people often express themselves infelicitously without leaving any doubt about what they meant. Of course in serious utterances such as legal documents, in which people may be supposed to have chosen their words with care, one does not readily accept that they have used the wrong words. If the ordinary meaning of the words makes sense in relation to the rest of the document and the factual background, then the court will give effect to that language, even though the consequences may appear hard for one side or the other. The court is not privy to the negotiation of the agreement – evidence of such negotiations is inadmissible – and has no way of knowing whether a clause which appears to have an onerous effect was a quid pro quo for some other concession. Or one of the parties may simply have made a bad bargain. The only escape from the language is an action for rectification, in which the previous negotiations can be examined. But the overriding objective in construction is to give effect to what a reasonable person rather than a pedantic lawyer would have understood the parties to mean. Therefore, if in spite of linguistic problems the meaning is clear, it is that meaning which must prevail.” (Emphasis added)

60.An agreement is an agreement between the contracting parties.  Each party will have its own commercial purposes to agree to a particular contractual term.  In considering the commercial purposes, the court has to consider not only commercial purposes of one of the parties but the commercial purposes of both parties. 

61.I have no doubt that the commercial purposes of the plaintiff in entering into the Appointment Clauses were those submitted by Mr Law.  However, it seems to me from the structure and wording of the Appointment Clauses that the defendants had only agreed to appoint a particular law firm with service of a particular lawyer as their process agent.  This is not difficult to understand. 

62.It is only natural and logical that the defendants would like to appoint their legal advisors for this transaction to be their process agent for this transaction so that any legal disputes in respect of this transaction could be dealt with promptly by the defendants’ legal adviser who would have full knowledge of this transaction. 

63.The defendants might have their own reasons to require Mr Guo working with Dacheng Law Office to handle legal disputes on this transaction for them.  It is noted that execution of the Agreement and the Guarantee by the defendants was witnessed by a legal assistant of Dacheng Law Office.  It is likely that Mr Guo was the handling lawyer in Dacheng Law Office handling this transaction for the defendants.  The defendants might not want another lawyer in Dacheng Law Office who might not have full knowledge of this transaction to act as their process agent for disputes in this transaction and the defendants might not want Mr Guo working with another law firm which might not have the expertise or resources of Dacheng Law Office to handle legal disputes in this transaction for them.  I see good commercial reasons for the defendants to have their process agent for this transaction to be constituted in such way. 

64.Such arrangements had to have been accepted by the plaintiff.  If not, the plaintiff would have required the defendants to appoint simply “Dacheng Law Office” or “Mr Guo JinKai” as their process agent in the Agreement and the Guarantee.  

65.It can be seen from the discussion below that the agreement of the parties for appointment of substitute process agent for this transaction was for the defendants to nominate process agent reasonably acceptable to the plaintiff.  If that was the arrangement for appointment of substitute process agent, I see no reason why the arrangement for appointing the first process agent would be different.  As pointed out by Poppwell J in the Cargill case (supra) at para 24 of the judgment, the court “must also be alive to the possibility that one side may have agreed to something which, with hindsight, did not serve its interest.  Similarly, the Court must not lose sight of the possibility that a provision may be a negotiated compromise”. 

66.In Guo’s Letter, Mr Guo stated that Dacheng Law Office had already ceased practice.  In fact, it was within the parties’ contemplation that Dacheng Law Office might cease practice or Mr Guo might leave Dacheng Law Office and the process agent appointed would then be unable to act as such. Both the Agreement and the Guarantee had made provisions for such contingency in the Appointment Clauses. (See para 20 above)

67.Under the Appointment Clauses, the defendants should have appointed a substitute process agent reasonably acceptable to the plaintiff when Dachenmg Law Office ceased practice or when Mr Guo left Dacheng Law Office.  It seems that the defendants might have breached their contractual obligations to appoint substitute process agent.  However, such breaches on the part of the defendants would only confer to the plaintiff the contractual right to claim damages for breach of contract but would not have the effect of changing the original appointment to constitute Mr Guo as the defendants’ process agent to suit the purposes of the plaintiff. 

68.As pointed out by Poppwell J in the Cargill case (supra) at para 24 of the judgment:

“It does not matter whether the more detailed analysis commences with the factual background and the implications of rival constructions, or a close examination of the relevant language in the contract, so long as the Court balances the indications given by each.”

69.After considering the structure and wording of the Appointment Clauses and the commercial purposes of such clauses from the perspectives of both parties, I am of the view that the process agent for the defendants appointed under the Agreement and the Guarantee was “Dacheng Law Office with Mr Guo JinKai working with that firm”.  Such process agent was no longer there available to accept service of legal proceedings for the defendants when the plaintiff issued the writ in this action. 

70.I find that all efforts of service set out in Dai’s Affidavit do not have the legal effect of validly serving the re-amended writ to the defendants.

71.It was pre-mature for the plaintiff trying to seek default judgment against the defendants before the re-amended writ had been validly served to them.  As such, I dismissed the Application and made no order as to costs for the Application at the hearing on 25 June 2019. 

Other matters

72.Mr Law referred to DVB Bank SE v Isim Amin Limited & Anr [2014] EWHC 2156 (Comm) and Citicorp Trustee Company Limited & Anr v Mr Maan Abdulwahed Al-Sanea & Ors [2017] EWHC 2845 (Comm) to submit that service on a process agent which was a limited company in liquidation had been held to be valid service.  In those cases, the process agents were limited companies.  They still existed albeit under liquidation.  As such, services of legal proceedings on these companies were held to be valid. 

73.In the case before me, I am of the view that the process agent appointed had ceased to exist.  The DVB Bank case and the Citicorp Trustee case do not assist the plaintiff. 

74.Mr Law also addressed me on the irrevocable nature of the appointment of process agent.  Mr Law submitted that Mr Guo’s allegation in Guo’s Letter that his appointment was terminated was neither here nor there.  Mr Law referred to the Cargill case (supra) when the learned judge stated at para 29 of the judgment that:

“If the service of suit clause is to serve its purpose, it must not be capable of being frustrated by the simple expedient of terminating the service agent’s actual authority. It operates as an agreement that whatever the position vis-à-vis the service agent itself, the agreement between the two counterparties is that service on that person shall be effective service, and that agreement cannot be revoked or withdrawn unilaterally.”

75.I have no disagreement with Mr Law on this point.  However, the case before me is not a case of revocation but a case when the original appointment ceases to be workable as the process agent appointed has ceased to exist.  As Poppwell J went on to say in para 29 of the Cargill judgment: “There may be circumstances in which such agreement [ie agreement of appointment of process agent] necessarily comes to an end, for example, if the agent ceases to exist.”  This is exactly what happens in this case. 

76.In the Application, the plaintiff sought an order from the court ordering the defendants to transfer the Additional Shares to the plaintiff or its nominees.  The plaintiff is seeking specific performance of the Anti-Dilution Covenant.  I had raised this issue with Mr Law at the hearing. Specific performance is an equitable remedy.  A decree of specific performance will be granted by the court only when monetary compensation is inadequate or inappropriate. (See para 27-015 of Chitty on Contracts Vol 1 (33^rd edition))  I also note that the Anti-Dilution Covenant had provided for the 1^st defendant to pay to the plaintiff an amount equivalent to the market value of the Additional Shares on the date of announcement of the dilutive event in lieu of transferring the Additional Shares to the plaintiff or its nominee. (See para 8 above) 

77.As I was not satisfied that the original process in this case had been validly served to the defendants, I had dismissed the Application without going into further details on this issue.  The plaintiff shall prepare to address the court on this issue if it still pursues its application for default judgment against the defendants in the same terms of the Application after sorting out the issue of service. 

Mr M C Law instructed by Reed Smith Richards Butler for the plaintiff

The defendants being absent