Xu Ying v. Xu Weihong

HCA 2650/2017

[2020] HKCFI 1955

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2650 OF 2017

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Before:  Deputy High Court Judge MK Liu in Chambers (Paper Disposal)

Date of the Plaintiff’s submissions: 23 & 28 July 2020

Date of the Defendant’s submissions:  22, 27 & 29 July 2020

Date of Decision:  7 August 2020

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DECISION

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1.By a summons dated 12 July 2019 (“the Summons”), the defendant (“D”) applies for, inter alia, (1) an order to set aside leave for service out of jurisdiction granted on 30 October 2018 (“the Leave”); and/or (2) a declaration that this court does not have the jurisdiction over the present dispute.

2.P obtained the Leave by relying on Order 11 rule 1(1)(b) and (f).

3.Originally, the substantive hearing of the Summons was scheduled to take place on 27 July 2020.  In view of the public heath situation in Hong Kong, on 23 July 2020, I directed that the Summons be determined on the papers without an oral hearing.  Counsel for D and counsel for the plaintiff (“P”) have provided me detailed written submissions, and I am grateful for that.

4.This case concerns a written declaration dated 20 November 2011 and signed by D (“the Declaration”), and a written trust agreement dated 6 December 2007 (“the Trust Agreement”) annexed to the Declaration.  P claims that D has published the Declaration and the Trust Agreement in Hong Kong, which are untrue, and the publication has caused loss and damage to P.  P is suing D for libel and/or malicious falsehood.  I would first set out the background facts.

Background

5.At the material times,

(1)  P was the chairman, shareholder and director of China Review News Agency Limited (中國評論通訊社有限公司, “CRNA”), a company incorporated in Hong Kong on 1 February 2005. According to P, CRNA is a digital network news agency in the Greater China Region.

(2)  P was also a non-executive director and vice chairman of eBiz.com Limited.  The name of the company was changed to China Gas Holdings Limited (中國燃氣控股有限公司, “China Gas”) in August 2001. On 2 June 2003, P was the executive director and vice chairman of China Gas.  P was removed from the board of China Gas by a resolution passed during an EGM on 26 April 2011.

(3)  According to P, he had “close connections” with the Liaison Office of the Central People’s Government in the HKSAR (中央人民政府駐香港特別行政區聯絡辦公室, “LOCPG”) and Taiwan Affairs Office of the State Council (國務院台灣事務辦公室, “TAO”).  P also claimed that he was an official of the TAO.

6.D is ordinarily resident in Cangzhou City, Hebei Province in Mainland China. D’s case is that at the material times, she held various management positions with different subsidiaries of China Gas, and positions with various government departments in Cangzhou City.

7.On 16 November 2011, a group who claimed to be minority shareholders of China Gas published a statement in “Sharp Daily”, a newspaper in Hong Kong (“the Sharp Daily Article”), demanding China Gas to explain, inter alia, whether a company called 重慶市川東燃氣工程建設有限公司 (“Chongqing Chuandong”) is a corporation owned by connected persons and senior management of China Gas.  According to the Sharp Daily Article:

(1)  武漢中燃實業有限公司 (“Wuhan China Gas”) and 深圳中油嘉禾貿易發展有限公司 (“Golden Harvest”) held 51% and 39% respectively in Chongqing Chuandong as of 31 May 2006.  It is alleged that Wuhan China Gas then transferred 7% of its shareholding to Golden Harvest on 17 August 2006, resulting in Golden Harvest holding 46% in Chongqing Chuandong.

(2)  D became the legal representative and sole shareholder of Golden Harvest since December 2007.

(3)  The alleged minority shareholders questioned why Wuhan China Gas transferred its shareholding to Golden Harvest.

8.On or about 20 November 2011, D signed the Declaration, in which she provided a response to the allegations in the Sharp Daily Article.  The gist of the response is as follows:

(1)  Towards the end of 2007, P (who purportedly represented the TAO) contacted D and signed a trust agreement with D for D to hold shares in Golden Harvest on behalf of CRNA (ie the Trust Agreement).

(2)  D was told by P that the CRNA was a fully funded organization by the TAO in Hong Kong, and Golden Harvest was the working platform for CRNA in Shenzhen.  For confidentiality reasons, CRNA did not want to hold shares in Golden Harvest directly.

(3)  Because D worked for the government, TAO gave the approval for D to hold the relevant shares.

(4)  As such, D was only a nominee shareholder of Golden Harvest, and did not concern herself with the operation of the company.

(5)  D learned that P had disclosed the above to newspapers in Hong Kong and put the blame on D. As a result, D wished to disclose the Trust Agreement with the Declaration and specifically asked that the relevant senior departments of the TAO to clear D’s name on this matter (請國台辦上級相關部門還本人 [ie D] 一個清白).

9.The Trust Agreement specifies that, inter alia, D would hold the 100% shares in Golden Harvest as nominee only and CRNA would have all beneficial interest in the shares.

10.P’s case is that the Trust Agreement is forged and the content of the Declaration is false.  P says that by publishing the same in Hong Kong, D has committed libel and malicious falsehood.

11.The details of the alleged publication of the Declaration and the Trust Agreement in Hong Kong are as follows: 

(1)  P claims that the Declaration and Trust Agreement had been published, either by D or through Mr Feng Zhuozhi (“Feng”), a former non-executive director of China Gas, to other third parties in Hong Kong. This is denied by D.

(2)  According to P, he first discovered the existence of the Declaration and Trust Agreement in late December 2011 when he was informed the same from officials of the TAO and the LOCPG:

(a)  Mr Li Xiaoyun (“Li”) (allegedly a director of Centre of Strait Economy & Science-Tech Cooperation (海峽經濟科技合作中心, “CSESC”, an institution under the TAO) and the TAO, informed P that someone (which P claims to be Feng) had provided the Declaration and the Trust Agreement to the LOCPG.

(b)  According to media reports, Li was also one of the “parties” (當事人) to the relevant events concerning the Declaration and the Trust Agreement, and a former director of China Gas who was removed in the same EGM on 26 April 2011 along with P[1].

(c)  P claims that he attended the office of LOCPG in Hong Kong on 27 December 2011 and met with a Mr Tang Yiyuan (“Tang”), allegedly the director of the Taiwan Affairs Department of the LOCPG.  It is said that P was shown the Declaration and the Trust Agreement during this meeting, and the documents were annexed to a “Report Letter” allegedly from Feng.  The “Report Letter”, however, has not been produced by P in these proceedings.

12.P has produced the following media reports in the Mainland concerning the Declaration and/or the Trust Agreement:

(1)  an article in Beijing Times (京華時報) dated 24 March 2012; and

(2)  an article in China Business Journal (中國經營報) dated 20 August 2012 (“China Business Journal Article”).

Grounds of D’s application

13.D is relying upon the following grounds in support of her application:

(1)  No real and substantial tort in Hong Kong: Leave for service out of jurisdiction should not be granted if there is no real and substantial tort committed by D in Hong Kong. This requirement is not satisfied as P has failed to present sufficient evidence that there has been substantial publication of the allegedly defamatory materials in Hong Kong.

(2)  No serious issues to be tried: P’s claim for malicious falsehood is bound to fail, for P has failed to (a) plead and prove pecuniary loss at common law; or (b) plead and prove how D’s acts would more likely than not cause pecuniary loss to P under s.24 of the Defamation Ordinance (“DO”). Pecuniary loss in this regard does not include reputational loss or injury to feelings.

(3)  Material non-disclosure: There has been material non-disclosure in P’s ex parte application for the Leave, and the Leave ought to be set aside on this ground alone.  No re-grant of the order should be given as the non-disclosures are serious and deliberate.

The principles

14.The principles concerning this court exercising its long arm jurisdiction over a defendant in another jurisdiction are well established[2].  The burden is on the applicant to show:

(1)  There is a good arguable case that his claims fall within a gateway in Order 11 rule 1(1).  A good arguable case means that P has “the better of the argument”.  Where there is an issue of fact, or some other reason for doubting whether the jurisdictional gateway applies, the court must take a view on the material available if it can reliably do so.

(2)  There are serious issues to be tried on the merits of the claim.

(3)  Hong Kong is the forum conveniens pursuant to Order 11 rule 4(2).  It is not sufficient to merely show that the Hong Kong court is the appropriate forum, but that it is clearly and distinctly so[3].

No good arguable case that P’s claim falls within Order 11 rule 1(1) - No real and substantial tort in Hong Kong

15.D submits that in order to obtain leave to service proceedings on a defendant outside the jurisdiction of Hong Kong under Order 11 rule 1(1)(f), the plaintiff must show that a real and substantial tort has been committed in Hong Kong.  D is relying upon the Court of Appeal’s decision in Oriental Press Group Ltd v Google LLC[4] in support of this proposition.  In that case, Cheung JA said:

“3.1 This is a unique case in the sense that the plaintiffs are not suing a local defendant in Hong Kong as of right but rather it seeks the permission of the Court to serve the proceedings on a foreign defendant outside the jurisdiction of Hong Kong under Order 11, rule 1(1)(f). It is common ground between the parties that in respect of publication on the internet, the test for the application of this rule depends on whether a real and substantial tort has been committed in Hong Kong.

3.2 In Jameel (Yousel) v Dow Jones & Co Inc [2005] QB 946, Lord Phillips of Worth Matravers MR held:

‘50. It is in the context of an application to set aside service outside the jurisdiction on such grounds that the question of whether “a real and substantial tort has been committed within the jurisdiction” has been relevant......’ (emphasis added)

3.3 Earlier, Lord Phillips held :

‘40. We accept that in the rare case where a claimant brings an action for defamation in circumstances where his reputation has suffered no or minimal actual damage, this may constitute an interference with freedom of expression that is not necessary for the protection of the claimant’s reputation. In such circumstances the appropriate remedy for the defendant may well be to challenge the claimant’s resort to English jurisdiction or to seek to strike out the action as an abuse of process....’ (emphasis added)

3.4 In Jameel (Yousef) a foreign claimant issued defamation proceedings in England against the publisher of a US newspaper in respect of an article posted on an internet website in the USA, which was available to subscribers in England. The publisher averred that only five subscribers within the jurisdiction had accessed the internet article.  The claimant accepted that there had been minimal publication within the jurisdiction.  The first instance Judge refused the publisher’s application for summary dismissal of the claim.  The English Court of Appeal allowed the appeal and struck out the claim as an abuse of process.”

16.P does not agree and submits that what has been said by Cheung JA in [3.1] of the aforesaid case is the common ground of the parties in that case, and the rule requiring “a real and substantial tort committed in Hong Kong” only applies in respect of publication on the internet.  With respect, I am unable to agree.

(1)  According to the Court of Appeal, the rule requiring “a real and substantial tort committed in Hong Kong” is a requirement under Order 11 rule 1(1)(f).  At [3.1] of the Court of Appeal’s judgment, Cheung JA said:

“…… It is common ground between the parties that in respect of publication on the internet, the test for the application of this rule [ie Order 11 rule 1(1)(f)] depends on whether a real and substantial tort has been committed in Hong Kong.” (Emphasis added)

(2)  Having read the Court of Appeal’s judgment as a whole, I am of the view that in stating the requirement of having a real and substantial tort committed within the jurisdiction, the Court of Appeal is not saying that the requirement is only relevant to publication on the internet. The rationale of having that requirement is that the court should not exercise its jurisdiction over a foreign defendant if the tort committed within the jurisdiction is only a trivial one.

17.In my judgment, the proposition advanced by D is a correct proposition of law.  Having examined the evidence before the court, I am of the view there is no convincing evidence showing a good arguable case that a real and substantial tort has been committed by D in Hong Kong.

18.There is no convincing evidence showing substantial publication of the Declaration and/or the Trust Agreement in Hong Kong.

(1)  It is not P’s case that D has circulated the Declaration and/or the Trust Agreement to Feng or any other third parties in Hong Kong.

(2)  There is no apparent reason why D would have intended for the LOCPG in Hong Kong to receive (whether through Feng or otherwise) the Declaration and the Trust Agreement. The Declaration made no reference to the LOCPG or any entity in Hong Kong. Instead, D specifically requested in the Declaration that the relevant senior departments of the TAO to clear her name (請國台辦上級相關部門還本人一個清白).  It is common ground that the TAO is an office of the State Council in the Mainland.

(3)  According to P, the Declaration and the Trust Agreement have been seen by the individuals specifically named by P, namely Li and Tang[5].  Even if this is true, this cannot amount to substantial publication, let alone substantial publication in Hong Kong.

(4)  Based upon the evidence adduced by P, I am not convinced that P has shown a good arguable case on substantial publication of the Declaration and the Trust Agreement within LOCPG.  As to the alleged “Report Letter” from Feng to LOCPG, no copy of the “Report Letter” has been produced by P.  According to what has been said by P, apart from the meeting on 27 December 2011, there has not been any action taken by the LOCPG regarding the Declaration and the Trust Agreement.  Based upon the bare assertions made by P, I am of the view that there is no sufficient evidence showing a good arguable case that there has substantial publication of the Declaration and the Trust Agreement within the LOCPG.

(5)  P alleges that the Declaration and the Trust Agreement have been published in Hong Kong by Ms Guo Juan (“Guo”), Vice President of China Gas.  The only basis of this allegation is the China Business Journal Article. In my view, the reliability of the report in the China Business Journal Article is in doubt.  If what has been said in the China Business Journal Article (ie Guo has published the Declaration and the Trust Agreement in Hong Kong) were correct, it is most unlikely that there would be no media report in Hong Kong, or any indication by the regulatory authorities in Hong Kong of any investigation or inquiries in relation to the Declaration and the Trust Agreement.  In any event, even if the report in the China Business Journal Article is correct, that would only be publication of the Declaration and the Trust Agreement in Hong Kong by Guo, and not publication of the documents in Hong Kong by D.

(6)  The only media reports adduced by P in relation to the Declaration and the Trust Agreement are published by media in the Mainland.  That would not be evidence showing any publication of the Declaration and the Trust Agreement in Hong Kong, let alone substantial publication.

19.Further, based upon the evidence before the court, even if P succeeds on liability in this case, the alleged damage suffered by P would be minimal.

(1)  P has adduced no evidence to show his alleged reputation in Hong Kong.

(2)  Despite the alleged publication of the Declaration and the Trust Agreement in Hong Kong, P has remained the Chairman, director and shareholder of CRNA at all material times. P has not claimed that his “close connections” with the LOCPG and TAO had been affected in any way.

(3)  P placed emphasis on his role with the CRNA.  However, CRNA’s alleged focus is on cross-strait affairs between the Mainland and Taiwan, and P has not explained why his reputation in Hong Kong would be critical to his role in the CRNA.

(4)  If P indeed had a significant reputation in Hong Kong, and there was substantial publication of the Declaration and the Trust Agreement, it is inherently unlikely that there would be no evidence of any media report of the matter in Hong Kong.

(5)  P took no step to protect his reputation until commencing these proceedings in November 2017, despite his claim that he already knew of the existence of the Declaration and Trust Agreement in December 2011.  This is inexplicable if he has any genuine concern to protect his reputation in Hong Kong.

20.In my judgment, P has failed to show a good arguable case that D may have committed a real and substantial tort in Hong Kong. No leave to serve the proceedings out of Hong Kong should be granted to P under Order 11 rule 1(1)(f).

21.Further, since I have decided that P has not shown a good arguable case that D may have committed a real and substantial tort in Hong Kong, I am of the view that the court’s discretion should be exercised against granting leave to serve the proceedings out of Hong Kong under Order 11 rule 1(1)(b).

22.P submits that he is claiming for a declaration that the Trust Agreement was forged and had no real effect and this claim should fall within Order 11 rule 1(1)(b).  With respect, I do not agree. Order 11 rule 1(1)(b) is only concerned with injunctive relief. In any event, for the reason set out in the above, no leave to serve the proceedings out of jurisdiction should be given concerning the entire claim of P.

No serious issue to be tried

23.D submits that P’s claim for malicious falsehood is bound to fail for the following reasons:

(1)  P has no cause of action for malicious falsehood at common law unless he is able to allege and prove special damage.  Such special damage must be pecuniary, as opposed to merely capable of being compensated by an award of money.  As such, P’s case may not be founded on general loss of reputation, nor on mental anxiety and distress[6].  Apart from a bare assertion of “pecuniary loss”, no particulars for special damage has been pleaded.

(2)  P’s attempt to rely on s.24(1) of the DO is misconceived. That section provides:

“In an action for slander of title, slander of goods or other malicious falsehood, it shall not be necessary to allege or prove special damage—

(a) if the words upon which the action is founded are calculated to cause pecuniary damage to the plaintiff and are published in writing or other permanent form; or

(b) if the said words are calculated to cause pecuniary damage to the plaintiff in respect of any office, profession, calling, trade or business held or carried on by him at the time of the publication.” (Emphasis added)

(3) The requirement at common law for a plea of special damage is only relaxed under s.24 if the words upon which the action is founded are “calculated to cause pecuniary damage to the plaintiff”. This requirement is not satisfied, and leave for service out of jurisdiction ought to be set aside in such circumstances.

(4) “Calculated” in this context means “more likely than not”. P is required to plead and prove, with sufficient particularity, that it was more likely than not that the pecuniary damage was caused by “the words upon which the action is founded”. P must give particulars of the nature of the allegedly probable damage, and the grounds relied on for saying that it is more likely than not[7].

(5) “Pecuniary damage” does not cover damage to reputation or injured feelings, but only probable monetary loss. The court would have to see whether any monetary loss can be inferred from the evidence, otherwise only nominal damages would be recovered[8].

(6) The pleas in the Amended Statement of Claim fail to show that the Declaration and the Trust Agreement would “more likely than not” cause pecuniary damage to P. All that is pleaded in the Amended Statement of Claim at [22] is essentially that (a) the CRNA is a global media agency which is important to cross-strait relations between the Mainland and Taiwan; and (b) as a result of the alleged publication of the Declaration and the Trust Agreement, P had to clarify and explain to the representatives of the LOCPG during the alleged meeting on 27 December 2011. The mere fact that P may have had to provide clarifications to the LOCPG cannot cause any pecuniary damage to P. No particulars have been provided to show how such clarifications could have caused any pecuniary damage to P, or how P’s work with the CRNA was affected by the Declaration and the Trust Agreement.

24.P does not dispute that actual damage must be alleged and proved in an action for malicious falsehood at common law. However, P claims that he is entitled to rely upon s.24 of the DO to mount a case on malicious falsehood against D.  P claims that he has pleaded and proved a prima facie case involving the element “calculated to cause pecuniary damage to the plaintiff”.  P’s submissions are as follows:

(1)  What a plaintiff is required to plead in this respect is that[9]:

“This requires him to give particulars of the nature of the allegedly probable damage and the grounds relied on for saying that it is more likely than not. However, since the claim is one for general damages it is unnecessary for the claimant to identify the amount of pecuniary loss that it is said the falsehoods were calculated to cause. All that is required in order to make the nature of the case clear is identification of the nature of the loss and the mechanism by which it is likely to be sustained.” (Emphasis added)

(2)  At §47-O1 (p.1178) of Bullen & Leake & Jacob’s Precedents of Hong Kong Pleadings (2nd Ed), the precedent for claim for pecuniary damage for malicious falsehood is as follows:

“Further or alternatively the said words were calculated to cause pecuniary damage to the Plaintiffs in their said business”.

(3)  The word “calculated” used in s.24 of the DO refers to the likely or probable effect of the statement in an objective sense[10].

(4)  D, by publishing the Declaration and the Trust Agreement whether directly or indirectly to parties related to or connected with P in his business and/or professional capacities and/or his office in Hong Kong, calculated “to cause pecuniary damage to [P]” and “to cause pecuniary damage to [P] in respect of any office, profession, calling, trade or business held or carried on by him at the time of the publication” under s.24 of the DO. 

(5)  At the time of the publication, P held directorship in China Gas and was CRNA’s Chairman, director, shareholder, representative in Hong Kong.

(6)  P has sufficiently pleaded with respect to his pecuniary loss in the Amended Statement of Claim, [14] and [22].  The nature of the probable damage of P is pecuniary loss and damage arising from and incurred in challenging the forgery and falsity of the Declaration and the Trust Agreement.

(7)  Essentially, the Alleged Shareholding and the Purported Explanation implicate P of dishonest conduct or behaviour in concealing CRNA’s beneficial shareholding in Golden Harvest and involving in the scheme of concealing China Gas’ senior management’s interest in Chongqing Chuangdong. 

(8)  In view of the extremely serious allegations against P of committing wrongful, despicable acts and breach of fiduciary duties as China Gas’ director, it became necessary for P to account, clarify and explain in respect of his office, profession, calling, trade and/or business carried on or engaged by him.  Most notably, P was required by Li and Taiwan Affairs Department of LOCPG to account to LOCPG which P did in the meeting with Tang on 27 December 2011.

(9)  It was of paramount importance for P to account, clarify and explain as the publication was made by D whether directly or indirectly to parties related to or connected with P in his business and/or professional capacities and/or his office in Hong Kong.

(10)  There was also a pressing need on P as China Gas’ director to defend the allegations brought against him in relation to the Alleged Shareholding Agreement and the Purported Explanation when the Minority Shareholders of China Gas were questioning whether Chongqing Chuandong was a family-owned corporation of connected persons and China Gas’ senior management and requesting investigations be made by Hong Kong regulatory authorities like Hong Kong Stock Exchange and SFC.

25.Having considered the respective arguments advanced by D and by P, I am in agreement with D and cannot accept P’s submissions.

(1)  A bare assertion in the pleading that the words had been “calculated to cause pecuniary damage” would not be adequate[11].  P’s reliance on the “precedent” in the Bullen & Leake & Jacob’s Precedents of Hong Kong Pleadings is misconceived.  In the precedent provided therein, it has specifically pleaded that “the Plaintiffs have lost profits from the order they would otherwise have obtained…alternatively have lost an opportunity of obtaining that order, and have suffered loss and damage”. 

In the present case, there is no similar plea in the Amended Statement of Claim.

(2)  All the matters pleaded in [14] and [22] of the Amended Statement of Claim only show that P had to account, clarify and explain for the Declaration and the Trust Agreement, and P had to provide such in the meeting with Tang on 27 December 2011.  However, adding all these together cannot explain how P could have suffered any pecuniary damage as a result of the alleged publication of the Declaration and the Trust Agreement.  At most, P may say that his reputation and credibility have been injured. However, this would not be relevant for the purpose of considering whether s.24 of the DO can be invoked, as damage to reputation or injured feelings cannot be pecuniary damage under s.24 of the DO.

(3)  P has tried to argue that the pecuniary loss is the damage arising from and incurred in challenging the forgery and the falsity of the Declaration and the Trust Agreement and defending his reputation, credibility and standing.  In my view, this argument cannot succeed for the following reasons:

(a)  This alleged pecuniary loss has not been pleaded in the Amended Statement of Claim.  P is not entitled to put forward an unpleaded case.

(b)  There is no evidence showing that apart from these proceedings, P has commenced any other legal proceedings at any place to challenge the Declaration and the Trust Agreement to defend his reputation, credibility and standing.  The expenses mentioned by P are the costs incurred in these proceedings.

(c)  As to the costs incurred in these proceedings, I am of the view that this item cannot be the “pecuniary damage” in s.24 of the DO.  If costs incurred in an action described in s.24 of the DO can be the “pecuniary damage” in that section, each and every action for slander of title, slander of goods or other malicious falsehood would be within the scope of that section, for the plaintiff must have incurred some costs in the action (for example, the court fee paid when issuing the writ of summons).  If that is the case, the words “calculated to cause pecuniary damage to the plaintiff” in the section would not serve any meaningful purpose.

26.I agree with D and hold that there is no serious issue to be tried on the claim based upon malicious falsehood against D.

Hong Kong not the forum conveniens

27.Based upon the evidence before the court, it has not been shown that Hong Kong is clearly and distinctly the forum conveniens.  As said in the above, there is no evidence showing that there has been substantial publication of the Declaration and the Trust Agreement in Hong Kong.  P has adduced some evidence showing that there might have been publication of the Declaration and the Trust Agreement in the Mainland.  If so, the appropriate forum should be in the Mainland.

28.P claims that any claim concerning the Declaration and the Trust Agreement in the Mainland would now be time-barred. With respect, I am of the view that P may not derive any assistance from this argument.

(1)  Apart from his bare assertion, P has not adduced any evidence on Mainland Chinese law showing that his claim in relation to the Declaration and the Trust Agreement would have been time-barred in the Mainland.  On the contrary, D has produced a legal opinion on the Mainland Chinese law, which suggests that time would stop running for the purpose of limitation if there are factors which are outside of P’s control, or if there are any other obstacles which have disabled P from bringing the claim within the prescribed time. There is no allegation, let alone evidence, suggesting that P cannot rely on these provisos.

(2)  Further, according to P, he first came to know the existence of the Declaration and the Trust Agreement in late December 2011.  There has not been any explanation from P as to why he did not take any legal action in the Mainland within the limitation period prescribed under the Mainland Chinese law.

(3)  The burden is on P to show that notwithstanding the fact that he did not commence any legal proceedings in the Mainland within the prescribed time under the Mainland Chinese law, he has acted reasonably. On this issue, no explanation has been offered by P, let alone a satisfactory explanation.  In the circumstances, the burden has not been discharged by P.

(4)  Taking into account all these, the time-barred argument cannot assist P[12].

29.Since P has failed to show that Hong Kong is clearly and distinctly the forum conveniens, P should not be allowed to pursue his claim in the Hong Kong court.

Material non-disclosure

30.D submits that P has failed to discharge his obligation of making full and frank disclosure in his ex parte application for the Leave.  That application is supported by the 1^st Affidavit of Tang Shu Pui Simon dated 22 October 2018 (“Simon 1^st).  D submits that there has been material non-disclosure on the following:

(1)  In Simon 1^st [7] and [9], it was alleged that D had “directly” published the Declaration in Hong Kong and “indirectly” provided the same to the LOCPG in Hong Kong.  This is misleading and is clearly inconsistent with P’s present pleaded case.  In the Amended Statement of Claim [18], the reference to publication in Hong Kong by D to Feng has been deleted.

(2)  In Simon 1^st, no factor which may undermine the jurisdiction of the Hong Kong court, or point to the Mainland as the appropriate forum instead, has been mentioned.

(3)  Further, no potential legal argument against P’s claim is touched upon in Simon 1^st.

31.An application for leave to serve out of jurisdiction under order 11 rule 1(1) is made ex parte.  It is therefore incumbent on an applicant to comply with the duty to make full and frank disclosure of all material matters which may have a bearing on the court’s decision whether to grant leave.  The test as to materiality is an objective one and is for the court and not for the applicant or his legal advisers to decide[13].

32.The facts that the applicant must disclose are those which the court should have in the weighing scales, ie those facts relevant to the weighing operation which the court has to make in deciding whether or not to grant the order[14].

33.The question of non-disclosure only concerns matters which are relevant to the judge’s weighing operation at the ex parte stage; otherwise “an impossible burden would be placed on applicants and their advisers and the court may get itself in a position of what might be called ‘counter-abuse’…”[15].

34.In the context of application for leave to serve a writ out of jurisdiction, in general, a failure to refer to arguments on the merits which the defendant may seek to raise in answer to the plaintiff’s claim would not amount to material non-disclosure, unless they are of such weight that their omission may mislead the Court in exercising its jurisdiction under the rule and its discretion whether or not to grant leave[16].

35.As to material non-disclosure on law, it would not be right to gauge whether the ex parte procedure has been abused by measuring that application against the very full argument and citation of authorities before the court in the inter partes hearing[17].

36.As to the 1^st complaint, ie putting forward an allegation that D had “directly” published the Declaration to Feng and “indirectly” provide the same to the LOCPG, I hold that this is a material non-disclosure by P in the ex parte application.  I further hold that this is a deliberate material non-disclosure.

(1)  Publication of the Declaration and the Trust Agreement in Hong Kong is a crucial element in P’s claim.  If there is no publication in Hong Kong, no tort would have been committed in Hong Kong.  Accordingly, whether there is any evidence showing publication of the documents by D in Hong Kong is a material point.

(2)  As to the alleged direct publication of the Declaration by D to Feng in Hong Kong, in the ex parte application, P did not tell the court that in fact P did not have solid evidence on this point.  P also did not reveal to the court that at the material times, D was ordinarily resident in the Mainland.  The residence of Feng would certainly undermine the allegation of direct publication of the Declaration by D to Feng in Hong Kong.  The subsequent amendment to [18] of the Statement of Claim shows the weakness of this allegation.

(3)  As to the alleged indirect publication of the Declaration by D to LOCPG in Hong Kong, P did not draw the court’s attention to the fact that there was little evidence on the point, except some second-hand accounts in Mainland media reports.  Even if taking the Mainland media reports into account, there was still no evidence showing that the publication was by D in Hong Kong.

(4)  P must be aware of the lack of evidence on the point of publication in Hong Kong.  However, he chose not to mention this in the ex parte application.  The non-disclosure is deliberate.

37.As to the 2^nd complaint, ie material non-disclosure on matters concerning the issue of appropriate forum, I am of the view that this is also a valid complaint.  Lack of evidence showing publication of the Declaration and the Trust Agreement by D in Hong Kong is also relevant to the forum issue.  The fact that D was making a request to TAO and the fact TAO is an office under the State Council in the Mainland would suggest that D might have published the Declaration and the Trust Agreement in the Mainland.  However, these factors pointing to the Mainland have not been drawn to the court’s attention in the ex parte application.  These are material matters and are within P’s knowledge in the ex parte application.  I hold that not mentioning all these in the ex parte application is a deliberate material non-disclosure by P.

38.As to the 3^rd complaint, ie failing to mention the legal arguments in D’s favour in the ex parte application, I would not say there has been any material non-disclosure in this aspect.  D submits that P has not disclosed the requirement of having a real and substantial tort committed in Hong Kong under Order 11 rule 1(1)(f), and has not mentioned that P might not derive any assistance from s.24 of the DO.  Although I am with D on all these legal issues after considering the detailed written submissions from the parties in this inter parte application, it would not be right to gauge whether the ex parte application has been abused by measuring that application against the very full argument arguments received by me in this inter parte application.

39.Since the 1^st and the 2^nd complaints are established, the Leave must be set aside.  The jurisdiction to re-grant an ex parte order discharged for material non-disclosure should be exercised sparingly[18]. Where non-disclosure is deliberate, the court should normally not entertain a fresh application[19].  Since the material non-disclosures in the 1^st and the 2^nd complaints are deliberate, leave should not be re-granted to P.

Disposition

40.For the reasons above, the Leave must be set aside without any re-grant.  As the Hong Kong court is not the appropriate forum, this court should not exercise jurisdiction over D in respect of P’s claim herein.  I order that:

(1)  the Leave be set aside; and

(2)  there be a declaration that this court has no jurisdiction over D in respect of the subject matter of the claim or remedy sought by P in these proceedings.

41.Costs should follow the event.  Since my ruling on the Summons would have the effect of bringing these proceedings to the end, I am of the view that costs of these proceedings, including costs of the Summons and all costs reserved (if any), should be paid by P to D.  As to the Summons, I am satisfied that the complexity of the issues involved would justify a certificate for 2 counsel.  I make a costs order nisi that costs of these proceedings (including costs of the Summons and all costs reserved, if any) be paid by P to D, to be taxed if not agreed.  There be a certificate for 2 counsel in relation to the Summons.

42.There be liberty to apply.  If there is any matter consequential upon my ruling made in this decision, the parties may seek appropriate directions from the court.

43.Lastly, it remains for me to thank counsel for the helpful assistance rendered to the Court.

Mr Denis Chang SC leading Ms Teresa Wu and Ms Stephanie Hung, instructed by P C Woo & Co, for the plaintiff

Mr Victor Dawes SC leading Mr Peter Dong, instructed by Iu, Lai & Li, for the defendant