Read the full judgment text of HCA 001456/2005 on BabelCite. This High Court CFI judgment was delivered on 29 January 2007 before Mr Recorder B Yu, SC.
Civil procedure – service out of jurisdiction – Order 11 rule 1(c) – application to discharge leave granted by Master Ho to serve concurrent writ out of the jurisdiction – whether plaintiff must show good arguable case that case falls within Order 11 and that there are serious issues to be tried on the merits – Sino-foreign joint venture in Dalian for development of golf course – Chinaup Properties Limited as 75% joint venture partner – loan facility from China Merchants Bank secured by Shares Charge over Chinaup shares – Shares Charge allegedly void for illegality under PRC foreign exchange and banking laws and for want of authority – material non-disclosure at ex parte application of powers of attorney executed before notary public in Los Angeles and irrevocable proxies – whether non-disclosure warrants discharge of leave – non-disclosure of facts going only to merits of case rather than jurisdictional threshold does not justify discharge absent attempt to deceive court – want of authority claim unsustainable as there is no serious issue to be tried given the powers of attorney, the recital in two supplemental agreements of the Shares Charge's execution, and absence of any affidavit from the plaintiffs – illegality claim – whether severability clause in loan agreement can cure illegality relating to object and purpose of facility – severability test from Sadler v Imperial Life Assurance and Marshall v NM Financial Management – pleaded illegality goes to object and purpose of agreement and cannot be cured by blue-pencil severance – whether illegality defence sustainable given Hong Kong proper law – Ralli Brothers principle on performance in foreign country – broader public policy rule from Foster v Driscoll that contract is invalid if its real object and intention necessitates performance of an illegal act in a friendly foreign country – principle of public policy applies to Hong Kong's relationship with PRC – abuse of process – whether Hong Kong proceedings constitute collateral attack on judgment of Guangdong Higher People's Court rejecting same illegality defence – principle from Hunter v Chief Constable of the West Midlands Police applied in Hong Kong in China North Industries v Ronald Chum – 1st and 2nd plaintiffs were parties to Guangdong proceedings and had full opportunity to raise illegality defence – present proceedings amount to abuse of process by 1st and 2nd plaintiffs but not by 3rd plaintiff who was not party to Guangdong proceedings – fraud plea – rule from Aktieselskabet Dansk Skibsfinansiering v Wheelock Marden that allegations of fraud must be supported with utmost particularity – disjunctive plea embarrassing and no overt act attributed to relevant defendants individually – plea of fraud should not be allowed to proceed in this form – 6th and 7th defendants as necessary or proper parties under Order 11 rule 1(c) because validity of their appointment as directors of Chinaup depends on validity of Shares Charge – leave to serve out of jurisdiction set aside but without prejudice to 3rd plaintiff to issue new writ on his own.
Legal issues: Whether leave to serve out of the jurisdiction should be set aside for material non-disclosure · Whether there is a serious issue to be tried on the want of authority claim · Whether illegality can be cured by the severability clause · Whether illegality defence is sustainable given Hong Kong proper law and public policy · Whether the proceedings amount to an abuse of process as a collateral challenge to a foreign judgment · Whether the fraud allegation against the relevant Defendants is properly pleaded · Whether the 6th and 7th Defendants are necessary or proper parties
Outcome: Leave to serve the writ out of the jurisdiction set aside as against the relevant Defendants, with the order being without prejudice to the 3rd Plaintiff to issue a new writ on his own and obtain fresh leave.
Cited by 19 cases