Lin Ming and Another v. Chen Shu Quan and Others
Read the full judgment text of HCA 1900/2011 on BabelCite. This High Court CFI judgment was delivered on 7 February 2013.
1. This is an application by summons filed herein on 6 December 2011 by the 26 th , 27 th and 28 th defendants herein (hereinafter referred to as “D26”, “D27” and “D28” respectively) for setting aside the service by the plaintiffs of the following documents upon D26, D27 and D28 on the grounds that service was irregular:
Cited by 2 cases · Cites 3 cases
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HCA 1900/2011 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO 1900 OF 2011 ____________ BETWEEN
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_____________ D E C I S I O N _____________ 1.This is an application by summons filed herein on 6 December 2011 by the 26th, 27th and 28th defendants herein (hereinafter referred to as “D26”, “D27” and “D28” respectively) for setting aside the service by the plaintiffs of the following documents upon D26, D27 and D28 on the grounds that service was irregular:
PLAINTIFFS’ CASE 2.For present purposes, it is not necessary to go into any great detail as to the case of the plaintiffs, suffice it to say that in a nutshell, the plaintiffs’ case is that the group of companies of the 1st plaintiff, which includes the 2nd plaintiff (a PRC company), Win Power Investment Ltd, Fame Glory Holding Ltd and Jointa Ltd have been unlawfully taken over by a group of tortfeasors including D26, D27 and D28 and their agents when the 1st plaintiff was detained by the authorities in Mainland China during the period between 22 October 2009 and 22 December 2010. 3.It is also the plaintiffs’ case that in November 2009, the tortfeasors forged the signature of the 1st plaintiff (while the 1st plaintiff was in detention) and wrongfully caused the relevant Mainland authorities to register a change of the Registered Legal Representative of the 2nd plaintiff from the 1st plaintiff to the 1st defendant. 4.In December 2009, the tortfeasors forged the signature of the 1st plaintiff and transferred the shares in Win Power Investment Ltd from the 1st plaintiff to the 1st defendant. 5.In January 2010, the tortfeasors wrongfully caused the Companies Registry to register a change of directorship in Jointa Ltd from the 1st plaintiff to the 1st defendant. 6.On 8th June 2010, the tortfeasors caused the transfer of the shares in Jointa Ltd to the 15th defendant. 7.The funds thereby misappropriated by the tortfeasors during the period when the 1st plaintiff was under detention, so far as is known to the 1st plaintiff are US$2,000,000 (escrowed money), RMB45,000,000 (cash in hand), RMB87,000,000 (loss of inventory) and RMB170,000,000 (loss of account receivable). RELATIONSHIP BETWEEN D26, D27 AND D28 8.D26 is a Japanese national and ordinarily resident in Japan and is also the sole director and managing director of a Hong Kong company known as Sequedge ASA Capital Ltd, a member of the Sequedge Group. Sequedge ASA Capital Ltd has its registered office at Room 1209, Great Eagle Centre, 23 Harbour Road, Wanchai, Hong Kong. 9.On 8 May 2008, D27, a Cayman Island company, was set up by Sequedge ASA Capital Ltd. The registered office of D27 is at Zephyr House, 122 Mary Street, P O Box 709, Grand Cayman KY1-1107, Cayman Islands. 10.D28 is a company incorporated under the laws of Japan, with its registered office at 2-18-5, Araki-Cho, Kishiwada City, Osaka, 596‑0004, Japan. At all material times, D28 holds a Business Registration Certificate in Hong Kong under the Business Registration Ordinance. The address given in the Business Registration Certificate of D28 is at 1135-1139, Sun Hung Kai Centre, 30 Harbour Road, Wanchai, Hong Kong (“D28’s BR address in Hong Kong”). SERVICE OF PROCESS AND PROCEDURAL BACKGROUND 11.In September 2011, before any Writ was issued by the plaintiffs in this matter, Sequedge Investment Inc (being D28 herein), Sequedge ASA Capital (Cayman) Ltd, (being D27 herein) together with one Gingero Associated SA had commenced arbitration proceedings in Hong Kong, being HKIAC/A11113, in relation to the same subject matter of dispute as in this present case. 12.On 10 November 2011 the plaintiffs issued the Writ herein and a sealed copy of the Original Writ and Original SOC were purportedly served on D28 by leaving same at the D28’s BR address in Hong Kong. 13.On 11 November 2011, a sealed copy of the Original Writ and Original SOC were purportedly served on each of D26 and D27 by leaving same at the registered office of Sequedge ASA Capital Ltd. 14.On 22 November 2011, each of D26, D27 and D28 filed Acknowledgments of Service respectively by their solicitors Messrs Sidley Austin. 15.On 25 November 2011, the solicitors for D26, D27 and D28 wrote to plaintiffs’ solicitors informing plaintiffs’ solicitors that they had “instructions to set aside the alleged service of the Statement of Claim”. 16.On 29 November 2011 plaintiffs’ solicitors took out a summons restraining D27, D28 and Gingero Associated SA from proceeding with or taking any further steps in the Arbitration Proceedings started by them in September 2011 relating to this matter (“the Stay Arbitration Summons”). 17.On 30 November 2011, plaintiffs’ solicitors amended the Writ and Statement of Claim herein. The amendments included the addition of the foreign address of D26, and the addition of the registered offices respectively of D27 and D28. Despite the additions of the foreign addresses of each of D26, D27 and D28, no applications were made under Order 11 for service out of jurisdiction by the plaintiffs upon D26, D27 and D28 18.The Amended Writ and Amended SOC were purportedly served on the solicitors for D26, D27 and D28, namely Messrs Sidley Austin, at the office of Messrs Sidley Austin. 19.On 2 December 2011, directions were given for the filing of affidavit evidence in opposition to the Stay Arbitration Summons and the matter was adjourned for argument scheduled to be heard on 7 February 2012. 20.On 5 December 2011 solicitors for D26, D27 and D28 indicated to the plaintiffs’ solicitors that the defendants reserved the right to file applications to set aside service and/or application to stay the court proceedings. The defendants’ solicitors also indicated that those applications should be heard before or together with the Stay Arbitration Summons. 21.On 16 December 2011, solicitors for D26, D27 and D28 took out the present summons which was scheduled for hearing on 29 February 2012. 22.On 19 December 2011, solicitors for D27 and D28 took out a summons to stay the present action (of the 1st plaintiff’s claim only) in favour of the Arbitration Proceedings which summons was scheduled to be heard together with the Stay Arbitration Summons on 7 February 2012. D26, D27 AND D28S’ CONTENTION TO SET ASIDE SERVICE 23.This being an application by D26, D27 and D28 to set aside the service of the Writ and Amended Writ, I shall deal firstly with the submissions of the defendants. 24.In a nutshell, the contention by D26, D27 and D28 is that they are either non-residents of Hong Kong (in the case of D26) or companies incorporated outside Hong Kong (in the case of D27 and D28) and therefore the purported service upon them of the Writ on addresses in Hong Kong or the Amended Writ with foreign addresses upon Messrs Sidley Austin but without seeking leave for service out of jurisdiction pursuant to Order 11 of the RSC must be bad, improper and ineffective. (a) Service upon D26 25.Specifically, it was submitted that D26 is a citizen of Japan and ordinarily resident in Japan. The Writ was purportedly served on him in Hong Kong at Room 1209 Great Eagle Centre, 23 Harbour Road, Wanchai (being the registered office of Sequedge ASA Capital Ltd) on or about 14 November 2011. There is no evidence that D26 was in Hong Kong on that date of the alleged service. That service must therefore be bad and/or defective service. 26.The Amended Writ added new foreign addresses outside of Hong Kong but no attempt was made by the plaintiffs to seek leave for service out of jurisdiction under Order 11 in the absence of which there can be no proper service. 27.D26 filed an Acknowledgement of Service pursuant to Order 12 of the RSC on 19 November 2011 to challenge the purported service of the Writ. 28.Thereafter, the plaintiffs’ solicitors also purported to effect “service” of the Amended Writ and Amended Statement of Claim upon Messrs Sidley Austin, the solicitors acting for D26, by way of letter on 29 November 2011 upon D26. This was despite the fact that Messrs Sidley Austin had in earlier letters advised the plaintiffs’ solicitors that they had no instructions to accept service for any of the defendants (apart from the 7th defendant) and that they would be taking out an application to set aside service of the Writ and Statement of Claim on behalf of D26. (b) Service upon D27 29.It was submitted by the defendants that D27 is a company incorporated in the Cayman Islands with its registered office at Zephyr House, 122 Mary Street, PO Box 709, Grand Cayman KY1-1107, Cayman Islands and that D27 does not carry on any business activities in Hong Kong nor does it have any place of business in Hong Kong. 30.Therefore the attempted service of the Writ on D27 by leaving a copy of the Writ and Statement of Claim at 1209 Great Eagle Centre, 23 Harbour Road, Wanchai, Hong Kong, being the registered office of Sequedge ASA Capital Ltd must be defective service. 31.It was also submitted that for the Hong Kong courts to have jurisdiction over a foreign corporate entity outside Hong Kong it is fundamental that service out of jurisdiction has to be effected in accordance with Order 11 of the RSC. (c) Service on D28 32.D28 is a company incorporated under the laws of Japan with a registered office in Osaka, Japan. 33.D28 has a representative office in Hong Kong at 1135-1139 Sun Hung Kai Centre, 30 Harbour Road, Wanchai, Hong Kong. 34.The Writ was served on D28’s representative office in Hong Kong. 35.The stance taken by D28 is that service on a foreign corporation at its representative office in Hong Kong is not good service. Proper service would be for the plaintiffs to seek leave to serve D28 out of jurisdiction and if such leave is granted, then service can be effected at D28’s registered address in Osaka, but the plaintiffs had not even sought leave for service out of jurisdiction pursuant to Order 11 RSC. 36.D28 accepts that if a foreign corporation is registered in Hong Kong under Part XI of the Companies Ordinance, service may be effected under section 338 of the Companies Ordinance if the foreign corporation has a “place of business” within section 341 of the Companies Ordinance. 37.However, D28 submits that in the present case, D28 is not registered under Part XI of the Companies Ordinance and it is not open to the plaintiffs to rely on service pursuant to section 338 of the Companies Ordinance. 38.It was also submitted by D28 that it does not carry on any business in Hong Kong and that its representative office in Hong Kong is only for the purpose of gathering market intelligence in the Asia Pacific region and to explore opportunities in the region for D28 in Japan. The representative office in Hong Kong does not sign any business contracts or generate any income or profits. The representative office in Hong Kong has only a single executive who does not sign any contracts on behalf of D28 in Hong Kong. 39.In the circumstances, the representative office of D28 in Hong Kong is not even a “place of business” under section 341 of the Companies Ordinance. PLAINTIFFS’ CONTENTION (a) Service on D26 40.The plaintiffs rely on the fact that it is not disputed that D26 is the sole director of Sequedge ASA Capital Ltd and submit that as such, the registered office of Sequedge ASA Capital Ltd could be taken as the last known address of D26. 41.In so submitting, the plaintiffs seek to rely on a passage in the judgment of Lord Atkin in McMillan v Guest [1942] AC 561 at 565 in which it is said:
42.Therefore it was contented by the plaintiffs that service upon D26 at the address of Sequedge ASA Capital Ltd in Hong Kong was good service. 43.It was also contended by the plaintiffs that the only matter relied on by D26 in challenging the effectiveness of service is the fact that D26 says that he is a Japanese national, not ordinarily resident in Hong Kong and not within the jurisdiction on the day that the Writ was served. 44.In so saying, D26 has only produced one page from his passport to show that he is a national of Japan but has failed to produce any other pages from his passport to show that he was not in Hong Kong on the day when the Writ was served on him at the address of Sequedge ASA Capital Ltd. 45.The plaintiffs therefore submit that D26 has not discharged the evidential burden in displacing the presumption that the Writ was duly served on D26. (b) Service on D27 46.The plaintiffs submit that service on D27 at the address of Sequedge ASA Capital Ltd in Hong Kong is justified for the following reasons. 47.D27 was established by Sequedge ASA Capital Ltd and, although a Cayman Island company, does not have any establishment in the Cayman Islands. 48.D26 is a director of D27 and also the managing director of Sequedge ASA Capital Ltd. 49.When D27 invested in the business of the 1st plaintiff by taking some of the shares purchased by D28 from the 1st plaintiff, this investment was announced by Sequedge ASA Capital Ltd in its official website. Therefore the fact that D28 has carried on business in Hong Kong by exercising a put option through Messrs Sidley Austin equally applies to D27. Thus D27 should be taken as carrying on business in Hong Kong. 50.As such D27 is amenable to the jurisdiction of the Hong Kong courts and service out of jurisdiction is not required. 51.Pursuant to section 338(2) of the Companies Ordinance, service of a document may be effected by leaving it or sending it by post to any place of business established by the company in Hong Kong. 52.In the present case, the place of business established by D27 in Hong Kong should be taken as the address of Sequedge ASA Capital Ltd. 53.Given that D26 holds an office in Hong Kong by reason of the fact that he is the sole director of Sequedge ASA Capital Ltd, it is submitted by the plaintiffs that the central management of D27 is in Hong Kong and therefore D27’s real business is carried on in Hong Kong. 54.By virtue of section 338(2) of the Companies Ordinance, the plaintiffs say that service on D27 was properly effected by leaving the Writ at the registered office of Sequedge ASA Capital Ltd. 55.As an alternative argument, the plaintiffs also say that D27 (and also D28) has submitted to the jurisdiction of the Hong Kong courts by bringing arbitration proceedings in Hong Kong in respect of the same subject matter. This point is more fully dealt with when I come to D28. (c) Service on D28 56.It is not disputed by the plaintiffs that D28 is a company incorporated under the laws of Japan. 57.Service of the Writ upon D28 was effected at the address given by D28 in the Business Registration Certificate of D28. 58.The justification for service on that business address is as follows, as submitted by the plaintiffs. 59.Since D28 has taken out a Business Registration Certificate under the Business Registration Ordinance, that is as good an admission by D28 that it is carrying on business in Hong Kong since section 5 of the Business Registration Ordinance provides that persons carrying on or commencing to carry on business in Hong Kong shall be registered in the manner prescribed under the ordinance. 60.Regulation 3 of the Business Registration Regulations Cap 310A provides that in the case of a business carried on by a body corporate, a business registration application must be made to the Commissioner of Inland Revenue in the prescribed Form 1(b) set out under Regulation 9. An applicant shall provide (inter alia) in Form 1(b) the address of its “place of business”. 61.Under section 19 of the Business Registration Ordinance, the Commissioner shall certify and issue to any person upon request a copy of a valid business registration certificate and/or extract of any information contained in the register of business kept by the Commissioner. 62.By virtue of section 19(1A) of the Business Registration Ordinance, an “extract of information” may be issued by the Commissioner by supplying a copy of the Form 1(b) submitted by the relevant body corporate for the purpose of registration. 63.The purpose of section 19 of the Business Registration Ordinance is to enable any person to ascertain whether a business is registered under the Business Registration Ordinance and the particulars of the business so registered. 64.The fact that D28 was registered under the Business Registration Ordinance and that it was not a club, is a representation to the public by D28 that it carries on a business in Hong Kong within the meaning of the Business Registration Ordinance and it carries on that business at its registered “place of business”. 65.D28’s reliance on the decision of case of Deputy High Court Judge Anthony To (as he then was) in the case of Gerald Leon Murdock v Dresser-Rand Services SARL [2001] HKCFI 148 to say that its “representative office” is not a “place of business” within the meaning of the Companies Ordinance is wholly misconceived. 66.Murdock’s case was decided before section 341 of the Companies Ordinance was amended. The amendment to section 341 came into operation on 14 December 2007. 67.Before its amendment, “place of business” is defined in section 341 of the Companies Ordinance to include “a share transfer or share registration office and any place used for the manufacture or warehousing of any goods, but does not include a place not used by the company to transact any business which creates legal obligations.” (my underlining) 68.After the amendment, “place of business” in section 341 of the Companies Ordinance include “a share transfer or share registration office but does not include an office specified in the 24th Schedule”. 69.The kind of office specified in the 24th Schedule is a “local representative office established or maintained … under section 46 of the Banking Ordinance”, which is not applicable to the present case. 70.The plaintiffs rely on the decision of Sakhrani J in the case of Sigamas Management Services Ltd v Axis Intermodal (UK) Ltd trading as Seaaxis (HCA 228/2010) in which Sakhrani J refers to the difference of section 341 before and after the amendment and then said in para 31:
71.Based on what is stated in the passage cited above, the plaintiffs submit that the business address given by D28 in its Business Registration ought to be taken as the “place of business” required under the Companies Ordinance as defined by section 341 thereof. 72.The plaintiffs further submit that section 338(2) of the Companies Ordinance provides that where a non-Hong Kong company has defaulted in delivering to the Companies Registry the name and address of a person authorized to accept service on behalf of the company (as where the company has failed to register its “place of business” under section 333) a document may be served “by leaving it at or sending it by post to any place of business established by the company in Hong Kong”. 73.For the reasons given above, the plaintiffs submit that the Original Writ should be considered as duly served on D28 at its place of business registered under the Business Registration Ordinance. 74.Lastly, in the case of D28, it is also the submission of the plaintiffs that since D28 (and also D27), by commencing arbitration in Hong Kong in relation to this dispute, both of them are deemed to have consented to the jurisdiction of the Hong Kong courts and that service out of jurisdiction is not required. In those circumstances, the plaintiffs say that service can be properly effected by serving the Amended Writ at the office of their solicitors, namely, Messrs Sidley Austin, representing them in the arbitration proceedings. DECISION (a) Service on D26 75.D26 is a Japanese national and an individual and is not ordinarily resident in Hong Kong. The fact that he is the sole director as well as the managing director of Sequedge ASA Capital Ltd does not make the registered office of Sequedge ASA Capital Ltd the last known address of D26 in Hong Kong. 76.The plaintiffs’ reliance on the passage cited in the case of McMillan v Guest is misconceived. That case was not a case on service of process. That was a tax case and decided that a foreign director (who is resident outside England) of an English company holds an office in the company which is situated in England and therefore is liable to pay tax by reason of his holding an office in a company in England. 77.That decision is not authority for saying that the last known address of a foreign director of a company is the registered address of the company and that the foreign director, when sued as an individual tortfeasor, can be served with the process at the registered address of the company of which he is a director. 78.In the circumstances, the service upon D26 at the registered address of Sequedge ASA Capital Ltd, is not proper service and therefore ineffective. 79.Moreover, the purported service of the Amended Writ and Amended SOC upon the office of Messrs Sidley Austin is also not good service since there is no endorsement by Messrs Sidley Austin that they had instructions to accept service and more importantly, Messrs Sidley Austin had informed the plaintiffs’ solicitors that they were about to dispute/challenge jurisdiction after acknowledging service. 80.Indeed at the hearing, the plaintiffs have not pursued this point of service upon Messrs Sidley Austin as being good service against D26. 81.As for the point that D26, having failed to show any part of his passport to show that he was not in Hong Kong at the material time of service, has failed to discharge the evidential burden on him to rebut the presumption of service, I do not find that to be a good point. Since there is no presumption of service on the facts, I cannot see that D26 has any evidential burden to rebut. The onus is squarely on the plaintiffs to show that D26 was present within the jurisdiction when the plaintiffs purported to serve him with the Writ in this matter. It is not a matter for D26 to disprove. (b) D Service on D27 82.D27 is a Cayman Islands company with its registered office in the Cayman Islands. 83.D27 is a separate legal entity from D28 and also from Sequedge ASA Capital Ltd. 84.Once again there can be no justification for serving D27 at the registered office of Sequedge ASA Capital Ltd and I do not accept the arguments put forward by the plaintiffs to the effect that service of the Original Writ upon D27 at the registered address of Sequedge ASA Capital Ltd to be good service. 85.For the same reason as given above in the case of D26, purported service of the Amended Writ upon Messrs Sidley Austin on behalf D27 is neither good nor effective service. 86.I also do not accept the argument put forward by the plaintiffs that because D27 had, together with D28 and Gingero, began arbitration proceedings in Hong Kong in respect of the same subject matter of dispute as that of the present case, they have thereby submitted to the jurisdiction of the Hong Kong courts. When the arbitration proceedings were commenced by D27, D28 and Gingero, the Writ in the present case has not even been issued by the plaintiffs and therefore that act on the part of D27 cannot be said to be “a step in the proceedings” whereby D27 would have waived any irregularity as to service. 87.However, D27 (together with D28) did take out a summons to stay the present action and in so doing did take “a step in the proceedings” whereby D27 has waived the irregularity as to service and has thereby submitted to the jurisdiction of the Hong Kong courts in these proceedings. 88.Accordingly, the application by D27 to set aside service of the Original Writ and Original SOC upon it as well as to set aside service of the Amended Writ and Amended SOC must be dismissed. (c) Service upon D28 89.Service of process is permitted on a non-Hong Kong company by leaving it at or sending by post to “any place of business established by the company in Hong Kong” even though the company has not registered under Part XI of the Companies Ordinance (see section 338(2) Companies Ordinance, Ho Tai Kwan v Global Innovative Systems Inc [2008] 1 HKLRD 339). 90.The question to consider therefore is whether the address in the Business Registration Certificate of D28 is a “place of business” established by D28 in Hong Kong for the purposes of the service under section 338(2) of the Companies Ordinance. 91.Section 341 of the Companies Ordinance defines “place of business” as including “a share transfer or share registration office but does not include an office specified in the Twenty-fourth Schedule.” 92.The Twenty-fourth Schedule contains an exclusion in the definition of place of business which is:
93.That exclusion is not applicable here. 94.Before section 341 was amended by The Companies (Amendment) Ordinance 2004 which came into effect on 14 December 2007, there was another exclusion to the definition of “place of business” in section 341. That exclusion was that a place of business “does not include a place not used by the company to transact any business which creates legal obligations”. Such exclusion was removed by the said amendment to section 341. 95.In the case of Huang Ping, Owen v Burswood Ltd and anr (DCCJ 5239 of 2008, 9 September 2009), Deputy District Judge Raymond Tsui said in paragraph 30 of his judgment that as the wide exclusion in the old version of section 341 has now been replaced by a narrower exclusion this must mean that the legislature intends that “place of business” should bear a wide meaning. I agree with that observation of Deputy Judge Raymond Tsui. 96.When Deputy High Court Judge Anthony To (as he then was) gave his decision in the case of Gerald Leon Murdock v Dresser-Rand Services SARL [2001] HKCFI 148, the amendment to section 341 of the Companies Ordinance had not been made and had not taken effect. That case was therefore decided on the old version of the exclusion to the definition of “place of business” in section 341 of the Companies Ordinance. In the light of the amendment, that decision by Deputy Judge To cannot assist D28 in the present case. 97.Given that D28 has seen fit to apply for a Business Registration Certificate in the present case, I am of the view that the address given by D28 on the Business Registration Certificate to be D28’s “place of business” within the meaning of section 341 of the Companies Ordinance notwithstanding that D28 has not registered itself under Part XI of the Companies Ordinance. 98.Accordingly, and for the reasons given above, service of the Original Writ and Original SOC upon D28 at the address under its Business Registration Certificate is good service and the present application by D28 ought to be dismissed. 99.Moreover, if I was wrong in deciding that service upon D28 was good service, or if there was any irregularity with service upon D28, D28, like D27 has also taken out an application to stay the present action in favour of the arbitration proceedings. In so doing, D28 has taken a step in the present proceedings and must also be taken to have waived any such irregularity with service. CONCLUSION 100.Service of the Original Writ and Original SOC as well as the Amended Writ and Amended SOC upon D26 is set aside as being improper and ineffective service. 101.The applications by D27 and D28 are dismissed. COSTS 102.The costs of D26 in making this application and attending the hearing be borne by the plaintiffs in any event. 103.The plaintiffs’ costs in opposing the applications of D27 and D28 to be paid by D27 and D28 in any event.
Mr Kelvin Leung, instructed by M C A Lai & Co, for the 1st and 2nd plaintiffs Mr Ing Loong Yang, of Sidley Austin, for the 26th, 27th and 28th defendants |
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