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HCA 473/2017
[2018] HKCFI 1044
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IN THE HIGH COURT OF THE
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HONG KONG SPECIAL ADMINISTRATIVE REGION
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ACTION NO. 473 OF 2017
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HAITONG INTERNATIONAL SECURITIES
COMPANY LIMITED (海通國際證券有限公司)
Plaintiff
and
ADS SECURITIES LLC
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Defendant
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BETWEEN
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COURT OF FIRST INSTANCE
Before: Deputy High Court Judge Kent Yee in Chambers
Date of Hearing: 27 March 2018
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Date of Decision: 14 May 2018
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DECISION
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Introduction
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1.
Haitong International Securities Co Ltd (“Haitong”) brought
this action against ADS Securities LLC (“ADS”) to enforce a sale and
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purchase agreement (“the Agreement”) in respect of the sale of a
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convertible bond at its nominal value of €25million together with interest
accrued. Haitong obtained leave from a master to serve the concurrent
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writ dated 30 March 2017 on ADS in Abu Dhabi, the United Arab
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Emirates (“the UAE”). This is an application of ADS by summons dated
15 May 2017 (“the Summons”) for an order that the concurrent writ
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purportedly served be set aside pursuant to O.12 rule 8 of the Rules of the
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High Court (“RHC”).
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2.
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The key issues in this application include (1) whether
Haitong can demonstrate a good arguable case that its claim falls within
the gateways under O.11, r.1(1)(d)(i) & (iii) of the RHC, (2) whether
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there was any material non-disclosure when Haitong made the ex parte
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application and (3) whether the concurrent writ (“the Writ”) was validly
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served on ADS in Abu Dhabi without any contravention of UAE law and
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hence O.11 r.5(2) and if not whether this court should exercise its
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discretion to cure the deficiency in service.
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3.
Haitong contends that it has a good and arguable case that its
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claim is to enforce the Agreement made in Hong Kong and that by its
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implication, the Agreement is governed by Hong Kong law. Mr Yu SC,
leading Ms Sit for Haitong, indicates that Haitong no longer relies on
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O.11 r.1(1)(e) and contends that ADS was in breach of the Agreement by
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its failure to pay to Haitong the consideration thereunder in Hong Kong,
as it did so at the ex-parte stage.
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4.
ADS adopts the position that the Agreement was made
outside jurisdiction, in either Abu Ahabi or Singapore and that the
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governing law should be UAE law or Singaporean law. In other words,
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Haitong is unable to establish jurisdiction over their dispute.
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5.
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Apart from the jurisdiction issue, Haitong has to convince
this court that it should exercise its discretion to approve service out on
the basis that there is a serious issue to be tried on the merits and that
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Hong Kong is clearly the appropriate forum under the principle governing
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forum conveniens for the trial of the action: see Dynasty Line Ltd v
Sukamto Sia [2009] 4 HKLRD 454 at §29 per Cheung JA.
6.
Mr Alder, appearing for ADS, at the very outset, makes it
clear that though by paragraph 1(e) of the Summons ADS asks for a stay
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of these proceedings for the claim to be tried in the Abu Dhabi Federal
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First Instance Court, ADS is not making an application for stay on the
basis of forum non conveniens and hence should not be saddled with the
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evidential burden in accordance with the well-known Spiliada principles.
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Further, Mr Alder makes it clear that for the purpose of this application,
ADS accepts that the claim of Hoitong discloses a serious issue to be
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tried and, thus, does not address me on the purported defence raised by
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ADS.
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Preliminary matters
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7.
Haitong took out a summons dated 19 March 2018 to apply
to adduce the 2nd Affirmation of Amre Abdulkader Bajamal for the
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purpose of the application of ADS. On the other hand, ADS seeks to
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adduce the 3rd Affirmation of Ali Mohammed Omar Al Aidarous dated
22 March 2018. Both Mr Bajamal and Mr Aidarous purport to be expert
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in UAE law. I have heard no debate about the admissibility of these two
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affirmations despite their lateness. Mr Yu invites this court to consider
them on a de bene esse basis. Absent serious objection, I grant leave to
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the parties to file these two affirmations.
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General approach adopted in applications for service out
8.
The proper approach is well-known. The court must handle
applications under O.11 with care. Ribeiro PJ in Kayden Ltd v Securities
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and Futures Commission (2010) 13 HKCFAR 696 at §36 explained the
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need for the strict approach adopted by the court in dealing with these
applications in the following terms,
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“The need for a strict approach is dictated by at least three related
considerations. First, it is granted on recognition of the need for
special care given the extraordinary nature of the long-arm
jurisdiction asserted under O.11. As Lord Mustill pointed out, it
involves seeking to compel a foreign defendant to submit to
adjudication by the court or suffer judgment and execution in
default.”
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I further agree with the observation of G Lam J in 張才奎所
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託管中國山水投資有限公司股份相關員工 v 張才奎, unreported, HCA
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2191/2014, 13.5.2015 at §52 that, despite the strict approach, the court
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ought not have any predilection or presumption against granting leave to
serve out. The judge went on to cite with approval the following dictum
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of Lord Sumption in Abela v Baadarani [2013] 1 WLR 2043 at §54:
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“This characterisation of the jurisdiction to allow service out [i.e.
as an ‘exorbitant’ jurisdiction] is traditional, and was originally
based on the notion that the service of proceedings abroad was an
assertion of sovereign power over the Defendant and a
corresponding interference with the sovereignty of the state in
which process was served. This is no longer a realistic view of the
situation. The adoption in English law of the doctrine of forum
non conveniens and the accession by the United Kingdom to a
number of conventions regulating the international jurisdiction of
national courts, means that in the overwhelming majority of cases
where service out is authorised there will have been either a
contractual submission to the jurisdiction of the English court or
else a substantial connection between the dispute and this country.
Moreover, there is now a far greater measure of practical
reciprocity than there once was. Litigation between residents of
different states is a routine incident of modern commercial life. A
jurisdiction similar to that exercised by the English court is now
exercised by the courts of many other countries. The basic
principles on which the jurisdiction is exercisable by the English
courts are similar to those underlying a number of international
jurisdictional conventions, notably the Brussels Convention (and
corresponding regulation) and the Lugano Convention. The
characterisation of the service of process abroad as an assertion of
sovereignty may have been superficially plausible under the old
form of writ (‘We command you …’). But it is, and probably
always was, in reality no more than notice of the commencement
of proceedings which was necessary to enable the defendant to
decide whether and if so how to respond in his own interest. It
should no longer be necessary to resort to the kind of muscular
presumptions against service out which are implicit in adjectives
like ‘exorbitant’. The decision is generally a pragmatic one in the
interests of the efficient conduct of litigation in an appropriate
forum.”
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Haitong’s case on the two gateways
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O.11 r. 1(1)(d)(i)
10.
The pleaded case of Haitong is as follows. Haitong is a
locally incorporated company licensed to carry on Type 1, Type 3 and
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Type 4 regulated activities under the Securities and Futures Ordinance,
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Cap 571 in Hong Kong. ADS is a limited company incorporated in the
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UAE and based in Abu Dhabi. ADS has maintained an interdealer-broker
delivery versus payment (DVP) trading line with Haitong since about
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2013.
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11.
It is pleaded that the Agreement was concluded by Haitong
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and ADS on the Bloomberg trading system known as “Instant
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Bloomberg” and in parts in writing by an VCON email dated 29 July
2016 from ADS to Haitong (“the VCON Email”). The subject matter of
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the Agreement is the convertible bond RNMGR 5 07/27/20 with ISIN
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XS1223161651 issued by RNTS Media NV (“the CB”).
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It is allegedly agreed under the Agreement that the principal
of the CB payable by ADS would be at 100% of the nominal value and
the settlement date would be 29 July 2016. Further, the CB have accrued
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2-day interest of €6,793.48 as at the settlement date and the delivery of
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the CB as well as settlement of the purchase price comprising the
principal of the CB and the accrued interest totalling €25,006,793.48
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would be effected through Euroclear Bank SA/NV (“Euroclear”).
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13.
It is further pleaded that ADS expressly requested Haitong
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that for the purpose of the Agreement, Haitong would acquire the CB in
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question from UBS AG (“UBS”) for the price of €24,99,293.48 so as to
sell it on to ADS.
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14.
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To perform the Agreement, Haitong duly entered into an
agreement with UBS on 25 July 2016 to acquire the CB with settlement
date on 29 July 2016 (“the UBS Agreement”). However, whilst Haitong
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performed the UBS Agreement, ADS failed to take delivery of the CB
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from Haitong on 29 July 2016 and to make payment in breach of the
Agreement. The primary relief claimed by Haitong is specific
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performance of the Agreement.
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15.
In the affirmation of Desmond Lee (handling solicitor acting
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for Haitong) filed in support of the ex parte application for leave to issue
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the Writ and service out (“Lee’s Affirmation”), the relevant records on
“Instant Bloomberg” and a copy of the VCON Email are exhibited
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thereto.
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16.
Haitong contends that the Agreement was concluded by its
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receipt of the VCON Email evidencing the acceptance of its offer by
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ADS at its place of business in Hong Kong. In this regard, it relies on
section 19(4) of the Electronic Transactions Ordinance, Cap 553 (“the
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ETO”) which provides,
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“Unless otherwise agreed between the originator and the addressee,
an electronic record is taken to have been –
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(a)
sent at the place of business of the originator; and
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(b)
received at the place of business of the addressee.”
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17.
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Both parties agree that it is trite that in the case of near-
instantaneous communications including emails, the postal rule does not
apply: David Thomas and Anor v BPE Solicitors [2010] EWHC 306 (Ch).
18.
The position of ADS is that the Agreement was concluded in
the UAE where ADS received the acceptance of Haitong of its offer. To
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be exact, ADS contends that it was concluded at 1812:29 when Mr
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Mameli of ADS received Ms Leong’s confirmation as shown in the
Instant Bloomberg records. The VCON Email, it contends, is nothing
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more than a further recap or record. Its fall-back position is that the
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Agreement was concluded in Singapore where Ms Leong was located. It
is remarkable that Mr Alder no longer argues that Mr Mameli did not
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have the authority to contract on behalf of ADS and that ADS was a mere
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agent of a disclosed principal at all despite the half-hearted allegations in
its affirmation evidence.
19.
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Hence, the Instant Bloomberg records and the VCON Email
should be dispositive of the controversy over the locus of the conclusion
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of the Agreement. The parties do not rely on any other documents or
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verbal exchanges. Before I study those documents, it is necessary to give
an introduction of the key figures taking part in the exchanges evidenced
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by those documents.
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20.
The relevant department of Haitong involved in this
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transaction is the Fixed Income, Currency and Commodities Desk (“the
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FICC Desk”) and Ms Leong and Ms Kang were the salespersons
working for the FICC Desk. According to the affirmation of Mr Kong,
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who is the Head of FICC, he has to oversee and manage the FICC Desk
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in both Hong Kong and Singapore. Mr Mameli was a former employee of
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ADS and his position was FX and Fixed Income Manager.
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21.
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ADS relies on the following extract from the Instant
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Bloomberg records:
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Mameli:
hi guys
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Mameli:
I spoke to the client in Sing
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UBS WM sells at [99.5 and ADS buys at 100]
Leong:
okie
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Leong:
let me confirm w them
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Mameli:
please do. Value date 29th of July
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Leong:
got it. Pending their confirmation
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Leong:
hihi Ruggero confirmed
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Mameli:
great
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22.
Mr Alder says once Ms Leong made the confirmation to Mr
Mameli, all the essential terms were agreed and the Agreement was
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therefore concluded. The VCON Email was insignificant and extraneous
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to the Agreement.
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Mr Yu points out to this court that in the VCON Email, it
was stated that in addition to the principal amount of €25 million, a sum
of €6,793.48 (“the Interest”) was payable as two days’ interest accrued
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on the CB. Mr Yu submits that the VCON Email was not just a formality
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but indeed contained a substantive term. The Agreement could hence
only be concluded by the VCON Email.
24.
Mr Alder highlights that the affirmation evidence of Haitong
said nothing about the Interest and submits that it was only raised by Mr
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Yu for the first time to inflate its importance to the Agreement. I do not
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think that this is a fair criticism. In the statement of claim, it is expressly
pleaded that the Interest was part of the Agreement. I also agree with Mr
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Yu that the Interest constitutes a substantive term given its quantum and
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Mr Alder does not argue otherwise. Whether Haitong has said so in its
affirmation is irrelevant.
25.
This court has then to decide whether or not ADS already
agreed on its liability to pay the Interests and the quantum of the same
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only upon sending the VCON Email to Haitong. It is true that the Interest
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is not covered by any affirmation evidence at all. Neither party explains
how it was computed and it appeared for the first time in the VCON
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Email and not in any of the previous exchanges in the Instant Bloomberg
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records.
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26.
In an email from Ms Goh of UBS to Ms Leong sent at
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18:13:23 on 25 July 2016 (“UBS Email”), I can find a similar breakdown
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of the sum payable to UBS by Haitong for the purchase of the CB for the
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sale of the same to ADS. Haitong was required to pay the like amount of
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accrued interest for 2 days. Assuming the dispatch information of the
USB Email, the VCON Email and the Instant Bloomberg records is
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correct, and there is no allegation that it is not, the VCON Email came
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about two minutes after the USB Email. Mr Mameli told Ms Leong about
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the VCON Email a few seconds after it was sent. There is no evidence
that Ms Leong told Mr Mameli about the accrued interest on the CB by
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whatever means.
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27.
Mr Alder refers this court to another VCON email issued by
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Mr Mameli to Ms Kang dated 27 June 2016. It related to an earlier
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transaction involving the same quantity of the same convertible bond
issued by RNTS Media NV. There, ADS agreed to pay, in addition to the
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principal, accrued interest for 153 days in the sum of €525,412.09 for the
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transaction. I read the preceding Instant Bloomberg records and I find no
reference to such interest at all.
28.
Even in the absence of direct evidence adduced by the parties,
I believe that in an ordinary sale of a convertible bond, it is customary for
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the purchaser to pay accrued interest (starting from the last interest
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payment date) on the convertible bond. In all three previous acquisitions
of convertible bonds, ADS agreed to pay the interest accrued without any
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discussion about the same. In the Instant Bloomeberg messages relating
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to the material sale, the parties agreed that Haitong should make a profit
of 5% out of the selling on of the CB to ADS. On balance, I believe that it
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is more likely than not that the parties had tacitly agreed that the accrued
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interest should be borne by ADS. They did not wait until the VCON
Email to agree on such a substantive term.
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29.
In regard to the quantum of the Interest, the issue
information of the CB should be in the public domain. The trade in the
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convertible bond, as with other convertible bonds, is transacted in the
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open market and the information concerning its periodic interest
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payments such as interest rate and payment dates should be readily
available to prospective buyers including ADS. I believe it is more likely
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than not that ADS came up with the quantum of the Interest
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independently. There is simply no evidence that Haitong had ever
provided such information to ADS.
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30.
I am therefore driven to the conclusion that whilst the VCON
Email contained the substantive term of the Interest, Haitong does not
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have a good arguable case that the Agreement was only concluded when
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such a term was contained in the VCON Email.
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31.
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Indeed, the UBS Email arguably supports this conclusion. It
had a similar format with that of the VCON Email and it came before the
VCON Email. There is no reason why Haitong would have committed
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itself to the purchase of the CB and concluded the UBS Agreement by the
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UBS Email even before the conclusion of the Agreement by the VCON
Email.
32.
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This court has still to decide whether Haitong has a good
arguable case that the Agreement was concluded in Hong Kong before
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the VCON Email. The following matters are relevant in my view:
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(a)
ADS approached Haitong in Hong Kong and started
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their trading relationship by opening the DVP trading line in
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about October 2013. Three transactions were completed
without any issue.
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(b)
From the Instant Bloomberg records, it can be seen
that at the outset Mr Mameli approached Ms Kang to acquire
the CB just as he had done so on the last occasion. Mr
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Mameli told Ms Kang that USB instead of JPM would be the
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vendor. USB is based in Singapore. Ms Kang then talked to
Ms Leong about the deal. Shortly afterwards, Ms Kang
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reverted to Mr Mameli and follow up the deal. Ms Leong
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joined the discussion and took over the matter apparently and
continued to talk with Mr Mameli about the details of the
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acquisition of the CB. Ms Kang did not make a specific
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introduction of Ms Leong, who was working from the FICC
Desk in Singapore, to Mr Mameli. I accept the submission of
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Mr Yu that the discussion remained to be tripartite though
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Ms Kang did not say anything further.
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(c)
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Mr Yu’s submission that the confirmation given by
Ms Leong was only confined to the confirmation given by
UBS is correct. However, the contextual background is that
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Mr Mameli proposed that UBS would sell to Haitong at
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99.95 and ADS would buy at 100. Ms Leong first replied
“okie” and then she told Mr Mameli that she would ask for
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the confirmation of UBS. It appears that the only outstanding
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concern about the proposal of Mr Mameli was the
confirmation of UBS to sell to Haitong at 99.95 and the
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confirmation of Haitong could be assumed. Once Ms Leong
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replied to Mr Mameli with the word “confirmed”, it should
mean that the sale should be completed and no further
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confirmation had to be made by Ms Leong. Ms Leong did
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not suggest such a confirmation, either.
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(d)
The UBS Agreement was an integral part of the
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Agreement and was to be performed by Haitong.
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(e)
Mr Kong produced an agreement between Haitong
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and Haitong International Securities (Singapore) Pte, Ltd
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(“Haitong Singapore”) dated 4 June 2015 (“the Haitong
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Agreement”). He contended that Ms Leong did during the
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discussion shown in the Instant Bloomberg records with Mr
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Mameli was actually pursuant to the Haitong Agreement as
placement services rendered to Haitong. She was not
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authorised to conclude or enter into any agreement without
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the prior written consent or authorisation of Haitong.
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(f)
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Mr Kong explained that Ms Leong merely handled the
logistics for Haitong in this transaction by checking the
availability of the CB in Singapore for the purchase of
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Haitong. The fact that Ms Leong forwarded both the UBS
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Email and the VCON Email to the personnel of Haitong
lends credence to this explanation.
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33.
On the evidence, by reason of the foregoing matters, I am not
convinced that it is reasonably arguable that the Agreement was
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concluded in either the UAE or Singapore. Haitong plainly has a good
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arguable case that it, based in Hong Kong, concluded the Agreement in
Hong Kong. I am satisfied that it has a good arguable case that its claim
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falls within the gateway under O.11 r. 1(1)(d)(i).
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O.11 r.1(1)(d)(iii)
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34.
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I proceed to consider the other gateway on which Haitong
relies, namely, whether the Agreement is governed by Hong Kong law by
implication. It is common ground that the parties have no express
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agreement as to what the governing law should be.
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35.
The appropriate test was laid down by Litton JA (as he then
was) in the decision of the Court of Appeal in Century Yachts Ltd v
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Xiamen Celestial Yacht Ltd [1994] 1 HKC 331 at p.339F (adopted by
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DHCJ McCoy SC in Continental Mark Ltd v Verkehrs-Club De Schweiz
[2001] 4 HKC 469 at p.482H): what ordinary reasonable businessmen
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would have been likely to have agreed if their minds have been directed
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to the question?
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36.
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Further, the Court of Final Appeal in First Laser Limited v
Fujian Enterprises (Holdings) Co Ltd (2012) 15 HKCFAR 569 stated the
common law rule should be that the law applicable to a contract is the
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system of law by which the parties intended the contract to be governed,
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or, where the intention is neither expressed nor to be inferred from the
circumstances, the system of law with which the transaction has its
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closest and most real connection. Lord Collins NPJ at §53 pointed out
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that the courts frequently go straight to the third question largely because
the tests of inferred intention and close connection merged into each other
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and because before the objective close connection test became fully
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established, the test of inferred intention was in truth an objective test
designed not to elicit actual intention but to impute an intention which
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had not been formed.
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37.
Regarding this gateway, I have little difficulty in coming to
the conclusion that Haitong has a good arguable case that the parties
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intended that the Agreement should be governed by Hong Kong law for
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the following reasons.
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38.
First, as stated in §32(a) above, the trading relationship
between the parties was started by ADS’s opening of the DVP trading
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line with Haitong in Hong Kong. By the use of the trading line, the three
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previous transactions were completed without any allegation that they
were governed by foreign law.
39.
In the present case, ADS had in mind USB as the ultimate
vendor of the CB but still it turned to Ms Kang of Haitong in Hong Kong
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and not Haitong Singapore to acquire the CB.
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40.
I accept Mr Yu’s submission that by the DVP trading line,
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the parties would trade with each other in many different securities
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registered or cleared in any exchange around the world. The sourcing and
on-sales of such securities may take place in different parts of the world.
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It is more likely than not that the parties actually intend their business
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relationship should be governed by a single proper law and it appears to
me that naturally it should be Hong Kong law. It is unlikely that Haitong
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intends to be bound by different laws vis-à-vis different subscribers of its
N
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N
trading line for different securities. Certainty in the governing law of all
of its transactions does have a clear commercial purpose to serve. I
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cannot accept Mr Alder’s submission that the failure of Haitong to adopt
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P
a standard jurisdiction clause in the Agreement designating Hong Kong
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law to be the governing law can be of any significance in ascertaining the
parties’ intention.
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41.
I have considered all other matters advanced by Mr Alder. I
do not think that I should attach any significance to the fact that the CB
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was denominated and the payment by ADS were to be in Euro. The fact
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that payment of ADS was to be in Belgium has little significance as well
and this factor alone could not possibly point to the conclusion that
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B
C
Belgian law should be the governing law by implication.
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D
E
42.
Thus, I am satisfied that Haitong has shown a good arguable
E
case that the governing law of the Agreement should be Hong Kong law
F
and Haitong’s contractual claim falls within O.11 r.1(1)(d)(iii).
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Discretion Issue: (1) Serious issue to be tried and (2) whether or not
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Hong Kong is clearly or distinctly the appropriate forum
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43.
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H
Mr Alder very sensibly in my view does not argue that there
is no serious issue to be tried. The two lines of defence advanced in the
affirmation are, to say the least, unimpressive and indeed contradicted by
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the documentary evidence. I am yet to understand the basis on which the
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allegation that Mr Mameli did not have authority to enter into the
Agreement with Haitong.
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44.
On the question as to whether Hong Kong is clearly or
distinctly the appropriate forum to try the claim of Haitong, Mr Yu urges
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this court to take the lack of an arguable defence on the part of ADS into
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account. He submits that if ADS does not have any conceivable defence,
it should not be heard to say that Hong Kong is not the proper forum. In
this connection, he refers to me my decision in Intex Recreation Ltd v
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Q
R
Tong Liu, unreported, HCA 1788/2013, 11.5.2015 in which I cited with
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approval Bayer Polymers Co Ltd v Industrial and Commercial Bank of
China [2000] 1 HKC 805.
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45.
Mr Alder disagrees. He submits that the burden remains on
Haitong to prove that Hong Kong is the proper forum and it is not for the
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defence to disprove by way of showing the merits of its case. He makes a
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tactful submission that the Intex Recreation Ltd case was wrongly
decided in that merits of the defence should not be a relevant
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consideration.
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46.
I believe that G Lam J in 張才奎所託管中國山水投資有限
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公司股份相關員工 (at §50) explained the correct principles sufficiently
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clear in the following terms:
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“What I think is clear from the authorities is that despite the
burden is on the plaintiff, a defendant is expected to inform the
court in outline what his case on the merits is so that the court
can form a view of what the issues may be that arise for trial.
Often not every element of a plaintiff’s case requires trial; only
the disputed matters have to be tried. At the stage when a
jurisdictional challenge is raised, which is almost invariably
before the defendant has filed a defence, neither the plaintiff nor
the court will know from any pleading what will be in dispute. If
the defendant does not reveal any positive case then the court
assumes there is none and proceeds on the basis that the trial will
involve no more and no less than the plaintiff trying to make out
his case.”
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47.
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In my view, if the purported defence advanced is
transparently bad meaning any issue raised by the defence is non-issue
only, there is no reason why the court should not proceed on the basis that
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the trial will involve nothing more than the case of the plaintiff in
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assessing whether Hong Kong is clearly and distinctly the appropriate
forum.
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48.
In this application, I have heard little submission on the
allegation of the lack of authority of Mr Mameli. The affirmation
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evidence of ADS does not explain why he lacked the authority despite he
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concluded an earlier transaction with Haitong to acquire the same
convertible bond on behalf of ADS not long ago. The contemporaneous
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documents involving other personnel of ADS did not evidence any
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objection raised by ADS in respect of the purported lack of authority of
Mr Mameli. I am not satisfied that there is a real debate about the
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authority of Mr Mameli.
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49.
As regards the defence of disclosed agency, it is contradicted
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by undisputed documentary evidence and is actually abandoned in the 2nd
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Affirmation of Hallsworth.
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50.
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On the other hand, the conclusion that there is a good
arguable case that the Agreement was concluded in Hong Kong and the
governing law should be Hong Kong law points strongly towards the
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conclusion that Hong Kong is the appropriate forum for Haitong being a
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N
Hong Kong company. After all, this action apparently involves a simple
and straightforward contractual claim only and in the absence of any
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complication, I am satisfied that Hong Kong should clearly and distinctly
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be the proper forum.
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51.
Even if the defence insists on raising the two lines of defence
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at trial, I agree with Mr Yu that foreign law can be adduced to resolve
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such discreet issues and the Hong Kong court is fully competent in trying
such issues with the assistance of foreign law expert evidence.
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52.
Whilst Haitong has indicated that its witnesses are ready to
testify in Hong Kong, I have heard no serious hardship that the defence
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will suffer if the trial is to take place in Hong Kong. There is no
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allegation that their witnesses have any difficulties in travelling to Hong
Kong to testify or giving testimony through video-link as an alternative.
53.
Lastly, I cannot accept Mr Yu’s submission that I should take
into account the undisputed evidence that the court in the UAE would
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normally allow nominal costs to be recovered by the winning party only.
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54.
Mr Alder pertinently draws my attention to The Jin Yi,
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unreported, HCAJ 119/2010, 17.3.2011. In dealing with a submission
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against a stay to Dubai on the ground that the plaintiff would be deprived
of legitimate personal or judicial advantages, Reyes J (at §39) observed
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that it would be invidious to hold that a legal system is somehow “better”
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only because it allows more or less full recovery of costs and pre-action
interest. Reyes J did not regard that the plaintiff as being denied a
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“legitimate” advantage by being made to litigate the case in an
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appropriate forum where pre-action interest and costs are not recoverable.
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55.
I believe that the observation of Reyes J is still valid even if
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Haitong would incur substantial costs in litigating its case in the UAE
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despite the lack of any meritorious defence as submitted by Mr Yu.
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56.
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In summary, I am convinced that there is a serious issue to be
tried and Hong Kong court is clearly and distinctly the proper forum to
try the claim of Haitong. The requirements for service out are
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undoubtedly met.
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B
Material-nondisclosure
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C
57.
D
E
A
In the 1
st
Affirmation of Hallsworth, he made several
allegations of material non-disclosure. I have examined all those
allegations and found no substance in any of them having checked against
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Lee’s Affirmation. In fairness to Mr Alder, I heard little submission or
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elaboration on such allegations.
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58.
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F
The allegation about the application of the ETO is made on
the basis that Haitong has a place of business in Singapore. This is an
allegation not accepted by Haitong. In any event, the fact that there is a
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FICC Desk in Singapore is disclosed in Lee’s Affirmation under the
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section “Full and frank disclosure”.
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59.
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I too cannot accept the allegation that Mr Lee, in Lee’s
Affirmation, ever misstated the relevant principles so that the master was
misled. I cannot accept that the master would have been misled by a
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deponent in his affirmation in relation to a legal issue.
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60.
Mr Alder makes some other allegations. First, I do not think
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in a simple application for service out, an applicant is obliged to file a
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skeleton submission if the supporting affirmation is clear enough.
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Q
61.
Mr Alder further argues that Mr Lee made a deliberate non-
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R
disclosure about the payment obligation under the Agreement. I find no
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merit in this allegation. Lee’s Affirmation clearly referred to the
settlement of the CB at Euroclear.
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62.
Mr Alder complains that now that Haitong abandons its
contention that the Agreement was breached in Hong Kong. This
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B
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contention was relied on to establish jurisdiction before the master. He
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E
F
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then argues that the master was misled by Haitong when the payment
obligation was not intended to take place in Hong Kong at all.
63.
I cannot agree with Mr Alder. As stated above, Lee’s
Affirmation already made it clear how the payment obligation on the part
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of ADS was to be performed. The material fact was disclosed. The master
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should be able to draw his own conclusion on such facts.
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64.
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Lastly, I would like to deal with a complaint of Mr Alder
about the use of Lee’s Affirmation at the ex-parte hearing before the
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master, though strictly speaking it is not really a matter of material non-
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disclosure. In gist, Mr Alder points out that the supporting affirmation
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should have been made by someone holding a responsible position in
Haitong with actual personal knowledge of the transaction.
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65.
I would say Mr Alder is correct in that a supporting
affirmation should best be made by the parties themselves rather than
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their legal representatives. This should apply equally to foreign parties.
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66.
However, in the present case, I see no reason to criticise Mr
Lee or Haitang. The case of Haitang as disclosed by Mr Lee in Lee’s
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Q
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Affirmation is well-supported by contemporaneous documents and the
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basic facts are not even challenged. It is only reasonable to infer that Mr
Lee had obtained such documents and learnt about the basic facts as
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instructions given to him by Haitong.
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D
67.
All in all, I am not convinced that there was any material
non-disclosure and I refuse to set aside the ex parte leave on that basis.
Validity of service in the UAE
68.
G
H
I
B
C
D
E
E
F
A
It is not in dispute that Haitong served the Writ on ADS in
Abu Dhabi and ADS did file its Acknowledgement of Service. ADS now
contends that the service is contrary to UAE law.
69.
In this regard, ADS relies on the expert evidence of Mr
Aidarous. In a nutshell, as summarised by Mr Alder, his evidence is as
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follows:
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(a)
UAE law will govern service of foreign process in the
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UAE;
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(b)
There is no specific law on service of foreign process
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in the UAE;
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(c)
By long-standing practice, service of foreign process
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in the UAE is via the UAE Ministry of Justice (“the MOJ”);
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(d)
The MOJ issued a circular dated 27 December 2010
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(“the MOJ Circular”) ‘completely prohibiting’ UAE law
R
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firms serving foreign process as private agents and stating
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that service should be via diplomatic channels or the MOJ so
that the MOJ may ensure the legality.
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70.
Mr Alder goes so far as to say that the MOJ should be
conclusive on the legality issue of the purported service in the UAE and
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B
C
this court should not condone contravention of the law or policies of
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foreign governments in their own territories.
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E
71.
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G
D
Mr Yu correctly identifies the key issue is whether service by
courier is contrary to UAE law. He invites my attention to the dictum of
Lord Clarke in Abela v Baadarani [2013] 1 WLR 2043 at §24. Lord
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Clarke held that although delivery of the claim form was not permitted
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service under Lebanese law, it was not suggested or held that delivery of
the documents was contrary to Lebanese law or that an order of an
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English court that such delivery was good service under English law was
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itself contrary to Lebanese law.
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72.
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M
J
In a similar vein, on the evidence of Mr Aidarous together
with the unchallenged part of the evidence of Mr Bajamal, service by
courier is not contrary to UAE law even if it is not permitted service
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under UAE law.
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N
O
73.
In the first place, UAE law at the moment does not govern
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the position of service of foreign process. Nor does it expressly provide
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that service by courier is a contravention of the law. The MOJ Circular
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only involves a practice.
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74.
S
Though I find Mr Alder’s criticisms about the qualifications
of Mr Bajamal as an expert witness to be valid, Mr Bajamal’s explanation
about the Civil Procedure Code (“CPC”) is not in dispute. Article 13 of
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Q
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the CPC provides that the procedure shall not be regarded as void even if
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there is any fundamental defect or failure in a procedural step so long as
the purpose of the procedure has been accomplished.
75.
Mr Alder points out that Mr Aidarous argues that Article 13
of the CPC cannot assist Haitong because the service issue is a nullity by
A
B
C
D
E
reason of a public order. However, this is a matter which should be
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decided by the UAE court.
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76.
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K
F
As the matter now stands, on the undisputed evidence of
UAE law, I accept the submission of Mr Yu that ADS fails to show that
service by courier is contrary to UAE law. O.11 r.5(2) is not engaged.
77.
Finally, I do not think it is necessary for me to consider
invoking the jurisdiction under O.2 r.1 to cure any irregularity in service
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given my foregoing conclusion. In my view, there was no irregularity at
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M
N
all absent cogent evidence of any contravention to UAE law by service of
the Writ by courier in Abu Dhabi.
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O
78.
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Conclusion and order
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P
L
For the reasons given, I am satisfied that Haitong has a good
P
arguable case that its claim falls within the two gateways and discretion
should be exercised in favour of service out. There was no material nondisclosure as alleged and ADS fails to prove that the service in Abu
R
Q
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Dhabi is contrary to UAE law. Thus, I find no merit in the application of
S
ADS and the Summons falls to be dismissed.
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79.
A
There is no reason why costs should not follow the event.
The complicity of this matter and the quantum at stake amply justify
B
C
engagement of two counsel. I make an order nisi that costs of and
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E
F
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occasioned by the Summons be borne by ADS with certificate for two
counsel, to be taxed if not agreed.
80.
D
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Lastly, it remains for me to thank Mr Yu, Ms Sit and Mr
Alder for their helpful assistance and succinct submissions.
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H
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(Kent Yee)
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Deputy High Court Judge
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Mr Benjamin Yu SC and Ms Eva Sit, instructed by Dentons Hong Kong
for the plaintiff
Mr Edward Alder, instructed by Reed Smith Richards Butler, for the
defendant
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