[Lead Lawyer: Wang Tengfeng] I. Basic Case Facts

In February 2002, the plaintiff Shenzhen Shekou XingX Port Shipping Transportation Co., Ltd. (hereinafter referred to as XingX Company) and Shenzhen WangXX Technology Co., Ltd. (hereinafter referred to as WangXX Company) entrusted the defendant Lai XX as the project manager for the contracted Sanya Breakwater Project. Meanwhile, WangXX Company also subcontracted part of the project to Chengdu XX Hydropower Technology Co., Ltd., where defendant Lai XX served as the legal representative. Consequently, defendant Lai XX's economic activities were extremely complex, involving the allocation and management of project resources such as manpower, funds, materials, and machinery, granting him extensive economic distribution rights. Later, defendant Lai XX suddenly died on January 29, 2005. In February 2005, the two plaintiffs conducted a financial review of the Sanya project and discovered from bank statements that defendant Lai XX had withdrawn a total of RMB 1.1 million from the company's project account before his death, which was held by him personally and his family members, including his wife Gong XX and mother Liu XX (defendants two and three). After multiple unsuccessful attempts to negotiate the return of these funds with defendants two and three, the plaintiffs filed a lawsuit on March 7, 2005, in the Nanshan District People's Court against the deceased Lai XX, his wife Gong XX, and his mother Liu XX, demanding the return of the RMB 1.1 million allegedly "held" by the three "defendants." They also applied to the court for the seizure and attachment of assets worth RMB 2 million under the names of the three "defendants."

Subsequently, Gong XX and Liu XX approached Guangdong Zhiming Law Firm and retained director lawyer Wang Tengfeng as their legal representative to participate in the litigation.

II. Disputed Focus

The main points of contention in this case are:

(1) The issue of whether a deceased person can be named as a defendant;

(2) The issue of whether the determination of case facts should be based on overall consideration or taken out of context.

III. Case Outcome

After a prolonged and multi-round litigation process involving stalemates and confrontations over factual evidence, the two plaintiffs, recognizing the weakness of their case, filed a motion to withdraw the lawsuit. The Nanshan District People's Court issued a ruling on December 14, 2007, granting the withdrawal of the lawsuit by the two plaintiffs (Civil Ruling Nos. (2005) Shen Nan Fa Min Yi Chu Zi No. 733 and 734). The case acceptance fee of 20,010 yuan was reduced by half to 10,005 yuan, and the preservation fee was 10,520 yuan, totaling 20,525 yuan, to be borne by the plaintiff, Shenzhen WangXX Technology Co., Ltd.

3. IV. Case Analysis

In this case, the plaintiffs' lawsuit was premeditated, and the facts involved must have hidden circumstances. The plaintiffs attempted to exploit the special situation of "the dead cannot testify" to pass off the fake as genuine and achieve ulterior motives. During the confrontation in the case, the court sessions were extremely tense, and the debates surrounding the core issues of the case were fierce. Attorney Wang Tengfeng, as the defendant's representative, pointed out sharply that this case was artificially fabricated:

(1) The plaintiffs' listing of the deceased as a defendant constitutes a serious procedural error.

The plaintiff filed the lawsuit against Lai XX on March 7, 2005, but Lai XX had already died on January 29, 2005. Article 108 of China's Civil Procedure Law clearly stipulates that "a lawsuit must meet the following conditions: (1) ...; (2) there is a clear defendant; ..." The plaintiff listing a deceased person as the defendant is inconsistent with the law. As a basic legal common sense, a citizen's civil capacity and litigation capacity terminate upon death. In this case, the deceased Lai XX does not have the qualification to be a defendant. Court staff could not have been unaware of this simple principle. The court's acceptance of this case is illegal and constitutes a knowing violation.

Further analysis shows that the plaintiff listing both the deceased and the deceased's family members as defendants is also logically untenable. The plaintiff sued based on receipts from the deceased's official duties. Assuming the plaintiff did not know Lai XX had died, according to civil liability principles, the proper defendant should be Lai XX alone. If the plaintiff knew Lai XX had died, the proper defendant should be Lai XX's estate heirs. As a corporate legal entity, the plaintiff could not have been unaware of this simple principle. In fact, the plaintiff's legal representative not only knew Lai XX had died but also attended the deceased's funeral. This shows that the plaintiff's lawsuit is a deliberate and malicious illegal filing.

(2) Evidence indicates that the plaintiff and defendant owed debts to each other. Due to Lai XX's death, the final creditor-debtor relationship between the plaintiff and defendant cannot be clarified.

The plaintiff deliberately arranged for the deceased Lai XX to hold multiple positions, managing complex and diverse assets. Without an independent and complete accounting of the entire project managed by the deceased Lai XX by an authoritative and neutral auditing institution, the plaintiff selectively presented a few documents formed during Lai XX's performance of duties and claimed that Lai XX had misappropriated the plaintiff's property. The main facts are unclear.

Further analysis: First, in China's current economic environment, Lai XX was engaged in large-scale construction projects, where substantial cash payments were essential, such as paying wages to numerous workers, and renting and maintaining ships and large equipment for maritime operations. Second, the so-called personal account of Lai XX involved in this case was not strictly a personal account; a large number of economic transactions related or unrelated to the project were conducted through this account, and each payment from Lai XX's personal account was authorized or approved in writing by the legal representatives of the two plaintiffs. Thus, it is not difficult to see that the two plaintiffs had Lai XX serve as project manager for multiple companies merely to use him as a tool for conducting large-scale economic activities that violated financial discipline or even constituted economic crimes. With Lai XX's sudden death, it is now difficult to ascertain the full truth. We suspect that Lai XX's death may be inherently linked to these activities. Therefore, we strongly recommend that if the court does not dismiss this lawsuit due to serious procedural violations, it should, upon preliminary review and discovery of clues suggesting economic crimes, immediately transfer the case to criminal investigation authorities for investigation, so that the facts are fully revealed and the truly guilty parties receive due punishment.

In fact, the deceased Lai XX held multiple positions and worked diligently. Contrary to the plaintiff's allegations, the plaintiff has withheld substantial property rights and interests that should belong to Lai XX and now be paid to his lawful heirs, including profits from contracted projects of Chengdu XX Hydropower Technology Co., Ltd., Lai XX's salary and compensation, and partnership investment funds. Lai XX's lawful heirs reserve the right to take further legal measures.

Even if, to put it mildly, Lai XX had encroached upon the plaintiff's property, the relevant evidence on which the plaintiff based the lawsuit shows that the statute of limitations for some claims has expired; moreover, Lai XX's lawful heirs should at most bear the responsibility for restitution within the scope of the inherited estate. In this case, the evidence provided by the plaintiff showing that the deceased's wife, Gong XX, withdrew money from the deceased's personal account merely indicates that Gong XX engaged in daily living consumption activities, and it cannot prove that Gong XX engaged in any act of encroachment. Therefore, the indiscriminate seizure of Gong XX's personal property seriously violates Gong XX's legitimate rights and interests.

In summary, the two plaintiffs in this case, who are untenable both morally and legally, after finding no opportunity to exploit, were compelled by pressure to apply to the court for withdrawal of the lawsuit. This case fully demonstrates that when representing a case, an agent should comprehensively consider and grasp the relevant facts of the case, identify the other party's true intentions and weaknesses, and then deliver a decisive blow, thereby achieving twice the result with half the effort.

(Commented and compiled by Cao Guanghui)

Zhiming Office

July 3, 2005