A certain port shipping transportation company in Shekou, Shenzhen, sued Lai (deceased), Gong, and Liu.
[Lead Attorney: Zhiming Law Firm] I. Basic Case Facts
In February 2002, the plaintiffs, 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. Concurrently, WangXX Company also subcontracted part of the project to Chengdu XX Hydropower Technology Co., Ltd., of which the defendant Lai XX served as the legal representative. Consequently, the defendant Lai XX's economic activities were extremely complex; he was responsible for allocating and managing production factors such as manpower, funds, materials, and mechanical equipment for the construction project, and enjoyed broad economic distribution rights. Subsequently, the defendant Lai XX died suddenly on January 29, 2005. In February 2005, when the two plaintiffs were settling the financial accounts of the Sanya project, they discovered from bank statements that the defendant Lai XX, during his lifetime, had withdrawn a total of RMB 1.1 million from the company's project account, which was possessed by his individual family members, namely his wife Gong XX and his mother Liu XX (Defendants 2 and 3). After the two plaintiffs repeatedly negotiated with Defendants 2 and 3 for the return of the aforementioned funds to no avail, they filed a lawsuit with the Nanshan District People's Court on March 7, 2005, naming the deceased Lai XX, along with Lai XX's wife Gong XX and mother Liu XX, as defendants, demanding that the three "defendants" return the RMB 1.1 million in funds "possessed" by them from the plaintiffs. At the same time, they also applied to the court to seal up and distrain property under the names of the three "defendants" valued at RMB 2 million.
Later, Gong XX and Liu XX went to Guangdong Zhiming Law Firm and entrusted Zhiming lawyers as their agents to participate in the litigation.
II. Disputed Focus
The focus of the dispute between the parties in this case is mainly on:
(1) The issue of whether a deceased person can be named as a defendant;
(2) Whether determining case facts is a matter of holistic consideration or taking them out of context.
III. Case Outcome
After a prolonged process of multiple rounds of litigation and a stalemate in factual evidence, the two plaintiffs, knowing themselves to be in the wrong, submitted an application to withdraw the lawsuit to the court. The Nanshan District People's Court issued a ruling on December 14, 2007, permitting the two plaintiffs to withdraw the lawsuit [Civil Rulings No. (2005) Shen Nan Fa Min Yi Chu Zi No. 733 and 734]. The case acceptance fee of RMB 20,010 was reduced by half to RMB 10,005, and the preservation fee was RMB 10,520, totaling RMB 20,525, to be borne by the plaintiff Shenzhen WangXX Technology Co., Ltd.
3. IV. Case Analysis
In this case, the plaintiff's lawsuit was long premeditated, and there must be hidden circumstances behind the facts involved. The plaintiff attempted to exploit the special situation of "dead men tell no tales" to pass off fish eyes as pearls and achieve a special purpose. During the confrontation in the case, the courtroom atmosphere was extremely tense, and the debates surrounding the core issues of the case were fierce. Attorney Zhiming, as the defendant's representative, hit the nail on the head by pointing out that this case was artificially manufactured:
(1) The plaintiff named a deceased person as the defendant in the lawsuit, which constitutes a serious procedural error.
The plaintiff filed a lawsuit against Lai XX on March 7, 2005, but Lai XX had already died on January 29, 2005. Article 108 of the Civil Procedure Law of China explicitly stipulates that "the filing of a lawsuit must satisfy the following conditions: (1) ...; (2) there must be a definite defendant; ..." The plaintiff's naming of a deceased person as the defendant is not in accordance with the law. As a basic legal principle, a citizen's capacity for civil rights and capacity to conduct litigation both terminate upon death. In this case, the deceased Lai XX is not qualified to be a defendant. Court personnel could not have been unaware of this simple principle. The court's acceptance of this case is illegal and constitutes a knowing violation of the law.
Further analysis shows that it is also logically untenable for the plaintiff to name both the deceased and the deceased's family members as co-defendants. The plaintiff filed the lawsuit based on bills arising from the deceased's performance of official duties. Assuming the plaintiff did not know that Lai XX had died, then under the principles of civil liability, the proper defendant should be Lai XX alone; if the plaintiff knew that Lai XX had died, then the proper defendant should be Lai XX's estate heirs. As a corporate legal person, the plaintiff could not have failed to understand this simple logic. In fact, the plaintiff's legal representative not only knew that Lai XX had died, but also attended the deceased's funeral. It can thus be seen that the plaintiff's filing of this lawsuit is a deliberate and unlawful act done with ulterior motives.
(2) The evidence indicates that the plaintiff and the defendant owe debts to each other, and due to the death of Lai XX, the ultimate creditor-debtor relationship between the plaintiff and the defendant cannot be ascertained.
The plaintiff intentionally arranged for the deceased Lai XX to hold multiple positions concurrently, with control over complex and extensive property distribution. Without having an authoritative and neutral auditing institution conduct an independent and complete accounting of the entire construction project managed by the deceased Lai XX, the plaintiff selectively presented a few documents generated in the course of Lai XX's performance of duties and concluded that Lai XX had embezzled the plaintiff's property. The principal facts are unclear.
Further analysis: first, in China's current economic environment, Lai XX, who was engaged in large-scale construction engineering projects, inevitably required substantial cash payments, such as paying wages to numerous workers and covering rental and maintenance costs for vessels and large equipment needed for maritime operations. Second, the so-called private account of Lai XX involved in this case is not a strictly personal account in the true sense; a large number of economic transactions related to, or even unrelated to, the engineering projects were conducted through this account. Moreover, every payment from Lai XX's private account was made with the personal written instruction or authorization of the legal representatives of the two plaintiffs. At this point, it is not difficult to see that the two plaintiffs' arrangement of having Lai XX simultaneously hold several project manager positions in different companies was merely a convenience to use Lai XX as a tool for conducting numerous economic activities that violated financial discipline or even constituted suspected economic crimes. All of this, however, with Lai XX's sudden death, has become difficult to fully ascertain in terms of the complete facts and truth. We suspect that Lai XX's death may well have some inherent connection to these activities. Therefore, we strongly recommend that if the court does not rule to dismiss the lawsuit on the grounds of the serious procedural violations noted above, it should, upon discovering clues of suspected economic crimes during the preliminary verification, immediately transfer the case to criminal investigation authorities for handling in accordance with the law, so that the facts of the case may be fully brought to light and the truth revealed, and so that those who have actually committed illegal or criminal acts receive the punishment they deserve.
In fact, the deceased Lai XX held multiple positions during his lifetime and worked tirelessly without complaint. Contrary to the facts alleged by the plaintiff, the plaintiff has withheld a substantial amount of property rights and interests that should have been enjoyed by Lai XX and should now be paid to his legal heirs, including specifically the contract project profits of Chengdu XX Hydropower Technology Co., Ltd., Lai XX's salary and remuneration, partnership investment funds, etc. In this regard, the legal heirs of Lai XX reserve the right to take further corresponding legal measures.
Even if, to put it further, Lai XX had encroached upon the plaintiff's property, the relevant evidence on which the plaintiff's claims are based shows that the statute of limitations for some of the claims has already expired; moreover, Lai XX's legal heirs should at most bear the obligation to return only within the scope of the inherited estate. In this case, the evidence provided by the plaintiff that the deceased's wife, Gong XX, withdrew money from the deceased's personal account merely indicates that Gong XX engaged in daily consumption activities, and in no way proves that Gong XX committed any act of encroachment. Therefore, the act of indiscriminately freezing Gong XX's personal property seriously infringes upon Gong XX's legitimate rights and interests.
In summary, the two plaintiffs in this case, whose claims were untenable both morally and legally, found no opportunity to exploit and, under pressure, were compelled to apply to the court for withdrawal of the lawsuit. This case fully demonstrates that when representing a case, counsel must comprehensively consider and grasp the overall facts of the case, discern the opposing party's true intentions and vulnerabilities, 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
