天津市裕豐隆資產管理有限公司 v. Ho Kin Wa and Another
Read the full judgment text of HCA 2405/2014 on BabelCite. This High Court CFI judgment was delivered on 8 March 2019.
1. I have before me an application made by the 1 st defendant (“D1”) to dismiss or stay these proceedings in favour of the Shenzhen Intermediate People’s Court pursuant to Order 12, rule 8 of the Rules of the High Court.
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HCA 2405/2014 [2019] HKCFI 556 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO 2405 OF 2014 ____________
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______________ DECISION ______________ Introduction 1.I have before me an application made by the 1st defendant (“D1”) to dismiss or stay these proceedings in favour of the Shenzhen Intermediate People’s Court pursuant to Order 12, rule 8 of the Rules of the High Court. Background 2.The plaintiff (“P”) is a company incorporated in the Mainland. D1 and the 2nddefendant (“D2”) were husband and wife, but had separated since late 1997/early 1998. Plentiful Holdings Ltd (“Plentiful HK”) is and was the sole investor and shareholder of a Mainland company called 港丰房地产开发 (深圳) 有限公司 (“Plentiful Shenzhen”). Plentiful Shenzhen has been engaging in real estate business development in Shenzhen. D1 is and was the major beneficial owner of Plentiful HK through his beneficial ownership in a BVI company called Supreme Prosper Holdings Ltd, which holds shares in Plentiful HK. 3.P commenced this action on 26 November 2014. Its claim may be summarized as follows:
4.D2 filed a Defence on 2 January 2015, which was subsequently amended with the addition of a counterclaim on 16 March 2016. P filed a Reply and Defence to Counterclaim on 7 June 2016. 5.On the other hand, P entered default judgment against D1 on 1 April 2015. On 29 January 2016, D1 applied to set aside the default judgment on the ground that:
6.In the affirmation made in support of that application made on 28 January 2016, D1 stated that:
7.On 19 February 2016, the default judgment was set aside by consent. It was also ordered that:
8.By another consent order dated 31 March 2016, it was ordered that:
9.On 24 March 2016, D1 took out the present summons. Whether D1 has waived the right to dispute jurisdiction of the Hong Kong Court 10.First, P argues that D1 has waived the right to dispute the jurisdiction of the Hong Kong Court. Mr Cheung submits that in the application to set aside the default judgment, one of the grounds that D1 relied on was that he has merits in his defence; and that, in the affirmation made on 28 January 2016 in support of that application, D1 had gone into the merits of the case when it was unnecessary to do so. 11.In ABN Amro Bank NV v Fortgang [2008] 2 HKLRD 349 at 355, §24, Sakhrani J cited and approved the following judgment in GlobalMultimedia International Ltd v ARA Media Services & Ors [2007] 1 All ER (Comm) 1160 at [28] that:
He also cited the following judgment of Rogers VP in Miruvor Ltd v Panama-Globe Steamer Lines SA [2007] 1 HKLRD 804 at 809, §9:
12.Applying an objective test and looking at the matter fairly and sensibly, I take the view that D1 has not waived the right to dispute thejurisdiction of the Hong Kong Court. It is true that in the said affirmationmade by him, he had gone into the substantive merits of the case and claimed that there are merits in his defence. I also agree that it may not be strictly necessary for him to do so for the purpose of the application to set aside the default judgment. However, it was understandable why he did so as the Court might take into account the merits of the case in deciding whether toexercise the discretion to set aside the default judgment. Further, it is clear that he referred to the merits of the case in his affirmation to explain on what grounds he contested the claim in the PRC Proceedings. 13.More importantly, he had made it abundantly clear that he would challenge the jurisdiction of the Hong Kong Court. He stated in §27 of that affirmation:
And in §28:
14.For these reasons, I take the view that D1 has not waived the right to dispute the jurisdiction of the Hong Kong Court. Proper construction of the Jurisdiction Clauses and their legal effect 15.Both the Indemnity Agreement and the Supplemental IndemnityAgreement contain a choice of jurisdiction clause (“the Jurisdiction Clauses”). In the Indemnity Agreement:
And in the Supplemental Indemnity Agreement:
16.P contends that the Jurisdiction Clauses are non-exclusive whereas D1 contends they are exclusive. 17.In the light of the express choice of law clauses in both agreements, I agree that the Jurisdiction Clauses should be construed in accordance with Mainland law. Both parties have adduced Mainland legalexpert opinions to support their respective interpretation of the Jurisdiction Clauses. D1’s expert opined that:
Although Mr Cheung seeks to argue otherwise, it is clear that D1’s expert was saying that, although the word “exclusive” or the like in Chinese was not used expressly, the parties intended that litigations should be tried by the Mainland Court, but not any other court outside the Mainland such as the Hong Kong Court. 18.D1’s expert supports that, under the Mainland law, the word “exclusive” or its equivalent in Chinese needs not be expressly used. This is the same under Hong Kong law, under which the fact that the forum clause does not explicitly impose exclusive jurisdiction is inconclusive. In Hwoo Huang Linda v Fu Being San [2013] 1 HKLRD 259 at 273, §40, Deputy Judge Reyes SC (as he then was) held that the question:
19.On the other hand, P’s expert had not really answered the question. He merely said that the Mainland Court has jurisdiction under theJurisdiction Clauses; but because of Article 19 of the Basic Law, the Hong Kong Court will have jurisdiction if conditions prescribed by the relevant Hong Kong law are met. He had not given any opinion on whether, upon a proper construction of the Jurisdiction Clauses, it was intended that legal proceedings should only be brought before the Mainland Court. 20.As Recorder A Ho SC held in Oracle (China) Software Systems Co Ltd v Citic 21 CN (China) Technology Co Ltd HCA 105/2012 (18 September 2013, unreported), §22:
21.I am duty bound to consider the Mainland legal experts’ opinions with my legal skill and experience, in particular, when the Jurisdiction Clauses are written in Chinese, which is a language that I am familiar with. In my view, the use of the Chinese word “应” is critical and decisive. 22.In Rich Village Ltd v Grand Pride Holdings Ltd & anor CACV 224/2012 (22 January 2013, unreported), Cheung CJHC (as he then was) held in §17:
23.In this case, in the Indemnity Agreement, the word “应” was used in other clause to express mandatory obligations (see, for example, clauses 1(4), 4(4), 6(1), 8(3), 8(4), 9(1), 10(4)). 24.For these reasons, I take the view that the Jurisdiction Clauses are exclusive in nature. 25.Having said that, this is not the end of the matter. In The Pioneer Container [1994] 2 AC 324 at 347, the Privy Council held that:
26.Hence, the burden is on P to show strong cause for not granting a stay. 27.First, Mr Cheung submits that under Mainland law, the limitation period for commencing a legal action for the claim against D1 is 3 years and it has expired by around April 2017. I agree with Mr Leung that P has not adduced any Mainland legal expert opinion to support such argument at all. 28.Nevertheless, let us assume that what P contends is correct asa matter of Mainland Law. It is necessary to note that it was P who applied to withdraw the PRC Proceedings as against D1 and D2 on 26 December 2014 (which was one month after P commenced this action), and the application was granted by the Shenzhen Intermediate People’s Court on 26 January 2015. 29.In the 1st affirmation of Chen Wei Qiang made on behalf of P dated 24 June 2016, he stated in §6:
30.In the application submitted to the Shenzhen Court dated 26 December 2014, P stated that, according to its understanding, D1 and D2 no longer had any assets which may be enforced against in the Mainland, but they had assets in Hong Kong and there was a risk of dissipation; hence, it decided to commence legal proceedings in Hong Kong. Irrespective ofwhat reasons had been given by P, it was clearly a deliberate and consciousdecision of P to withdraw the PRC Proceedings against D1. D1 would not have been able to rely on any limitation defence if P starts a new action against him before the Shenzhen Court now but for P’s withdrawal of the PRC Proceedings against him. The juridical disadvantage that P may suffer now is self-induced. 31.In addition, D1 had made it clear that he intended to challenge the jurisdiction of the Hong Kong Court in his affirmation made on 28 January 2016. By the time P received D1’s present summons taken out on 24 March 2016, P should know that D1 was serious about his challenge to the jurisdiction of the Hong Kong Court. P should and could have procured this summons to be disposed of expeditiously before April 2017; and perhaps re-commenced a legal action against D1 before the Shenzhen Court to safeguard its position pending the disposal of the present summons. 32.Second, Mr Cheung stated in his written skeleton that P will suffer a juridical disadvantage if the action is to be tried in the Mainland due to an alleged deprivation of security. I have some difficulties in understanding his arguments in this respect. Be that as it may, Mr Cheung accepted in his oral submissions that any such loss of security would be caused by the application of the relevant contractual documents, and it does not depend on where P’s claim against D1 is to be tried. 33.Third, Mr Cheung submits that there are numerous connecting factors between P’s claim and Hong Kong. D1 is a Hong Kong resident having addresses in Hong Kong. P’s claim against D2 will proceed in any event. And there may be other witnesses in Hong Kong, including D1. I agree with Mr Leung that D1’s position should not be prejudiced by P’s continuing claim against D2. P has not identified any particular witness; and more importantly, there is no suggestion that any potential witness (including D1) can only give evidence in Hong Kong but cannot do so in the Mainland. 34.In the circumstances, I am not convinced that P has shown any strong cause for not granting a stay of these proceedings against D1. Forum non conveniens 35.It follows that it has become unnecessary to me to determine the issue of forum non conveniens. Solely for the sake of completeness, I shall deal with this issue briefly. 36.If I had to decide on this issue in order to dispose of the presentsummons, I would have refused to stay P’s claim against D1 on the ground of forum non conveniens for the following reasons. The burden is on D1 to show that the Shenzhen Intermediate People’s Court is clearly and distinctly more appropriate than the Hong Kong Court to try the dispute between them. D1 is a Hong Kong resident. Based on what D1 said in his previous affirmations, this will largely be a documentary case as the main factual issue is whether, and if so, how much had already been paid as service fees. The issues do not appear to be complicated even though Mainland law may be involved. There is no evidence that any potential witness will have difficulties to come to Hong Kong to give evidence. I was informed that the Shenzhen Court delivered judgment in the PRC Proceedings as against the other remaining defendants on 28 June 2018. However, as D1 is no longer a party in those proceedings, the judgment ofthe Mainland Court would not give rise to any issue estoppel or res judicata. In any event, I fail to see how this would, by itself, make Hong Kong not an appropriate forum. Conclusion and order 37.For the above reasons, I shall exercise my discretion to stay P’s claim against D1. P shall pay D1’s costs of and occasioned by the present summons, to be taxed if not agreed.
Mr Lawrence Cheung, instructed by Kelvin Cheung & Co, for the plaintiff Mr Richard Leung, instructed by Yap & Lam, for the 1st defendant Attendance of the 2nd defendant was excused | |||||||||||||||||||||||||
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