Wang Peiji v. Wei Zhiyong
Read the full judgment text of HCMP 571/2019 on BabelCite. This High Court CFI judgment was delivered on 24 October 2019.
1. This case is a setting aside application made pursuant to Order 73, rule 10(6) of the Rules of the High Court.
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HCMP 571/2019 [2019] HKCFI 2593 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE MISCELLANEOUS PROCEEDINGS NO 571 OF 2019 ____________
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________________________ DECISION ________________________ 1.This case is a setting aside application made pursuant to Order 73, rule 10(6) of the Rules of the High Court. 2.By an ex parte originating summons filed on 17 April 2019, the plaintiff sought leave to enforce an award (from the Guangzhou Arbitration Commission) made on 20 April 2009. The application was made under sections 2GG and 40B of the Arbitration Ordinance (Cap. 341). 3.By an order made on 14 May 2019 (the “Enforcement Order”), Madam Justice Mimmie Chan granted leave to enforce the award, in the following terms: (a) The defendant and 周友华 should pay to the plaintiff the outstanding sum of RMB 8 million and interest (interest is calculated from 1 April 2008 up to the date of full payment at 2% per month for the principal sum of RMB 8 million). (b) The defendant and 周友华 are jointly and severally liable for payment under (a) as stated above. (c) The defendant and 周友华 shall reimburse the plaintiff the arbitration fee in the sum of RMB 87,517. (d) In respect of the sum due from the defendant and 周友华 under (a) and (c) above, the Defendant’s Companies, namely 广州市启邦信用担保有限公司 and 广州市红马汽车出租有限公司 are to be held jointly and severally liable for the same. 4.By an inter partes summons filed on 27 May 2019, the defendant seeks to set aside the Enforcement Order. The grounds relied upon are that the cause of action is time barred; alternatively, that the principle of res judicata applies. Agreed facts 5.Helpfully, the parties provided me with a set of Agreed Facts at the start of the hearing. I have set these out below, for ease of reference:
The defendant’s case 6.Relying upon the separate decision of Madam Justice Mimmie Chan in CL v SCG [2019] 2 HKLRD 144, Mr Dickson Li, appearing for the defendant, asserted a time bar argument under the Limitation Ordinance (Cap. 347) (the “LO”). 7.It appears to me that the CL v SCG case is highly relevant to the present case and I will thus summarise the salient facts from that case. 8.In CL v SCG, the plaintiff, CL had received an order in its favour dated 17 February 2011 whereby the defendant, SCG was ordered to pay US$2,173,000, together with interest and costs. Demands were made on 18 and 31 March 2011 but no payment was received. So in July 2011,CL launched enforcement proceedings in Shenzhen. Those proceedings were singularly unsuccessful and on 30 March 2015 (ie, almost four years later), the Shenzhen Court rejected the enforcement application. That decision was appealed by CL and unfortunately for CL that appeal was rejected in March 2016. In effect, some five years of enforcement efforts in Shenzhen had come no nothing. 9.CL then turned its enforcement efforts to Hong Kong, seeking enforcement here on 6 February 2018. Leave to enforce was granted (ex parte) on 12 February 2018. 10.SCG applied to set aside CL’s enforcement order, arguing that the application was time barred due to LO section 4(1) (which governed the arbitration). 11.Mimmie Chan J agreed that the application was time barred. Relying on the decision in Agromet v Maulden Engineering Ltd [1985] 1 WLR 762, the judge held that the six-year time limit ran for CL from the time SCG failed to honour the implied promise to perform the award (and not from the date of the arbitration agreement, nor the date of the award). On the facts of that case, this date was 8 April 2011 such that CL’s application was time barred on 8 April 2017. 12.In this situation, CL sought to argue that the limitation period was suspended during the time when CL attempted enforcement proceedings in China. 13.This argument was rejected by Mimmie Chan J, in these terms:
14.Mr Li submitted that CL v SCG applies fully to the facts of the present case. He maintains that time ran for limitation purposes from around June 2009 (as the date of the Mainland enforcement order which prompted demands to pay) and that time expired for limitation purposes in or around June 2015 – long before the plaintiff’s 2019 enforcement application was filed in Hong Kong. Thus, CL’s application is time barred. Mr Li further submits that the six-year limitation period for the defendant in the present case was not suspended while enforcement efforts in China were still underway, relying again on CL v SCG. 15.Aside from the limitation argument, Mr Li argued that the Enforcement Order should be set aside on the ground of res judicata. This was on the basis the same claims had been pursued by the plaintiff in HCA 85/2019 but that those claims had since been withdrawn. The plaintiff’s response 16.Ms Joyce Leung, appearing for the plaintiff, made what was essentially a two-pronged response to the defendant’s time bar submissions. 17.Firstly, Ms Yeung asserted that the applicable time bar provision is not LO section 4(1)(c) at all but rather,section 4(3). The relevant part of this provision is in these terms:
18.In Ms Yeung’s submission this provision sets a 12 year time limit that runs from the date of the award made by the Guangzhou Arbitration Commission, namely, 20 April 2009 (ie not 12 years from the date of the underlying contract). If she succeeds with this argument,the limitation period will expire on 20 April 2021, such that the time bar issue falls away. 19.The second (and fall back) argument pursued by Ms Yeung is that if the six-year time limit in LO section 4(1)(c) is found to be applicable, time must be suspended for the whole of the period in which the plaintiff’s (partially successful) enforcement efforts were underway. The period to be excluded from time calculations, on her analysis, is the period from around July 2009 through to December 2018 – a period of roughly 9 years. Ms Yeung invited me to distinguish this case from the facts in CL v SCG. She said that this case was different for a number of reasons but most particularly, that in the present case, enforcement efforts in China went on for some time and were materially successful. This is in strong contrast to CL v SCG where the efforts at enforcement were only ever pending and ultimately failed. In Ms Yeung’s submission, a successful plaintiff cannot be expected to have stopped enforcement efforts in China which were bearing fruit. Discussion 20.In light of the decision of CL v SCG, the above points can be taken quite briefly. 21.As to the question of whether it is LO section 4(1)(c) or 4(3) which applies, I believe it is the former. Where, as here, we have an application to enforce an award, where the submission to arbitration (ie the underlying contract) is not under seal, the limitation period is 6 years from the date on which the cause of action accrued. This is how section 4(1)(c) applies in this case. 22.Had the underlying contract in this case been executed under seal, then the limitation period would have been 12 years, pursuant to LO section 4(3). But section 4(3) does not come into play in this case as it is not suggested by either party that the underlying contract was executed under seal. 23.As noted, Ms Yeung seeks to argue that the award of the Guangzhou Arbitration Commission, being executed under seal, is a specialty and thus, a 12 year limitation period runs from the date of the award. I am satisfied this this is not how section 4(3) should be construed. It is clear in my view that LO sections 4(1)(c) and 4(3) are directed to the question of whether the underlying contractual document giving rise to disputes is (or is not) executed under seal. This much is clear from a plain reading of the provisions of the Limitation Ordinance. 24.As to the plaintiff’s submission that time limits should be suspended, I am not persuaded by Ms Yeung’s efforts to distinguish CL v SCG. The passage cited above from that case (see §13), is entirely clear and correct in my view, namely, that Hong Kong law (including the Arrangement Concerning Mutual Enforcement of Arbitral Awards between the Mainland and the Hong Kong Special Administrative Region) does not provide for time limits to be suspended while the successful party attempts enforcement on the Mainland. I note that both this case and the case of CL v SCG were based upon the provisions of the Arbitration Ordinance (Cap. 341) and there is nothing in that Ordinance (including sections 2GG and 40C) that would lead me to conclude otherwise. 25.This is the law as it applies to the present case. The plaintiff’s efforts to distinguish this case from the facts in CL v SCG (eg, on the basis that in the present case, the plaintiff’s efforts at enforcement had been partially successful), do not change this legal reality. 26.For the reasons set out above, I would grant the defendant’s application to set aside the Enforcement Order on the ground that the application to enforce is time barred based upon the application of LO section 4(1). 27.It only remains for me to address the res judicata argument relied upon by the defendant as a second ground to challenge the Enforcement Order. In this regard, I would be inclined to accept Ms Yeung’s submission that the withdrawal of a writ is no bar to new action, so that the defendant’s res judicata argument fails. But since the defendant’s application to set aside the Enforcement Order on limitation grounds has succeeded, the success or otherwise of the res judicata issue does not need to be determined. Costs 28.In light of my decision, I make a costs order nisi that the costs of this application (together with any costs previously reserved) be to the defendant.
Ms Joyce Leung, instructed by Chung & Kwan, for the plaintiff Mr Dickson S P Li, instructed by Paul W Tse, Solicitors, for the defendant | ||||||||||||||||||||||||||||||||
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