China Citic Bank Corporation Ltd (Quanzhou Branch) v. Li Kwai Chun and Others

HCMP 1408 & 1439/2017
[2019] HKCFI 3110

HCMP 1408/2017

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1408 OF 2017

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MISCELLANEOUS PROCEEDINGS NO 1439 OF 2017

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(Heard Together)

Before:  Hon K Yeung J in Chambers

Date of Hearing:  18 December 2019

Date of Decision:  18 December 2019

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DECISION

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1.Relevant to the two matters before me are two Decisions of mine, namely the one handed down on 3 August 2018 in HCMP 1408/2017 (“HCMP 1408” and the “1408 Decision”), and the one handed down on 22 October 2019 in HCMP 1439/2017 (“HCMP 1439” and “1439 Decision”).  This Decision has to be read in the light of those two Decisions.  I also, unless otherwise specified, adopt in this Decision the same terms and abbreviations I used in those two Decisions.

History of the matters

2.I refer to the 1408 Decision and 1439 Decision for the background leading to those Decisions.  I will not repeat them.  In gist, P on 17 February 2017 obtained in the Mainland against Ds the Quanzhou IPC 1896 Judgment and Quanzhou IPC 1897 Judgment.  The principal amounts which Ds were held liable for were RMB 28,952,742.41 and RMB 30,817,595.23 respectively.  Ds have taken multiple steps in the Mainland to have those Judgments reversed through retrial and protest.  All actions have failed. Under HCMP 1439, P successfully has the Quanzhou IPC Judgments registered in Hong Kong.  In the meantime, P under HCMP 1408 obtained against Ds the Mareva Injunction in aid of the Quanzhou IPC Proceedings.  Consequential upon certain directions given by the Courts relating to the Mareva Injunction, Ds have paid certain sums into Court (the “Paid‑in Sums”).  The continuation of the Mareva Injunction has been challenged.  I continued it by the 1408 Decision.  The registration in Hong Kong of the Quanzhou IPC Judgments has also been challenged, which challenge I dismissed by the 1439 Decision.

The two summonses

3.Consequential upon the 1439 Decision, P and D have each taken out a summons:

(a) Summons dated 27 November 2019 taken out by P in HCMP 1408 for payment out of the Paid‑in Sums, in effect in part enforcement of the 1408 Decision (the “Payment Out Summons”); and

(b) Summons dated 10 December 2019 taken out by D3 in HCMP 1439 for stay of execution of the 1439 Decision pending appeal (the “Stay of Execution Summons”).

The Stay of Execution Summons

4.I deal with the Stay of Execution Summons first.

5.The Stay of Execution Summons was supported by D3’s 5^th affirmation dated 9 December 2019 (“D3/#5”).

6.The legal principles applicable to stay of execution pending appeal are not in dispute.  I refer to the very useful summaries contained in the Judgment of Ma J (as the Chief Justice then was) in Star Play Development Ltd v Bess Fashion Management Co Ltd, HCA 4726/2001 (unrep, 28 May 2002) at §9, and the Judgment of Au‑Yeung J in Ngan Pui Chi & Another v Bao Quan, HCA 2262/2013 (unrep, 15 June 2018) at §19.

7.D3 has filed a Notice of Appeal against the 1439 Decision. I have considered the grounds.  The focus is upon the expert evidence adduced by the parties.  Mr Cheung, counsel for D3, does not dispute that Mainland law has to be proved as a question of fact.  The gist of the complaint is that I have erred in preferring the evidence of the expert called by P (ie Professor Zhao) to that of the expert called by Ds (ie Professor Zhang). 

8.I am not satisfied that those grounds are reasonably arguable. This case is different from most cases which involve a competition of experts on Mainland or foreign laws.  As I have explained in §62 of the 1439 Decision:

“ In most cases where expert evidence on Mainland law is sought to be adduced, the purpose is to assist the court to predict the likely decision of the courts in the Mainland. In the present case, we have more than prediction. This Court has before it evidence on how the very issue in this very case has been decided upon by the Fujian HPC and PPFP. Not according considerable and substantial weight to their decisions would in my view be nonsensical.”

9.In addition to according considerable and substantial weight to the decisions of the Fujian HPC and PPFP, I have also stated my independent reasons explaining why I preferred the evidence of Professor Zhao to that of Professor Zhang — see section F.8 of the 1439 Decision.  The Notice of Appeal has not caused me to think otherwise.

10.If necessary, I would also have exercised my discretion against any stay:

(a) D3 accepts that D3’s appeal will not be automatically rendered nugatory if I refuse the stay sought [1];

(b) D3 says that despite the Mareva Injunction, and given the exceptions therein, she has been able to draw funds from her frozen assets to pay off legal expenses.  She says that she would suffer prejudice if she can no longer do that, that:

“ 7(d) …if [P] is entitled to enforce the Decision before the determination of the appeal, my entitlement to apply for leave to draw funds to pay off my legal expenses would be destroyed, since it is likely that the entirety of the assets frozen would be applied to satisfy the various monetary claims under the Decision and/or the registered Quanzhou IPC Judgments.

7(e) Without such funding support, I would face considerable difficulties in securing a capable and competent legal team to assist me to pursue my reasonably arguable appeal in the Court of Appeal, In this sense, there is a high risk that I will lose the appeal for lack of legal support.” [2]

(c) Under the Court’s Mareva jurisdiction, and at the pre‑judgment stage, the incurring of reasonable living and legal expenses is usually excepted (but even that is not a certainty, see eg the case of an injunction in the context of a proprietary claim).  But at the post‑judgment stage, the position is no longer the same.  The judgment creditor, as the starting point, is entitled to the fruit of the judgment.  In a case like this when D3’s assets are not sufficient to satisfy the judgment under enforcement, to say that she should continue to be allowed (albeit subject to leave) to draw funds to prosecute her appeal to the extent that the enforcement of the judgment concerned should be stayed is in my view wrong;

(d) In any event, if D3 is relying on financial hardship, and it appears that she is, the Court is entitled to expect her to come up with good evidence to support her contention — see Star Play Development Ltd,§9(3). None has been placed before this Court.

11.Mr Cheung, relying on §9 of D3/#5, submits that “there appears to be a doubt as to whether P has assigned the judgment debts to a third party, such that P has lost the standing to enforce the Decision and/or the registered Quanzhou IPC Judgments” [3]. Such conjecture is in my view hardly sufficient to ground any application for a stay.

12.In the circumstances, and for the reasons set out above, I dismiss the Stay of Execution Summons.

The Payment Out Summons

13.P is entitled to the fruit of the Quanzhou IPC Judgments. 

14.I have considered a number of authorities cited to me, including Wear Me Apparel LLC v Lam Na,HCA 149/2009 (unrep, 25 April 2013), per Au‑Yeung J.  This Court has a wide discretion to order payment out of the Paid‑in Sums pursuant to Order 22A of the Rules of the High Court.  I have dismissed the Stay of Execution Summons.  No other legitimate reason (eg the existence of any rival claims by any other creditors) has been put forward against payment out.  Mr Cheung submits that as P is not a Hong Kong bank, should the Paid‑in Sums be paid out, and should D3 be successful in her appeal, it may be inconvenient for her to obtain any repayment from P.  That is in my view speculative. 

15.I in the circumstances see no reason why the balance of the Paid‑in Sums should not be paid out to P.  I so order.

16.I will hear parties on costs.

17.Having heard parties, and as P is unfortunately not ready with any statement of costs for summary assessment, I order that the costs of both Summonses be to P, to be taxed if not agreed.

Mr Oscar WF Sin, instructed by Huen & Partners, for the Plaintiff (in both cases)

Mr Tommy Cheung, instructed by Philip Tam & Co, for the 3^rd Defendant (in both cases)