四川順利昌隆科技有限公司 v. Sze Ming Yee and Others

HCA 2005/2020

[2021] HKCFI 2289

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2005 OF 2020

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D E C I S I O N

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1.There is before the Court a Summons dated 6 January 2021 issued by the 1^st to 3^rd defendants (“Ds”) under Order 12 rule 8(1)-(2) of the Rules of the High Court for an order that (1) the action be dismissed on the ground that the Hong Kong court does not have jurisdiction over Ds in respect of the subject matters of the action, alternatively, (2) the action should be stayed on the ground that the subject matters of the action should be “adjudicated” by the Intermediate People’s Court of Chengdu in Mainland China (“Chengdu Court”).

2.The first part of the Summons is misconceived, as the writ was served on Ds both at their addresses in Hong Kong and on their solicitors.  The jurisdiction of the Hong Kong court over Ds has been established “as of right”, and there is no basis for them to challenge the jurisdiction of the Court. 

3.When the point is raised at the hearing, Mr Jeremy Cheung (appearing with Ms Cecilia Shum), counsel for Ds, accepts that the writ was properly served on Ds in Hong Kong, and there is no basis to challenge the jurisdiction of the Court over them.  Mr Cheung also accepts that the only application which requires the Court’s determination is Ds’ application for stay of the action on forum non conveniens ground.

A.      Factual background

4.The following facts are not in dispute.

5.The plaintiff (“P”) is a company registered in Chengdu in the Mainland.   

6.D1 and D2 are husband and wife and D3 is their son.  D1-D2 and D3 became permanent residents in Hong Kong in 2011 and 2015 respectively.  In their affirmations filed in support of the Summons, D1-D2 claim that they now reside in Wenzhou (温州) while D3 resides in the Mainland most of the time after he completed university studies in Hong Kong. 

7.According to the annual returns filed at the Companies Registry, Ds were (and still are) the directors and/or shareholders of the following companies incorporated in Hong Kong:

Name of Company	Date of Incorporation	Director	Shareholder
Newport Holdings Ltd (“Newport”)	30/6/2004	D1	D1 (100%)
Ample Hong Kong Group Ltd (“Ample”)	9/6/2010	D2	D2 (100%)
Ever Sino Holdings Ltd	10/8/2015	D2, D3 & 3 other persons	D2 (30%) Newport (30%)
AI Momentum Ltd	5/6/2018	D3 & 3 other persons	D3 (17%) Newport (22%)
Allied Bloom Asia Pacific Ltd	18/2/2019	D1	D1 (100%)

8.At the time the 1^st and 2^nd Agreements (as defined in §§9-10 below) were signed by the parties, Ds (through Ample and Newport) had indirect interests in the following properties in Hong Kong in that:

(1)  Ample was the registered owner of a property known as Flat A, 26/F, Tower 1, Larvotto, 8 Ap Lei Chau Praya Road (“Larvotto Property”) until 16 October 2020; and 

(2)  Newport was (and still is) the registered owner of a property known as 32/F, Tower B, Billion Centre, 1 Wang Kwong Road, Kowloon Bay (“Billion Property”).

9.By a 借款保証合同 dated 1 February 2019 made between P (as lender), D1 (as borrower) and D2-D3 (as joint and several guarantors) (“1^st Agreement”), P agreed to advance RMB 20 million (“1^st Loan”) to D1 for 2 months with interest at 24% p.a..  Pursuant to D1’s instructions, the RMB 20 million was transferred to D2’s bank account at China Construction Bank, Wenzhou Xincheng branch (“D2’s Account”) on the same day.

10.By another 借款合同 dated 30 September 2019 made between P (as lender), D1 (as borrower) and D2-D3 (as joint and several guarantors) (“2^nd Agreement”), P agreed to advance another loan of RMB 7 million (“2^nd Loan”) to D1, repayable on 29 November 2019 with interest at 2% per month.  The RMB 7 million was transferred to D1’s bank account at China Construction Bank, Wenzhou Xincheng branch (“D1’s Account”) on the same day.

11.Under the 2^nd Agreement, D1 was obliged to procure the creation of the following security for the 2^nd Loan by 30 October 2019 (collectively “Additional Security”):

(1)  a mortgage over 2 residential units located in Wenzhou held by D1 (cl 7);

(2)  a guarantee to be executed by Ample (cl 8(1));

(3)  a guarantee to be executed by Newport (cl 8(2));

(4)  a charge over the Larvotto Property (cl 8(3));

(5)  a charge over the Billion Property (cl 8(4));

(6)  a guarantee to be executed by Union Day Group Ltd (“Union”), a BVI company (cl 8(5)); and

(7)  a charge over all the shares held by Union in a listed company in Hong Kong, 京維集團有限公司, equivalent to 13.32% of its issued shares (cl 8(6)).

12.The 1^st and 2^nd Agreements both contain a clause which identifies the Chengdu Court as an agreed forum to litigate the parties’ dispute (“Clauses”).  The Clauses are in these terms:

(a)    Cl 6 of the 1^st Agreement:

“… 若爭議並非強制執行所能解決的問題，任何一方均可將爭議提交合同簽署地 … 有管轄權的人民法院通過訴訟方式解決”

(Translated as: if the dispute cannot be resolved by compulsory execution, any party to the agreement may bring the dispute for resolution through litigation in the People’s Court which has jurisdiction over the place where the agreement was signed)

(b)  Cl 13 of the 2^nd Agreement:

“各方就本合同有爭議的，任何一方可向本合同簽訂地有管轄權的法院提訴”

(Translated as: any party having a dispute over the agreement may bring litigation in the court which has jurisdiction over the place where the agreement was signed).   

13.In breach of the 1^st Agreement, D1 did not repay the 1^st Loan by its due date (1 April 2019) and the interest accrued on the 1^st Loan from 18 November 2019.   

14.In breach of the 2^nd Agreement, D1 failed to (1) procure any of the Additional Security to be created, and (2) repay the 2^nd Loan or any interest accrued thereon by the due date (30 November 2019). 

15.Despite P’s demands made on 26 September 2020, Ds failed to make any payment to P. 

16.On 30 November 2020, P commenced this action against Ds and claims the aggregate sum of RMB 34,046,000 together with interest at 24% p.a. from the date of the writ. 

17.The writ was served on D1-D2 at the Larvotto Property, and on D3 at Flat B, 16/F, Tower 1, Larvotto.  On 28 October 2020, Ds’ solicitors confirmed that they have instructions to accept service of the writ, whereupon the writ was served on them. 

B.      Applicable principles

18.The principles governing application for stay on forum non conveniens ground are well-established and have been summarised in SPH v SA (2014) 17 HKCFAR 364 at §51 as follows:

“(1) The single question to be decided is whether there is some other available forum, having competent jurisdiction, which is the appropriate forum for the trial of an action, i.e. in which the action may be tried more suitably for the interests of all the parties and the ends of justice.

(2) In order to answer this question, the applicant for the stay has to establish that first, Hong Kong is not the natural or appropriate forum (‘appropriate’ in this context means the forum has the most real and substantial connection with the action) and second, there is another available forum which is clearly or distinctly more appropriate than Hong Kong. Failure by the applicant to establish these two matters at this stage is fatal.

(3) If the applicant is able to establish both of these two matters, then the plaintiff in the Hong Kong proceedings has to show that he will be deprived of a legitimate personal or juridical advantage if the action is tried in a forum other than Hong Kong.

(4) If the plaintiff is able to establish this, the court will have to balance the advantages of the alternative forum with the disadvantages that the plaintiff may suffer.  Deprivation of one or more personal advantages will not necessarily be fatal to the applicant for the stay if he is able to establish to the court’s satisfaction that substantial justice will be done in the available appropriate forum.”

19.In determining the appropriate forum, the approach is not just an exercise in loading up factors which point to any jurisdiction.  The Court is required to focus on the appropriateness of a forum from the point of view of the trial of the action (Rambas Marketing Co LLC v Chow Kam Fai David [2001] 3 HKC 250, per Recorder Ma SC (as he then was) at 255B-C). 

20.Where, as here, a defendant contends that the action involves or may involve issues which would be more appropriate to be tried in an alternative forum, it is incumbent upon him to identify the issues, and demonstrate why such issues should be tried in another forum.  The principles have been expounded in various ways:

(1)  In Limit (No 3) Ltd v PDV Insurance [2005] 1 CLC 515, Clarke LJ, at §72, said:

“It is to my mind important that, in general, where a defendant wishes to set aside an order for permission to serve out of the jurisdiction on the basis that the action involves or may involve issues which it would be appropriate should be tried in a court or courts outside the jurisdiction, it is incumbent upon him, so far as possible to identify the issues concerned and to state as clearly as possible how they arise or may arise in the proceedings. That is so even though, on such an application, the burden of proving that England is the more appropriate forum for the trial of the action is on the claimant. It is not appropriate for a defendant merely to speculate as to the issues which might arise.” (underlined added)

(2)  VTB Capital plc v Nutritek International Corporation [2013] 2 AC 337, Lord Neuberger stated at §91:

“91.   However, if the defendant chooses to say nothing, then it would be quite appropriate for the court to proceed on the basis that there is no more (and no less) to the proceedings than will be involved in the claimant making, or trying to make, out its case.  … [I]f he is wholly reticent about his case, he can have no complaint if the court does not take into account what points he may make, or evidence he may call, at any trial. …” (underlined added)

(3)  In 張才奎所託管中國山水投資有限公司股份相關員工& anor v 張才奎& ors, [2015] HKCU 1068, 13 May 2015, Godfrey Lam J (as he then was) after considering Limit (No 3) and VTB Capital, said at §50:

“What I think is clear from the authorities is that despite the burden is on the plaintiff, a defendant is expected to inform the court in outline what his case on the merits is so that the court can form a view of what the issues may be that arise for trial. Often not every element of a plaintiff’s case requires trial; only the disputed matters have to be tried. At the stage when a jurisdictional challenge is raised, which is almost invariably before the defendant has filed a defence, neither the plaintiff nor the court will know from any pleading what will be in dispute. If the defendant does not reveal any positive case then the court assumes there is none and proceeds on the basis that the trial will involve no more and no less than the plaintiff trying to make out his case.” (underlined added)

21.Although the above statements were made in the context of applications to set aside service of the writ out of the jurisdiction, they apply equally to an application for stay on forum non conveniens ground when the Court comes to consider the appropriateness of a forum for the trialof the action.

22.Mr Samson Hung (appearing with Ms Sharon Ho), counsel for P, draws the Court’s attention to the following cases, where the judge in determining application for stay on forum non conveniens ground, held that the failure of the defendant to raise or identify any defence to the plaintiff’s claim was fatal to the applications: High Hope Zhongding Corporation v 廈門墩峰進出口有限公司, 16 January 2017, at §§30-36, 51, 57, per Lok J; Xu Ziming v Ruifeng Petroleum Chemical Holdings Ltd, HCA 450/2013, 27 August 2014, at §26, per DHCJ Wilson Chan (as he then was); Chow Fu Hsien v K Vision International Investment (HK) Ltd, HCA 2884/2004, 13 November 2006, §14, per DHCJ Carlson. 

C.      Discussion

C1.    Nature of the Clauses

23.I first deal with the nature of the Clauses.  This is because while at the hearing Mr Cheung appears to accept that the Clauses are in the nature of non-exclusive jurisdiction clauses (“NEJCs”), in his written submissions, under “Exclusive Jurisdiction Clause ‘EJC’ ”[1], he suggests that the Clauses may be construed as an exclusive jurisdiction clause or a manifestation of the parties’ intention that the “only means” to resolve their dispute is by bringing their claim in the Chengdu Court.    

24.It is sufficient to refer to the principles expounded by Ma CJHC (as he then was) in Noble Power Investments Ltd v Nissei Stomach Tokyo Co Ltd[2008] 5 HKLRD 631 at§24:

“The starting point, of course, is to arrive at the true construction of the relevant clause. Although non-exclusive jurisdiction clauses may come in different forms, generally, the following characteristics will be present:-

(1) The clause will identify a specific forum (usually the courts of a given place) to which the parties to a contract would be obliged to submit for the resolution of a dispute between them. It is important to emphasize that the element of submission to a jurisdiction in the event a party is sued in the named forum is a key component.

(2) The named forum will not, however, be an exclusive one to hear the dispute in that it will be clear that the parties may also be at liberty institute proceedings in other jurisdictions (which may be unidentified).” (underlined added)

25.In my view, the Clauses are NEJCs given that:

(1)  they identified Chengdu Court as the forum which the parties agreed to submit their dispute if the other party chooses to bring proceedings in such Court; and

(2)  the parties are at liberty to bring proceedings in other unnamed jurisdictions.  This is reinforced by the words “均可” (cl 6 in the 1^st Agreement) and “可” (cl 13 in the 2^nd Agreement), both of which are couched in permissive term.

26.The real question is what is the effect of the NEJCs when the Court considers an application for stay of proceedings commenced in a jurisdiction which the parties have neither identified as the agreed forum nor excluded it as a forum for litigating their dispute. In this regard, guidance can be found in Noble Power, at §§31-33:

“33. In considering the effect of a non‑exclusive jurisdiction clause, it is critical to recognize that there are differences in approach depending upon where proceedings have been instituted. Where proceedings are instituted in the named forum (to which the parties have agreed to submit), the party who seeks a stay or otherwise to contest the jurisdiction or appropriateness of that forum, has a very heavy burden to discharge, since that party has by definition agreed contractually to submit to the jurisdiction. In other words, he is seeking to avoid a forum to which he has, by contract, agreed to submit. The extent of this burden is discussed below.

32. Where, however, proceedings are instituted in a forum other than the identified one, an altogether different approach may be required. Here, much depends on the precise wording of the clause in the question. If the other forum is one to which the parties have also agreed to submit in the event of their being sued, it may be that there is little difference between the two situations. Where, however (as is more common) the other forum is merely one in which proceedings can be instituted without any obligation on the party sued actually to submit to that forum, the approach is different. The party who then seeks to contest the jurisdiction or appropriateness of that forum is in a better position so to do (compared with the situation articulated in the previous paragraph) simply because he would not be seeking to avoid a forum to which he has contractually agreed to submit.

33. Some simple illustrations to summarize the foregoing propositions might assist : ‑

(1) A sues B in Hong Kong. Hong Kong is named as a non‑exclusive jurisdiction to which the parties have agreed to submit in the event of their being sued. The burden on B, if he contests the appropriateness of the Hong Kong courts, is a heavy one.

(2) A sues B in Hong Kong. Hong Kong is on this occasion not named as a jurisdiction but the courts of, say, Japan are named as the non‑exclusive jurisdiction. However, on a true construction of the relevant clause, the parties have nevertheless agreed to submit to the jurisdiction of the courts of any other forum (which would include Hong Kong) in the event of their being sued there. Again, in view of the agreement actually to submit, the burden on B is also a heavy one.

(3) A sues B in Hong Kong. Again, Hong Kong is not named as the non‑exclusive jurisdiction but the courts of Japan are. However, this time the parties have not agreed to submit to any jurisdiction other than the Japanese courts. In other words, while the parties have agreed to submit to Japanese jurisdiction in the event that they are sued there, and while they have also agreed that they are at liberty to institute proceedings in a jurisdiction other than Japan, no positive obligation exists for a party to submit to any jurisdiction other than Japan. Here, the burden on B is less heavy.” (underlined added)

27.In T & K Electronics Ltd v Tai Ping Insurance Co Ltd [198] 1 HKLRD 172, Stone J held (at 173E-G, 177G-H) that a NEJC is “simply one factor to be placed into the discretionary mix”, as otherwise it would be to arrogate the effect of a NEJC to the same level as an exclusive jurisdiction clause, which is unwarranted in principle or on the authorities.  It does not shift the legal burden of proof to the detriment of a plaintiff, who is able to invoke the jurisdiction of the Hong Kong court as of right.   

C2.    Whether Hong Kong is not the natural form

28.Applying the principles discussed in §18 above, the burden is on Ds to show that (1) Hong Kong is not the natural or the forum has the most real and substantial connection with the action, and (2) the Chengdu Court is clearly or distinctly more appropriate than Hong Kong.  I consider these in turn. 

29.Mr Cheung makes 3 main points. 

30.First, he submits that “Mainland has the most real and substantial connection with the residence or operation of each party” in that:

(1)  P is a Mainland corporation;

(2)  Mr Cheng, a director of P, resides in the Mainland;

(3)  Ds are residents in the Mainland;

(4)  The 1^st and 2^nd Agreements were executed in Chengdu, the terminologies “are Mainland origin”, and were prepared by P with inputs from Ds;

(5)  The 1^st and 2^nd Loans were transferred to D2’s Account and D1’s Account respectively, both of which are located in the Mainland;

(6)  The communications between the parties were through WeChat;

(7)  Evidence regarding §§(4)-(6) above “are predominately located in the Mainland”;

(8)  No collateral is provided under the 1^st Agreement;

(9)  In respect of the Additional Security:

(a)    2 of the Additional Security mentioned in the 2^nd Agreement concern with properties located in the Mainland;

(b)    P does not say that the 2 properties in Hong Kong “are not sufficient coverage” for the 1^st and 2^nd Loans;

(c)    The other Additional Security mentioned in the 2^nd Agreement “do not form the subject matter of dispute” in this action, and no steps were taken by either party to execute the Security by the deadline (30 October 2019); and

(d)    The penalty stipulated in cl 9 of the 2^nd Agreement is not secured by any security[2].   

31.Second, the governing law of the 1^st and 2^nd Agreements is “Mainland law” given that:

(1)  the lis is “the existence and terms” of the 1^st and 2^nd Agreements; and

(2)  the “formation of a contract was governed by the law which would have been the governing law had the contract been validly concluded” (Johnston, The Conflict of Laws in Hong Kong, 3^rd ed, §5.010). 

32.Third, the Clauses are in the nature of NEJCs and are binding upon the parties.  While the parties “have not ruled out the proceedings may be brought in another forum, Chengdu Court is the only jurisdiction that they have agreed is appropriate and convenient” and is their “first choice”.  Therefore, the Hong Kong court should give “considerable weight” to their choice.  For these reasons, the NEJC “is a persuasive and significant connecting factor”, and “a powerful factor in favour of the grant of a stay” (Racecourse Betting Control Board v Secretary of War [1944] 1 Ch 114 at 126; New Link Consultants Ltd v Air China & ors [2005] 2 HKC 260 at 280D-281C).

33.The first point is ill founded. 

(1)  The question is not whether Mainland has the most real and substantial connection with the residence or operation of each party, but whether Hong Kong court is not the natural forum for the trial of this action.  This has not been shown by Ds. 

(2)  In any event, Ds have not identified, let alone established, any factors to show that Hong Kong court is not natural forum for the trial of the action.  This is not surprising as Ds have not articulated what, if any defence, they have to P’s claim.  In the absence of any defence, there would be no basis for Ds to contend that Hong Kong court is not the natural forum for the trial of this action.

(3)  Even if, contrary to my view, the first 8 matters identified by Mr Cheung (§30(1)-(8) above) are somehow relevant to the appropriateness of Hong Kong as the forum for the trial of this action, they are not matters in dispute between the parties.  As such, it would not be necessary for such matters to be tried in this action.  The point concerning the Additional Security (§30(9) above) is wholly irrelevant, as it is common ground that the Additional Security was never executed by the parties and the same does not form part of P’s claim in this action. 

34.The second point must be rejected.  I do not accept Mr Cheung’s suggestion that the lis is “the existence and terms” of the 1^st and 2^nd Agreements, when Ds do not dispute that they signed the 1^st and 2^nd Agreements.  As Ds have not identified any defence, let alone any positive case, the Court is entitled to assume that there is none and proceeds on the basis that the trial will involve no more than P having to prove its case against Ds.  This can be done by P adducing the documentary evidence described in section A above. 

35.If and insofar as may be relevant, I accept Mr Hung’s submissions that there is no proper basis for Ds’ contention that Hong Kong court is not the appropriate forum for the trial of this action, given that:

(1)  Ds are Hong Kong permanent residents and hold assets located in Hong Kong in their names.  They are directors and shareholders of various Hong Kong companies which, in turn, hold real properties and other assets located in Hong Kong.  Although Ds say that they now reside in Wenzhou, the fact remains that they have since 2004 given up their permanent Mainland Chinese status.  This being the position, it is difficult to see how they can deny their connection with Hong Kong. 

(2)  Assuming the governing law of the 1^st and 2^nd Agreements is “Mainland law”, this factor should carry very little weight, as Hong Kong court is accustomed to dealing with foreign laws including Mainland law (Venetian Macau Limited v Chen Mei Huan also known as Liu Chen Mei Huan also known as Liu Mei Huan Chen, HCA 1440/2012, 27 January 2014, at §50). 

36.As for the third point, while this is a factor relevant to the Court’s consideration as to whether or not to order a stay, it is not a strong or sufficient factor in favour of a stay for the following reasons:

(1)  The Clauses give liberty to the parties to bring proceedings in other jurisdictions.  P does not act in breach of the Clauses in commencing this action in Hong Kong. 

(2)  Ds have not commenced any proceedings in the Chengdu Court in respect of the 1^st and 2^nd Agreements.  It is therefore not open to Ds to contend that by bringing this action in Hong Kong, P is seeking to avoid having to litigate in the Chengdu Court (cf the plaintiff in Noble Power).

37.As Ds have failed to discharge the burden of showing that Hong Kong is not the natural forum for the trial of the action, the application must be dismissed.  For completeness, I will deal with the other issues briefly. 

C2.    Whether Chengdu Court is clearly the more appropriate forum

38.Mr Cheung does not advance any submission to demonstrate that Chengdu Court is clearly more appropriate than Hong Kong for the trial of P’s claim.  This again is not surprising as Ds say that their current residence is in Wenzhou, which is located in the Zhejiang Province (浙江省), whereas the agreed forum identified in the Clauses is the Chengdu Court, which is located in Sichuan Province (四川省).

39.Even if Ds contend that the 3 points discussed in section C1 above show that Chengdu Court is clearly the more appropriate forum for the trial of P’s claim, for the same reasons explained above, I do not think they support Ds’ contention. 

C3.    Juridical disadvantages to P

40.If, contrary to my view, Ds were able to satisfy the Court that Hong Kong court is not the natural forum for the trial of the action and the Chengdu Court is clearly more appropriate than Hong Kong for the trial of P’s claim, the burden would be on P to satisfy the Court that it would suffer juridical disadvantage if its claim were to be tried in the Chengdu Court. 

41.For this purpose, P relies on 2 juridical disadvantages, both concern enforcement of  any judgment which P may obtain against Ds from the Chengdu Court. According to the opinion of 北京玄黃律師事務所, a firm qualified to practise law in the Mainland:

(1)  P cannot enforce such judgment by seeking to bankrupt Ds in the Mainland, as there is no bankruptcy proceeding against natural persons in the Mainland; and

(2)  P cannot enforce such judgment as a judgment in Hong Kong.  In this regard, the arrangement for mutual enforcement of judgments implemented in 2006,《關於內地與香港特別行政區法院相互認可和執行當事人協議管轄的民商事案件判決的安排》(“Arrangement”), has no application to the 1^st and 2^nd Agreements and any judgment which P may obtain from the Chengdu Court. 

42.Ds do not dispute the absence of bankruptcy proceedings in the Mainland constitutes a juridical disadvantage to P if the Court stays this action in favour of the Chengdu Court.

43.However, in D3’s affirmation, he contends that by virtue of s 5 of the Mainland Judgments (Reciprocal Enforcement) Ordinance (Cap 597) (“Ordinance”), P may register a judgment obtained from the Mainland court at the Hong Kong court and, thereafter, enforce such judgment as if it is a judgment of the Hong Kong court.  The contention is plainly wrong.

44.S 5(2)(b) of the Ordinance provides as follows:

“On an application made under subsection (1), the Court of First Instance shall order the Mainland judgment to be registered in accordance with this Ordinance if the judgment creditor has proved to the satisfaction of the Court of First Instance that the following requirements are satisfied—

[…]

(b) the relevant choice of Mainland court agreement is made on or after the date of the commencement[3]of this Ordinance;” (underlined added)

45.The meaning of “choice of Mainland court agreement”(選用內地法院協議) is defined in s 3(2) of the Ordinance as:

“an agreement concluded by the parties to a specified contract and specifying the courts in the Mainland or any of them as the court to determine a dispute which has arisen or may arise in connection with the specified contract to the exclusion of courts of other jurisdictions.” (underlined added)

46.As is clear from the above provisions, the Arrangement only applies to an agreement which contains an exclusive jurisdiction clause in favour of the Mainland courts.  It has no application to the 1^st and 2^nd Agreements as the Clauses are not exclusive jurisdiction clauses, but NEJCs. 

47.At the hearing, Mr Cheung does not dispute that the Arrangement has no application to the 1^st and 2^nd Agreements.  He accepts that even if P obtains a judgment from the Chengdu Court, it is still necessary for P to enforce such judgment through the common law by commencing an action in Hong Kong. However, Mr Cheung contends that it would not be difficult for P to obtain judgment from the Hong Kong court through this avenue.  The submission misses the point.  The point is the inability to enforce a Mainland judgment means that P will have to commence an action and obtain judgment from the Hong Kong court before it can take enforcement actions against Ds’ assets in Hong Kong.  This is a juridical disadvantage which would be suffered by P if the Court were to order a stay of this action. 

48.In view of these juridical disadvantages, even if Ds were able to discharge the burden under the first question, this Court would still decline to exercise the discretion to order a stay of this action. 

D.      Disposition and costs

49.For the reasons set out above, Ds’ Summons is dismissed.  I make a costs order nisi that the costs of and occasioned by Ds’ Summons be paid by Ds to P forthwith, to be assessed by way of gross sum assessment. I do not think that this is a case which warrants the engagement of 2 counsel, given that the facts are fairly straight forward and the relevant principles are well-established. 

50.For the purpose of gross sum assessment, I direct P to lodge its statement of costs within 3 days of this Decision, and Ds to provide their comments on the statement, if any, within 3 days thereafter (both time to run during summer vacation). 

51.Order 12 rule 8(6A) of the Rules of the High Court provides that if the Court dismisses an application under Order 12 rule 8(1) or (2), it may give such direction on the further conduct of the proceedings.  The writ endorsed with the statement of claim was issued on 30 November 2020 and served on Ds shortly afterwards.  Ds have had more than 8 months to consider P’s claim.  At the hearing, this Court reminds Ds to start preparation of their defence if they have not already done so. 

52.I give the following directions on the filing of pleadings.  The parties are expected to comply with the time limits and not to seek any extension of time in the absence of good reasons:

(1)  Ds to file and serve their defence within 21 days of this Decision;

(2)  P to file and serve its reply, if any, within 14 days thereafter; and

(3)  Time to run during summer vacation. 

Mr Samson Hung and Ms Sharon Ho, instructed by Lawrence Chan & Co, for the plaintiff

Mr Jeremy Cheung and Ms Cecilia Shum, instructed by Pauline Wong & Co, for the 1^st – 3^rd defendants