湖州升華金融服務有限公司 v. Hang Pin Living Technology Company Ltd
Read the full judgment text of HCMP 647/2022 on BabelCite. This High Court CFI judgment was delivered on 13 June 2024.
1. There are 4 summonses before the Court:
Cited by 3 cases · Cites 1 case
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HCMP 647/2022 [2024] HKCFI 1464 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE MISCELLANEOUS PROCEEDINGS NO 647 OF 2022 ________________________
________________________ BETWEEN
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________________________ D E C I S I O N ________________________ Applications 1.There are 4 summonses before the Court:
2.As a preliminary comment, one can see that the New Evidence Summonses were taken out merely one month before the hearing. The purpose of such New Evidence Summonses was to adduce further PRC legal opinion. 3.There were a total of 8 PRC legal opinions rendered:
4.It must be noted that the parties, by entering into the consent summons for further evidence to be filed by D in February 2024, arguably misled the court into granting such consent summons on its terms as it was not apparent on the face of it that two additional expert opinions were to be adduced under the guise of further “affirmation in reply”. In doing so, parties had managed to commission and adduce as many legal opinions and on whatever issues as they wished, without first obtaining the Court’s sanction on whether such legal opinions should be sought, given that multiple legal opinions had already been filed previously. In the present case, parties seemed to have proceeded on the basis that there must be a reply to the opinion rendered by the other side’s expert. This approach had led to 2 additional rounds of legal opinions being rendered by each side. The parties also paid no regard to the court’s inclination to have a single joint expert opine on any relevant issues of law. 5.The restriction on adducing expert evidence under Order 38 rule 36 of the Rules of the High Court (Cap. 4A) precludes parties from adducing expert evidence at the trial or hearing of any cause or matter unless prior leave has been obtained from the court, but such rule does not apply to evidence which is permitted to be given by affidavit[1]. 6.Parties seemed to have taken advantage of the lack of restriction on adducing expert evidence in affidavits and have in the present case demonstrated how this lack of restriction can be abused. The court is now being put in the unenviable position where it is forced to go through a total of 8 legal opinions. 7.In my view, a lack of restriction on adducing expert evidence in affidavit evidence does not mean that parties who chose to adduce expert evidence without regard to whether they are relevant to the issues in dispute could do so without any consequences. I therefore indicated to parties that I was only be prepared to consider the New Evidence Summonses and the legal opinions on a de bene esse basis, and would decide if any of the various legal opinions were not relevant and the costs of their preparation ought to be disallowed. Background 8.The following background facts are taken from the written submissions of Mr John Hui and Mr Joshua Yeung, counsel for D and are non-controversial:
Registration of Mainland Judgment under the Ordinance – Applicable Principles 9.Mimmie Chan J had set out the applicable principles in Foshan Nanhai Branch of Industrial and Commercial Bank of China Ltd v Foshan Ruifeng Petroleum and Chemical Fuel Co Ltd[2]:
10.Mr Hui and Mr Paul Wong, counsel for P, agreed that the above principles are applicable to the Setting Aside Summons. Orders in the Mainland Judgment 11.The relevant orders made by the Zhejiang Intermediate People’s Court in the Mainland Judgment are as follows:
12.There is no dispute that D’s Liability is secondary to that of the Borrowers. D’s Grounds for Setting Aside 13.D asserts that registration of the Mainland Judgment should be set aside under section 18 of the Ordinance, on the basis that:
Whether Mainland Judgment orders payment of a sum of money 14.Section 5(2)(e) of the Ordinance provides that one of the requirements to be satisfied before a Mainland judgment can be registered is:
15.Mr Hui contended that as held in the Foshan case,
16.It cannot be disputed that there is no fixed or liquidated sum set out in the Mainland Judgment which can be attributed to D’s Liability. However, Mr Hui fairly accepted that if D’s Liability is a readily quantifiable sum, the fact that no liquidated sum is set out should not be a bar to registration. 17.On the question of whether D’s Liability is readily quantifiable, Mr Wong’s submission was that after the Enforcement Explanation had been handed down in March 2024, the position was that: a total of RMB 2,115,208.55 had been realized from the Enforcement Action. As such, he had calculated D’s Liability as follows and submitted that D’s Liability is quantifiable:
18.Mr Hui’s submission was that a calculation was simply impossible as the Enforcement Action against the Borrowers has not yet been completed. As such D’s Liability has not yet arisen as it is secondary to that of the Borrowers. 19.This in turn led to a dispute on whether the Enforcement Action has been concluded: an issue on which most of the legal opinions concentrated. 20.There is no official legal definition of the term “不能清償” under Mainland Law. As a result, a large proportion of the various expert opinions concentrated on how different experts sought to support their own interpretation. D’s expert opined that the requirement of “不能清償” is satisfied only if the Borrowers are bankrupt, lost their legal status, deceased, or have no properties to be enforced against; whilst P contended that since the Enforcement Action has been concluded, it is clear that the Borrowers have shown that their liability cannot be repaid (不能清償). D then tendered further expert opinion on how the Enforcement Action has not yet been concluded because there are still further assets belonging to the Borrowers that have not yet been enforced. 21.In my view, the argument on whether the Enforcement Action has concluded or not is a red herring. This is because it is clear from the Enforcement Decision that the Zhejiang Intermediate People’s Court clearly took the view and proceeded on the basis that enforcement against the Guarantors including D was possible, and enforcement was in fact carried out against D. As such, I see little basis for D to contend that D’s Liability under the Mainland Judgment has not yet arisen. 22.The remaining question is thus whether D’s Liability is readily ascertainable. D’s position is that D’s Liability is not readily ascertainable in the sense that without something akin to a mini-trial, the figure cannot be arrived at. D particularly relies on the fact that the sum of RMB 48,371,172.40 said to be payable under the Registration Order is already higher from the sum of RMB 78,082,175.07 / 2 = RMB 39,041,087.535 currently sought by P. 23.Mr Hui also submitted that to allow the Mainland Judgment to be registered in the amount currently sought by P may lead to difficulty in the ensuing enforcement proceedings in Hong Kong, such as garnishee proceedings and charging orders, when D’s Liability may be reduced over time. It is said that D will be prejudiced by having its assets irreversibly executed. This is said to be supported by the fact that as compared with the sum stated in the Registration Order, D’s Liability as sought by P at the time of the hearing has changed as the Enforcement Action progressed. 24.I am not satisfied that on a plain reading of the Mainland Judgment and of section 5(2)(e) of the Ordinance, the relevant orders against D were for the payment of a sum of money by the D:
25.I thus find that the Registration Order ought to be set aside for failing to comply with section 5(2)(e) of the Ordinance. Whether the Mainland Judgment is Final & Conclusive 26.Section 5(2)(c) of the Ordinance requires that:
27.Section 6 of the Ordinance provides:
28.Mr Hui submitted that the Mainland Judgment, which was given by the Zhejiang Intermediate People’s Court, does not fall within any of the instances set out in section 6(1) of the Ordinance. It is only the Appeal Judgment that can be classified as “final and conclusive”. Therefore, the Mainland Judgment is not eligible to be registered under the Ordinance as it is not “final and conclusive”. 29.Mr Wong’s response was that as the Mainland Judgment was affirmed by the Appeal Judgment and as such it must mean that the Mainland Judgment is by now final and conclusive. 30.Whilst this may be correct in the sense that the Mainland Judgment is now valid, effective and enforceable because the appeal was dismissed, a judgment needs to be a judgment that is final and conclusive under the provisions of the Ordinance before it can be registered under the Ordinance, as this is a statutory scheme of registration. There is no room for the court to deviate from the definition and requirements as set out in the Ordinance. 31.Mr Wong relied on section 6(1)(b)(i) of the Ordinance to argue that the Mainland Judgment is “a judgment of the first instance given by … an Intermediate People’s Court … and — (i) no appeal is allowed from the judgment according to the law of the Mainland” and therefore must be considered as final and conclusive. It was submitted that as the appeal was dismissed, the Mainland Judgment falls under section 6(1)(b)(i) as “no appeal is allowed from the judgment”. 32.I am unable to accept this submission. From a literal interpretation, “no appeal is allowed from the judgment according to the law of the Mainland” means it is not amenable to appeals under Mainland Law, rather than after the appeal process, the appeal is dismissed. I am of the view that Mr Wong’s submission would only be correct if the provision reads: “no appeal has been allowed from the judgment according to the law of Mainland”. This is supported by the Chinese version of the same provision, which provides:
33.Other than the above, Mr Wong is unable to point me to a provision which would enable the Mainland Judgment to be considered as having satisfied the requirement of “final and conclusive”. 34.I thus come to the conclusion that the Mainland Judgment is not final and conclusive under section 6 of the Ordinance. On this ground, the Registration Order must be set aside. Penalty Interest 35.P concedes that the court should not register any judgment involving penal nature. P also readily concedes that the penalty interest at 0.75% per month and double interest should not have been registered. 36.It was submitted that the remaining parts of the Registration Order shall stand good and shall not be set aside. 37.Mr Hui conceded that if the rest of the Mainland Judgment is capable of being registered under the Ordinance, the offending part as to penal interests can be severed. 38.However, given my conclusions above on the lack of finality of the Mainland Judgment and the fact that the Mainland Judgment did not order the payment of a sum of money, the complaint of penalty interest does not affect the decision one way or the other. No Choice of Mainland Court Agreement 39.Under section 3(2) of the Ordinance:
40.Section 4 of the Ordinance provides:
41.Mr Hui submitted that as it was held in the Mainland Judgment that D’s guarantee obligations under the Loan Agreement were void (“提供的擔保應認定爲無效”), the requirement for a choice of Mainland court agreement is missing. 42.However, the Appeal Judgment clearly held that: “本案屬於主合同 [Loan Agreement] 有效，保證合同無效的情形。”. There is no dispute that the choice of Mainland court agreement was contained in the Loan Agreement. Section 4 of the Ordinance clearly provides that the validity of the choice of Mainland court agreement is independent of other terms of the contract. Thus, even if the guarantee provision in the Loan Agreement is void, the validity of the choice of Mainland court agreement in Clause 7 of the Agreement is not affected. 43.In any event, D’s Liability (although found under other provisions of Mainland Law) arose under the provisions in the Loan Agreement. There is no merit in Mr Hui’s submission. Conclusion on whether registration of the Mainland Judgment should be set aside 44.I am satisfied that the Mainland Judgment is not final and conclusive as required under section 6 of the Ordinance and was not for payment of a sum of money as against D. The Registration Order against D should be set aside. 45.I make an order nisi that the costs of the application to set aside the registration of the Mainland Judgment should follow the event, and be paid by the plaintiff to the defendant, with certificate for counsel. Costs of the preparation of the legal opinions and the New Evidence Summonses 46.I take no issue with the first 3 legal opinions adduced by P during the ex parte stage of the proceedings, as the legal opinions were adduced in answer to requisitions raised by Masters. I also take no issue with the first legal opinion by Mr Lei adduced by D in support of the Setting Aside Summons on this occasion. However, going forward, as soon as an ex-parte application turns inter-partes, legal advisors should consider seeking directions from the court on whether further expert opinions ought to be adduced by a single joint expert, this is particularly the case if the issue involved is a legal issue. 47.Mr Lei’s legal opinion dated 18 February 2024 is predominantly for the rebuttal of Mr Ng’s legal opinion dated 7 November 2023. As explained below, costs of Mr Ng’s legal opinion dated 7 November 2023 are disallowed. The costs of Mr Lei’s legal opinion dated 18 February 2024 ought likewise to be disallowed as whether the Mainland Judgment falls within the definition of section 6 is a matter of Hong Kong Law, and the definition of “不能清償” is (as I have found) irrelevant to the determination of the Setting Aside Summons. 48.Mr Wang’s further legal opinion dated 23 February 2024 cover largely the same issues as that of Mr Lei. There is no explanation on why an additional opinion from another expert ought to be allowed in the first place. Costs of the preparation of Mr Wang’s further legal opinion dated 23 February 2023 are thus disallowed. 49.Costs of the preparation of Mr Ng’s legal opinions dated 4 May 2022 and 7 November 2023 are disallowed, as whether the Mainland Judgment falls within the definition of section 6 is a matter of Hong Kong Law. The opinion of an expert on the status, effect and progress of enforcement is not required as these are apparent on the face of the Enforcement Decision and the Enforcement Explanation. The opinion on the definition of “不能清償”, as found above, is irrelevant to the determination of the issue. 50.As the 3rd Affirmation of Lam Kai Yeung adduced the Enforcement Explanation, which was not previously available, leave is granted to D to file and serve the 3rd Affirmation of Lam Kai Yeung, with costs in the cause. 51.As the legal opinion by Mr Ng dated 18 April 2024 does not assist the resolution of the issues, I will dismiss P’s summons filed on 19 April 2024, with no order as to costs. 52.In light of my decision above, the Amendment Summons is dismissed, with no order as to costs. 53.I thank counsel’s assistance in the matter.
Mr Paul Wong, instructed by Kevin L.H. Kwong & Co, for the plaintiff Mr John Hui and Mr Joshua Yeung, instructed by Michael Li & Co, for the defendant |
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