Sunsco International Holdings Ltd v. Lin Chunrong

HCA 500/2017 and HCA 2104/2020

(Heard together)

[2025] HKCFI 5238

HCA 500/2017

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 500 OF 2017

_______________________

BETWEEN

_______________________

AND

HCA 2104/2020

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2104 OF 2020

_______________________

BETWEEN

_______________________

(Heard Together)

_______________________

JUDGMENT

_______________________

1.Introduction

1.1This is the trial of HCA 500/2017 (“HCA 500”) and HCA 2104/2020 (“HCA 2104”). By Master Dick Ho’s order dated 26 January 2024, leave was granted to the parties to set down the two actions for trial together or one after the other.

1.2In HCA 500, Sunsco International Holdings Limited (泰邦國際控股有限公司) (“SIHL”) seeks to recover from Mr Lin Chunrong[1] (“Lin”) the principal sum of HK$23,000,000 (“Sum”) and accrued interest from 5 July 2010, purportedly due under a loan agreement reached orally between the parties in May 2010 (“Alleged Oral Loan Agreement”).

1.3In HCA 2104, Lin seeks to enforce two Mainland judgments against黎康新先生 (“Lai Sr”) and his son 黎子鉅先生 (“Lai Jr” and together with Lai Sr “Lai Camp”) under common law. Lin commenced proceedings in the Mainland against the Lai Camp in 2016 to recover three loans extended on 26 January, 5 February and 12 March 2013 in the total sum of RMB 32,000,000 (“3 Loans”). On 14 April 2017, the Guangzhou Intermediate People’s Court (“IPC”) granted judgment in favour of Lin against Lai Sr (for the principal sum of RMB 32,000,000) and Lai Jr (for joint liability with Lai Sr in respect of RMB 17,000,000 of the principal sum of RMB 32,000,000), interest and costs (“First Instance Judgment”). Lai Jr’s appeal against the First Instance Judgment was dismissed by the Guangdong Higher People’s Court (“HPC”) by a judgment dated 2 August 2018 (“Second Instance Judgment”), by which Lai Jr was ordered to pay to Lin the costs of the appeal.

1.4It is pertinent to note that, as recorded in the First Instance Judgment, Lai Sr did not attend the trial at the IPC[2]. Lai Sr subsequently applied for a retrial on a number of bases, one of which was that he was not given proper notice of the IPC proceedings (“Service Issue”)[3]. Lai Sr’s application was dismissed by the HPC on 5 August 2021 (“2021 Judgment”). In particular, the HPC held against Lai Sr on the Service Issue, on the basis that his contention lacked proper basis[4].

1.5There are no overlapping issues in the two actions. As regards HCA 500, whilst there is no dispute that the Sum was advanced by SIHL by a cheque dated 5 July 2010 (“Cheque”) in favour of Ying Fu International Group Limited (“Ying Fu”), Lin denies the existence of the Alleged Oral Loan Agreement and advances a diametrically different account on the circumstances under which the Sum was paid to Ying Fu, and in particular, he categorically disputes that he was personally a borrower of the Sum. The resolution of HCA 500 involves an exercise of resolving the conflicting factual evidence advanced by SIHL and Lin (and their witnesses).

1.6On the other hand, by the time of closing, HCA 2104 raises (only) the question as to whether the First Instance Judgment and the Second Instance Judgment (collectively “Mainland Judgments”) are final and conclusive for the purpose of common law enforcement (“Enforcement Issue”) given the existence of the trial supervision procedure (審判監督程序), also known as the retrial procedure (再審程序) (“Retrial Procedure”) in the Mainland. Initially, there were disputes between the parties on (1) whether the 3 Loans were procured by misrepresentations made by Lin and (2) whether the Lai Camp were permitted to relitigate their liabilities under the 3 Loans in HCA 2104. Upon the court’s query in opening, those issues have fallen by the wayside, and by closing, only the Enforcement Issue remained a live issue. In that regard, the differences between the opinions of the parties’ Mainland law experts are relatively limited in scope.

1.7At the trial, the Lai Camp and SIHL were represented by Mr Yeung Ming Tai (with Mr Ray Kwan) and Lin by Mr David Chen.

2.The parties and other relevant entities

2.1In so far as relevant, Lin was at all material times:

(1) A shareholder and director of 龍浩集團有限公司, a company incorporated in the PRC previously known as 廣東龍浩集團有限公司 (“LHGL”);

(2) The sole shareholder and sole director of Grand Dragon International Holdings Company Ltd (龍浩國際集團有限公司) (“Grand Dragon”), a company incorporated in Hong Kong.

2.2According to Lai Sr, he was at all material times the director and/or the legal representative of the following companies:

(1) Sunsco Investment Group Ltd (泰邦投資集團有限公司) (“Sunsco Investment”), a company incorporated in the British Virgin Islands;

(2) SIHL, a company incorporated in Hong Kong wholly owned by Sunsco Investment;

(3) 深圳泰邦集團有限公司 (“Sunsco SZ”), a company incorporated in the PRC wholly owned by Sunsco Investment;

(4) Sunsco Asset Management Company Ltd (泰邦資產管理有限公司 ) (“Sunsco Asset Management”), a company incorporated in the BVI wholly owned by Sunsco Investment; and

(5) 泰邦基建發展有限公司 (“Sunsco Infrastructure”), a company incorporated in the PRC wholly owned by Sunsco Asset Management (collectively “Sunsco Group”).

2.3The companies controlled by Lin and Lai Sr had cooperated in a number of infrastructure projects in the Mainland. In so far as relevant:

(1) By an agreement dated 17 March 2009 between Sunsco Infrastructure and LHGL (“Sichuan Agreement”), the parties thereto agreed to invest in, construct and operate an express way (高速公路) referred to as “成安渝高速公路四川段项目” (“Sichuan Project”). According to the Recitals of the Sichuan Agreement, LHGL was to take over from another company called 深圳中洲集团有限公司 (“SZCCGL”) as Sunsco Infrastructure’s “partner” in the Sichuan Project;

(2) By an agreement dated 3 January 2010 between Sunsco SZ and LHGL (“Guangzhou Agreement”), the parties thereto agreed to invest in, construct and operate an express way in the Guangzhou province referred to as “佛清从高速公路北段项目” (“Guangzhou Project”).

2.4It is apparent from the terms of the above agreements that the projects were substantial undertakings involving significant monetary investments.

2.5As will be seen below, pertinent to the disputes in HCA 500 is an oral agreement (“JV Agreement”) reached between Sunsco SZ, LHGL and SZCCGL (collectively “JV Partners”) in around early 2010 to jointly bid for a project referred to as “深圳至中山過珠江通道的深中高速公路” (“Relevant Project”)[5].

3.HCA 500: The pleaded case

3.1In this section, I set out the core allegations advanced by the parties in the pleadings.

3.2SIHL’s pleaded case on the Alleged Oral Loan Agreement in the Amended Statement of Claim (“ASOC”) is as follows:

(1) ln May 2010, Lin informed Lai Sr about the invitation to tender by the Mainland government for the Relevant Project. Given the immense size of the Relevant Project and the anticipated keen competition, Lin planned to participate in a joint venture on this project with the companies managed by Lai Sr and SZCCGL. Lin told Lai Sr that he had the ability and connections with the relevant personnel for successfully getting the Relevant Project. However, he required several million Hong Kong dollars as funds for the liaising for the project. Due to Lin’s then lack of sufficient funds, he requested Lai Sr to lend him money. Lin also stated that he would engage an unrelated third-party to handle the liaison for the Relevant Project (ASOC §A(10));

(2) In around May 2010, Lin requested and attended a meeting with Lai Sr at the Renaissance Hong Kong Harbour View Hotel (“Hotel”). During the meeting, Lin introduced to Lai Sr a Chinese male in his 40s. The Chinese male only stayed for a few minutes and then left. Lin then asked Lai Sr to lend him the Sum through SIHL as funds for liaising and securing the Relevant Project. Lin informed Lai Sr that the Chinese male had the capability and connection to secure the Relevant Project, and the Sum would be provided to that man as his expenses for liaison and negotiation. Lin also indicated that he would need the Sum by early July 2010 and requested Lai Sr to make the necessary financial arrangements. Lin agreed to repay the Sum within a year’s time. Given the previous collaborations between the Sunsco Group with Lin’s companies and Lin, Lai Sr agreed to provide the Sum to Lin (ASOC §A(11));

(3) By the Alleged Oral Loan Agreement made in or about May 2010 between SIHL and Lin, SIHL agreed to lend to Lin the Sum for onward lending by a company which Lin represented was held by him (later known by SIHL to be Grand Dragon) to Ying Fu (ASOC §1);

(4) The express terms of the Alleged Oral Loan Agreement were (ASOC §3):

(i) SIHL agreed to provide the Sum to Lin;

(ii) The parties understood and agreed that Lin would provide the Sum to Grand Dragon for onward lending purposes;

(iii) The repayment date of the Sum would be one year from the date when the Sum was paid by SIHL (which later turned out to be 5 July 2010);

(iv) The Sum would be repayable on 5 July 2011;

(v) Interest would be payable by Lin to SIHL on the Sum from 5 July 2010 to the date of repayment;

(vi) The rate of interest would be 4% per annum.

(5) On 29 May 2010, Grand Dragon and Ying Fu signed a loan agreement (“29/5/10 Document”) and the parties thereto agreed that Grand Dragon would lend the Sum to Ying Fu, with an annual interest of 4% for a term of one year (ASOC §3A);

(6) In early June 2010, Lin again requested to and did meet with Lai Sr. During the meeting, Lin provided Lai Sr with a copy of the 29/5/10 Document for Lai Sr’s reference (ASOC §3B);

(7) Pursuant to the Alleged Oral Loan Agreement, and in accordance with Lin’s instruction, on 5 July 2010, SIHL provided the Sum to Lin by way of the Cheque in favour of Ying Fu (ASOC §4).

3.3It is SIHL’s case that Lin has not repaid the Sum or any amount (ASOC §4A). By a demand letter dated 1 June 2016 (“Demand Letter”), SIHL, through its solicitors, demanded repayment of the Sum together with interest thereon.

3.4Conversely, it is Lin’s pleaded case in the Amended Defence (“AD”) that:

(1) The JV Agreement, reached in early 2010 between the JV Partners, contained the following terms:

(i) The JV Partners would jointly bid for the Relevant Project;

(ii) LHGL would be responsible for all matters relating to design and technical management;

(iii) The equity split and the ratio of capital contribution of LHGL, Sunsco SZ and SZCCGL were respectively 20%, 40% and 20%;

(iv) The capital contributed would be applied for all costs, fees and expenses incurred for the Relevant Project;

(v) The JV Partners would appoint a consultant who had good connections with the government authorities to, inter alia, liaise with the authorities in the hope of obtaining the Relevant Project on the JV Partners’ behalf (AD §1L).

(2) By the 29/5/10 Document, Grand Dragon entered into a written agreement with Ying Fu (“Alleged Ying Fu Agreement”) whereby Ying Fu agreed to provide the contemplated consultancy services to the JV Partners in relation to the Relevant Project in return for the consideration of the Sum (equivalent to around RMB 20 million) (AD §1M);

(3) The Alleged Ying Fu Agreement contained the following express terms (AD §1N):

(i) Grand Dragon agreed to lend the Sum to Ying Fu with interest at 4% per annum and repayable within 1 year (Clause 1);

(ii) Ying Fu agreed to provide project planning, promotion, financing and financial consultation services (項目策劃、招商、融資、財務顧問) in relation to the Relevant Project (Clause 2);

(iii) The fees payable for Ying Fu’s services would be deducted from and set off against the Sum advanced by Grand Dragon who would be responsible for any shortfall (Clause 3).

(4) The Alleged Ying Fu Agreement was signed under the following circumstances (AD §1P):

(i) Sunsco SZ and SZCCGL authorized Lin to act in relation to all matters concerning the appointment of Ying Fu as a consultant for the JV Partners’ bid for the Relevant Project, including negotiating and entering into agreements with Ying Fu;

(ii) Ying Fu expressed a preference for the its fees to be paid in Hong Kong dollars in Hong Kong;

(iii) Sunsco SZ indicated to the other JV Partners that its Hong Kong associate, namely SIHL, had sufficient Hong Kong dollars for payment of Ying Fu’s fees. Accordingly, the JV Partners agreed that LHGL and SZCCGL would pay Renminbi representing their respective shares of Ying Fu’s fees to Sunsco SZ’s associate深圳市碧桂投資有限公司 (“SZ Pik Kwai”), whilst Sunsco SZ would cause SIHL to pay Yung Fu the Sum in Hong Kong;

(iv) At the requests of Sunsco SZ and SZCCGL, LHGL agreed to nominate itself or an associated company to enter into an agreement with Ying Fu. Eventually, LHGL nominated Grand Dragon as the signing party for the Alleged Ying Fu Agreement.

(5) In performance of the Alleged Ying Fu Agreement, the JV Partners and Ying Fu carried out the following acts (AD §1Q):

(i) On or around 6 July 2020, LHGL transferred RMB 4 million to the bank account of SZ Pik Kwai in the Mainland;

(ii) On or around 3 August 2020, SZCCGL transferred RMB 8 million to LHGL in the Mainland and LHGL in turn transferred the same to the bank account of SZ Pik Kwai in the Mainland;

(iii) Ying Fu produced three application reports dated 14 October 2010[6], 26 December 2010 and 28 June 2011 in relation to the Relevant Project and submitted them to the relevant government authorities on behalf of the JV Partners.

(6) Lin specifically denied the Alleged Oral Loan Agreement (AD §§2 and 4).

3.5The Reply, in gist, pleads the following matters:

(1) SIHL averred that the equity split and the ratio of capital contribution of LHGL, Sunsco SZ and SZCCGL should respectively be 30%, 40% and 30% (Reply §12);

(2) The JV Partners did not agree to appoint a consultant and it was the obligation of LHGL and Lin to obtain the Relevant Project and bear the necessary expenses in the course of obtaining themselves solely (Reply §14);

(3) SIHL averred that, at the material time, it or its related companies did not own or have any interest in SZ Pik Kwai and SZ Pik Kwai did not have any involvement in the Relevant Project. Instead, SZ Pik Kwai was involved in legal disputes in the Mainland with SIHL and/or its related companies (Reply §§19(a)-(d));

(4) SIHL denied that Ying Fu provided any consultancy service, in particular the three application reports. To the contrary, six application reports were prepared by SIHL in relation to the Relevant Project (Reply §§19(f)-(g)).

3.6Arising from the above pleaded issues, the parties have identified a number of issues for trial in HCA 500 in the Agreed List of Issues (“ALOI”). In my summary, they are:

(1) Whether the Alleged Oral Agreement was made in or around May 2010 between SIHL and Lin, and if so, what were its terms;

(2) Under the terms of the JV Agreement (a) what was the equity split and ration of contribution of the JV Partners and (b) whether the JV Partners agreed to appoint a consultant to, inter alia, liaise with the Mainland authorities on the JV Partners’ behalf;

(3) What is the true nature of the 29/5/10 Document, and in particular, whether Ying Fu agreed to and did provide consultancy services in respect of the Relevant Project.

4.HCA 500: The applicable principles

4.1The resolution of the issues in HCA 500 boils down to the assessment of the credibility of the witnesses. In assessing witness credibility, I adopt the approach set out at Hui Cheung Fai & Anor v Daiwa Development Ltd & Ors, HCA 1734/2009, 8 April 2014 §§79-83. In essence, importance is attached to the inherent likelihood or unlikelihood of an event having happened, or the apparent logic of the events. It is further important to assess the consistency of the evidence of a witness with undisputed or indisputable evidence, and its internal consistency, namely by comparing the oral testimony and his witness statement(s).

4.2In the present case, there are two pertinent features. First, the contentious allegations and the seminal events go back a relatively long time. The JV Agreement and the Alleged Oral Loan Agreement took place in 2010 and the witness statements were only filed in 2023 and 2024. Secondly, there are only scant and at best circumstantial contemporaneous documents to support/disprove the rival contentions on the terms of the JV Agreement and the existence of the Alleged Oral Loan Agreement.

4.3In such circumstances, it seems to me that the following principles are especially relevant.

4.4First, as observed by G Lam J (as he then was) in Au Yeung Pui Chun v Cheng Wing Sang [2021] HKCFI 463, human memory of what was said in a conversation is fallible for a variety of reasons, especially when disputes and litigation have intervened. The learned Judge then set out at §25 what he considered to be the proper approach, which I respectfully adopt:

“[23] The contentious allegations and the seminal events go back a very long time indeed. The initial purchase of the Property took place over 45 years ago; the assignment to the defendant, Lydia and Queennie 21 years ago; and the October 2008 Agreement 12 years ago. In the light of the long lapse of time, I have had regard to the oft‑cited observations of Leggett J in Gestmin SGPS SA v Credit Suisse (UK) Ltd & another [2013] EWHC 3560 (Comm) at §§15-22, which I shall not set out here, though I bear in mind that they do not laying down any general principle for the assessment of evidence: see Kogan v Martin & others [2019] EWCA Civ 1645, §88. In a similar vein, in Watson v Foxman & others (1995) 49 NSWLR 315 at 319, McClelland CJ in Eq said:

‘Furthermore, human memory of what was said in a conversation is fallible for a variety of reasons, and ordinarily the degree of fallibility increases with the passage of time, particularly where disputes or litigation intervene, and the processes of memory are overlaid, often subconsciously, by perceptions of self‑interest as well as conscious consideration of what should have been said or could have been said. All too often what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed. All this is a matter of ordinary human experience.’

Although his Honour was addressing evidence of the content of conversations, his observations seem to me to be of general application.

[24] I have also borne in mind the guidance given by Stock JA in Esquire (Electronics) Ltd v Hong Kong and Shanghai Banking Corporation Ltd [2007] 3 HKLRD 439 at §135:

‘ … I do not say that an assessment of the character of a witness plays no part in the fact finding process, but it is a task that may sometimes be elusive even to the best trained eye and ear, and I would venture to suggest that the truth, in so far as one is able to reach it or, as is sometimes the case, to reach a version of it that is more likely to be correct than not, can best be tested by reference to contemporaneous documentation where it exists, or to its absence where one would expect it to have been created, as well as to inherent probabilities (though bearing in mind that there may be occasions where the truth may run against that particular grain) having regard to all the facts that are known. … This is not to say that the documentation should have been treated as if it stood on its own, not to be explained, contradicted or supported by oral testimony. It is however to say that in this case the approach adopted to assessment of the facts placed far too much emphasis on character impression and too little upon what was suggested by the documentation and by the inherent probabilities in their historical context. That documentation, as well as conflicts within the evidence, inherent probabilities, and a study of how matters were originally pleaded and asserted in witness statements — these are the factors which in a trial such as this, so long removed from the time of the events in question, were likely to be of particular use in assessing the facts …’

[25] The only safe course in a case such as the present, it seems to me, is to steer oneself with primary reference to the objective surrounding facts, such documentation as there is, and the inherent probabilities as they appear to the court taking into account all the circumstances including the motivations and characters of the people involved and the relationship between them.” (emphasis added)

4.5Mr Chen has also reminded me that, in the particular circumstances of the present case, it may not be avoidable that the court may have to resort to burden of proof. He relies on Chan Chi Ling Elwyn v Richfield Realty Ltd, HCLA 9/2013, 11 July 2024 for the following propositions (with which I agree):

“[21] ‘The burden lies upon the party who substantially asserts the affirmative of the issue which he has to prove in order to succeed…’. In an action on a contract, the burden of proving the existence of the contract lies with the claimant. Here, the claimant sued on the Oral Agreement, so he bore the legal and persuasive burden to prove its existence.

[23] In most cases, where a judge or tribunal of fact is faced with two conflicting versions of events, he/it will be able to decide which is probable and which is not, and make a finding on the issue accordingly. The elimination of an improbable theory may lead to the acceptance of a competing theory that is not improbable where the available evidence supports this.

[24] Even though ‘[no] judge likes to decide cases on burden of proof if he can legitimately avoid having to do so”, “[there] are cases, however, in which, owing to the unsatisfactory state of the evidence or otherwise, deciding on the burden of proof is the only just course for him to take.’ This is explained by May LJ in Morris v London Iron and Steel Co Ltd as follows:

‘… Judges and tribunals of fact should make findings of fact in relation to matters before them if they can. In most cases, although in some cases it may be difficult, they can do just that. Having made them, the tribunal is entitled to draw inferences from the findings of primary fact where appropriate… Judges should, so far as is practicable and so far as it is in accordance with their conscientious duty, make findings of fact. But it is in the exceptional case that they may be forced to reach the conclusion that they do not know on which side of the line to reach the conclusion…’

[25] The principles have been summarised by Poon J in Big Island Construction (HK) Limited v Wu Yi Development Company Limited as follows:

‘19. If one version is found to be improbable, it does not necessarily lead to the acceptance of the other when, owing to the unsatisfactory state of the evidence, the court is not satisfied that the latter is probable. There are judicial utterances to the effect that in such scenario, the judge would be forced to say ‘I just do not know’ on which side of the line the decision ought to be drawn. However, such judicial utterances should not be understood to mean that the court will or should shy away from making a finding. What the court will do is to resort to deciding the matter on the burden of proof…’” (emphasis added)

5.HCA 500: General comments on the evidence

5.1The relevant evidence was given by (1) Lai Sr and 王育輝先生 (“Wong”) for SIHL and (2) Lin himself and his witness 陳暉先生 (“Chan”). At the material time:

(1) Wong was an employee of the Sunsco Group and claimed to be responsible for the compilation of the application reports referred to at Reply §§19(f)-(g) (§3.5(4) above);

(2) Chan joined Ying Fu in August 2007 and was at the material time a director of Ying Fu’s “cooperation department” (合作事務部)[7]. He claimed to be responsible for, along with Ying Fu’s other staff, the Relevant Project in particular the application reports.

5.2I have evaluated the witnesses’ evidence in the context of the entirety of the evidence. Regrettably, as will be seen below, I have come to the view that none of them is so reliable that I can confidently accept his evidence in full. Suffice it at this stage to make the following observations:

(1) Where Wong and Chan respectively claimed that the Sunsco Group or Ying Fu was responsible for the compilation of the application reports, neither of them was able to give cogent evidence on the topic;

(2) In relation to Lin, a more significant unsatisfactory feature is that he had difficulties in justifying the Sum as being a reasonable sum for the services purportedly undertaken by Ying Fu;

(3) As regards Lai Sr, there can be no escape that his evidence went through a number of iterations and his oral evidence is internally inconsistent with either his witness statements (which are inconsistent already as between his first and supplemental witness statements) or the pleaded case. Indeed, counsel for SIHL in closing conceded, in his own words, that Lai Sr was “an overly confident, arrogant and unpersuasive witness”.

6.HCA 500: The evidence

(i) The undisputed / indisputable evidence

6.1Adopting the approach endorsed in Au Yeung Pui Chun above, I first set out, largely in chronological order, the undisputed and indisputable evidence.

6.2Prior to May 2010 (when the Alleged Oral Loan Agreement was made), the parties had already cooperated in the Sichuan Project and the Guangzhou Project. Under the terms of the Sichuan Agreement and the Guangzhou Agreement:

(1) LHGL was described as having the expertise in engineering design, construction materials, construction of and feasibility studies in express ways and bridges and BOT projects[8] (Recital 3);

(2) The relevant Sunsco entity was responsible for liaison with the governmental departments and the tendering process, and in particular for prepaying any preliminary expenses (前期費用), and were the tender successful, such preliminary expenses would be treated as expenses of the project (Clause 1.1(C))[9];

(3) The relevant Sunsco entity was primarily responsible for fund-raising for the project and LHGL for the execution of the construction works (Clauses 1.2(B) and (C) of the Sichuan Agreement and Clauses 1.2(B) and (F) of the Guangzhou Agreement).

6.3In early 2010, the JV Agreement was made between Sunsco SZ, LHGL and SZCCGL. On the pleadings, the following terms of the JV Agreement were agreed:

(1) The JV Partners would jointly bid for the Relevant Project;

(2) LHGL would be responsible for all matters relating to design and technical management;

(3) The capital contributed would be applied for all costs, fees and expenses incurred for the Relevant Project.

6.4The 29/5/10 Document was signed by Grand Dragon and Ying Fu and was provided to SIHL before July 2010. The 29/5/10 Document contained the following terms:

(1) Clause 1: “乙方由于投资资金周转困难，经友好协商甲方同意借款贰仟叁佰万元港币给乙方，借款期限为一年，借款的利率按年利率百分之四计算，到期还本付息”;

(2) Clause 2: “乙方同意受甲方委托为其发展高速公路项目进行项目策划、招商、融资以及财务顾问，收费按行业标准优惠”;

(3) Clause 3: “項目策划、招商、融资以及财务顾问费用可从借款中抵扣，不足部分由甲方补足。可订特别协议规定”.

6.5On 5 July 2010, the Cheque was issued in favour of Ying Fu.

6.6On 6 July 2010, LHGL deposited RMB 4 million into the account of SZ Pik Kwai.

6.7On 3 August 2010, SZCCGL paid LHGL RMB 8 million which was then transferred to SZ Pik Kwai on 4 August 2010.

6.8According to the organizational chart adduced by SIHL, SZ Pik Kwai was at one point an entity related to or within the Sunsco Group.

6.9In evidence were 6 application reports issued in relation to the Relevant Project:

(1) The first application report was issued in the name of Sunsco Infrastructure and dated 20 July 2009 (“First Report”). The First Report was addressed to Wang Yang, the former Secretary of the Guangdong Provincial Party Committee. Wong was identified as the contract person in the First Report;

(2) The second application report was issued in the name of Sunsco SZ and SZCCGL and dated 20 July 2010 (“Second Report”). The Second Report was addressed to Wang Hua Hua, the former Governor of the Guangdong Province;

(3) The third application report was issued in the name of Sunsco SZ and SZCCGL and dated 13 August 2010 (“Third Report”). The Third Report was addressed to Li Ke Qiang, the former Premier of the People’s Republic of China;

(4) The fourth application report was issued in the name of Sunsco SZ and SZCCGL and dated 14 October 2010 (“Fourth Report”). The Fourth Report was addressed to Wang Yang;

(5) The fifth application report was issued in the name of Sunsco SZ, SZCCGL and LHGL and dated 26 December 2010 (“Fifth Report”). The Fifth Report was addressed to Wang Yang, Wang Hua Hua, Zhu Xiaodan (the former Governor of Guangdong Province) and Tong Xing (the former Deputy Governor of Guangdong Province;

(6) The sixth application report was issued in the name of Sunsco SZ, SZCCGL and LHGL and dated 28 June 2011 (“Sixth Report”). The Sixth Report was addressed to Li Ke Qiang (collectively “Application Reports”).

6.10Unlike the Guangzhou Project and the Sichuan Project where the Mainland authorities had already decided that the project would be open to tender by private enterprises (民營企業) and were in the process of inviting tenders, it is clear from the Application Reports that their purpose was to lobby the Mainland authorities to open the Relevant Project to private enterprises. For example, the Sixth Report stated:

“为了加快建设《珠三角地区改革发展规划纲要》中规划的“深圳至中山过江通道，为了贯彻落实国务院的政策和文件精神，我们郑重建议：将该项目列为民营企业投资、建设與经營的基础设施项目，实行 BOT 方式进行建设…

恳请李克强副总理根据国务院“关于鼓励和引导民间投资健康发展的若干次意见”（国发 (2010) 13 号），对我们予以支持和指导，允许我们依法作为項目主体对整个项目进行投资、建设和經營管理。” (emphasis added)

6.11It therefore seems to me plain that the nature of the Relevant Project was in substance materially different from the Sichuan Project and the Guangzhou Project. There is no dispute that, as pleaded at Reply §20, that the JV Partners decided not to further proceed with the Relevant Project as it was the Mainland government’s eventual decision that the Relevant Project should be undertaken by state enterprises due to its strategic importance.

(ii) SIHL’s evidence

6.12As summarized at §3.5(2) above, it is SIHL’s pleaded case that the necessary expenses incurred for the purpose of obtaining the Relevant Project would be borne by LHGL and Lin solely. Lai Sr’s evidence in his witness statements gave the following explanations. In May 2010, when Lin broached the subject of the Sum with Lai Sr:

(1) Lin told Lai Jr that the Chinese male at the Hotel had the capability and relationship to obtain the Relevant Project and the Sum would be provided by Lin to the Chinese male as expenses for liaising on the Relevant Project (該借款是被告人提供及該男子作為協商上述項目的經費): Lai Sr’s statement §17;

(2) Lai Sr told Lin that the Sum could not be regarded as part of expenses of the Relevant Project because (a) in accordance with the previous cooperation, the expenses incurred by LHGL to “cultivate relationship” (跑關係) would not be regarded as project expenses as any money used to “buy a project was improper” (因為使用金錢來買通項目作為發展是不當的), (b) as the Relevant Project had not been obtained, Lai Sr did not see the need to engage any consultant, and (c) Lin could not ignore SZCCGL and unilaterally regard the Sum as the expense of the Relevant Project: Lai Sr’s supplemental statement §18;

(3) As Lin had assumed personally responsibility to repay the Sum, Lai Sr did not pay too much attention to Lin’s purpose for borrowing the Sum: Lai Sr’s supplemental statement §20.

6.13In his oral evidence, Lai Sr said that, according to his understanding as at May 2010, the Sum would not be used for illegal purpose as, were it otherwise, he would not have agreed to lend the Sum. He also said, inconsistently with his witness statements, that the expenses could be recouped if they were used to coordinate relationship with the Mainland Government and the JV Partners were later awarded the Relevant Project. The relevant oral evidence in his cross-examination was as follows:

“Q: So the funds spent by Mr Lin could be recouped if the JV successfully tendered for the project, correct?

A: That’s right.

…

Court: … Assuming $23 million was used to coordinate relationship with the Government, if the JV got – were successful in bidding for the project, that sum would then be recouped?

A: Well if the purpose for him to obtain that sum of money was for that purpose, then that’s the case…

…

Court: … your understanding was that the $23 million would be recouped if the project was given to the JCV, correct?

A: Yes.”

6.14As regards Ying Fu:

(1) Lai Sr’s evidence was that the JV Partners had not authorized Lin or LHGL to engage Ying Fu as (a) Lai Sr did not know Ying Fu and was not aware of its expertise, (b) Sunsco SZ and SZCCGL were already experienced contractor and did not require the assistance of an unknown company, in particular involving the payment of a substantial fee of HK$23 million;

(2) Lai Sr pointed out that the AD only mentioned that Ying Fu prepared the Fourth, Fifth and Sixth Reports when in truth the Application Reports consisted 6 reports. His evidence was that all the Application Reports were prepared and submitted by Sunsco SZ and SZCCGL: Lai Sr’s supplemental statement §22. However, in Lai Sr’s first statement, he said that the Fifth and Sixth Reports were submitted by LHGL: Lai Sr’s statement §21. In his oral evidence, he said that his statement §21 was incorrect;

(3) Lai Sr also pointed out that the First Report, which was the most detailed, was dated 20 July 2009 before LHGL became involved in the Relevant Project and the Sunsco Group already became aware of the Relevant Project in early 2009: Lai Sr’s supplemental statement §§15 and 22. However, the foregoing is inconsistent with his first statement in which it was said that Lai Sr was only told about the Relevant Project by Lin in May 2010: Lai Sr’s statement §16 and ASOC §A(10). In his oral evidence, he said that he did not think it was necessary to mention the events in 2009 in his first statement;

(4) Wong’s evidence was that he was only tasked to prepare the First to Fourth Reports: Wong’s statement §§4-7. It was only in Wong’s oral evidence that he changed his evidence to say that all the Application Reports were prepared by the Sunsco Group.

6.15In relation to the Alleged Oral Loan Agreement, the express terms are set out at Lai Sr’s statement §17 which largely mirror those pleaded at ASOC §3 (§3.1(4) above). However, in Lai Sr’s oral evidence, he accepted that not all of the terms were agreed at the alleged meeting in the Hotel in May 2010:

(1) Lai Sr said that Lin asked to borrow the Sum from him personally and there was no discussion that the lender was SIHL. It was only later that he asked his wife to sign the Cheque since he did not personally have sufficient cash;

(2) Lai Sr accepted that there was no discussion that Lin would provide the Sum to Grand Dragon for onward lending purposes;

(3) Lai Sr further accepted that there was no discussion that the Sum would be repayable specifically on 5 July 2011. Instead, the discussion was only that the loan term would be one year;

(4) Lai Sr also said that there was no discussion that interest would start to accrue on 5 July 2010, but only that interest would start to accrue when the Sum was advanced;

(5) In the Demand Letter, it was asserted that the Alleged Oral Loan Agreement was entered into on 5 July 2010. When cross-examined on this, Lai Sr accepted that he gave instructions to SIHL’s solicitors but the content of the Demand Letter was incorrect.

(iii) The defence evidence

6.16The evidence Lin gave was largely consistent with his pleaded case.

6.17In particular, Lin’s evidence was that Ying Fu had a track record of obtaining government projects for private enterprises and it was on this basis that the JV Partners agreed to engage Ying Fu as the Relevant Project’s consultant.

6.18As pointed out by Mr Yeung, there is no documentary evidence to support Ying Fu’s credentials. Further, Lin and Chan only provided very scant details on the services provided by Ying Fu.

6.19Even in relation to the Application Reports, both Lin and Chan had incorrectly stated their witness statements that Ying Fu only prepared the Fourth to Sixth Reports. It was only at trial that they corrected their evidence to assert that Ying Fu prepared the Second to Sixth Reports. Lin said that the First Report was forged but, as I pointed out at trial, Lin never issued any notice under RHC Order 27, rule 4 to challenge the authenticity of the First Report.

7.HCA 500: Factual findings and analysis

7.1On a high level of generality, the two competing cases are (1) whether the Sum was a personal loan from SIHL to Lin (as SIHL contends) or (2) whether the Sum represented the fees for engaging Ying Fu for the Relevant Project as authorized by the JV Partners (as Lin contends).

7.2Many of the forensic points, forcefully made by Mr Yeung, are directed at the wisdom or efficacy of engaging Ying Fu:

(1) There is admittedly no documentary evidence to support Ying Fu’s purported credentials;

(2) There is no direct evidence that the other JV Partners had authorized LHGL to engage Ying Fu;

(3) There is no direct evidence that the Sum represented the fees payable to Ying Fu – the 29/5/10 Document does not so provide;

(4) There is no reliable evidence that the Application Reports were prepared by Ying Fu, and in any event, even on the basis that the Second to Sixth Reports were prepared by Ying Fu, on the evidence given by Chan on the resources that went into their preparation, it is difficult to justify a level of fees which was commensurate with the Sum.

7.3Whilst the above forensic criticisms are valid, I accept Mr Chen’s submission that HCA 500 is ultimately not about the wisdom or efficacy of engaging Ying Fu. The seminal question is whether the Alleged Oral Agreement existed. I am persuaded by Mr Chen that, on the balance of probabilities, I should make the following factual findings, and consequently, a finding that the Alleged Oral Loan Agreement did not exist. In my view, there is much force in Mr Chen’s submission that the Alleged Oral Loan Agreement is an ex post facto reconstruction of a claim by SIHL premised on the 29/5/10 Document and the Cheque:

(1) As noted above, the Relevant Project was different in nature from the projects previous undertaken by the Sunsco Group and LHGL. There is no evidence to suggest that Sunsco Group, LHGL or SZCCGL at the material time had any prior experience in lobbying the relevant Mainland authorities to “open” an infrastructure project to private enterprises. I find as a fact that it was not unreasonable for the JV Partners to find it necessary or desirable to engage an outside consultant for that purpose;

(2) I do not accept Mr Yeung’s submission that the terms of the 29/5/10 Document did not cover such services. In my view, the terms “項目策劃” and “招商” are wide enough to cover the service of lobbying the relevant Mainland Government authorities. There is no dispute that the 29/5/10 Document was contemporaneously provided to Lai Sr and there is no suggestion that the document was a forged document. As such, it is a plain fact that Grand Dragon did engage Ying Fu to provide the stated service;

(3) Whilst there is no direct documentary evidence to support Lin’s assertion that the JV Partners had decided to engage Ying Fu, the undeniable fact is that LHGL and SZCCGL made their respective contributions by remitting payments, respectively in the sums of RMB 4 million and RMB 8 million, to SZ Pik Kwai;

(4) In 2010, the average RMB/HKD exchange rate was around 1.1468. Therefore, the Sum was equivalent to around RMB 20 million;

(5) Whilst there was evidence that by July and August 2010, SZ Pik Kwai was no longer associated with the Sunsco Group, the fact remains that SZ Pik Kwai was previously related to Sunsco Group. On SIHL’s own pleaded case, SZ Pik Kwai was suing the Sunsco Group for repayment of various loans and it is entirely believable, and I so find, that LHGL and SZCCGL were directed by the Sunsco Group to make their respective contributions for the Sum (respectively 20% and 40%) to SZ Pik Kwai. There is simply no evidence before me to suggest that either or both LHGL and SZCCGL had any other reason to make substantial payments to SZ Pik Kwai shortly after the Sum was paid by way of the Cheque. This is a matter which I attach significant weight in my deliberation;

(6) Mr Yeung submits that the equity split was SZCCGL (30%) and LHGL (30%) and therefore the RMB 8 million and RMB 4 million paid by SZCCGL (40% of the Sum) and LHGL (20% of the Sum) could not be their respective contributions. The difficulty with Mr Yeung’s submission is that there is no documentary evidence to support either side’s version of the equity split, and for the reasons stated above, I am not impressed with Lai Sr as a witness. On the balance of probabilities, I find that the payments made LHGL and SZCCGL were their respective contributions to the Sum;

(7) It is true that the 29/5/10 Document does not expressly provide that the Sum represented the fees payable to Ying Fu. However, as expressly stated in the 29/5/10 Document, Ying Fu’s fees were to be deducted from the Sum. On the evidence, the JV Partners may well have a claim for amounts not “earned” by Ying Fu and Grand Dragon may even be obliged to pursue Ying Fu for the residual sum, but that is wholly different from the proposition that Alleged Oral Loan Agreement existed;

(8) Whilst the expenses incurred for “cultivating business” may involve grey areas or practices, as a matter of commercial sense, it is illogical for Lin to bear both the risk of legal consequences and personal financial liability for the benefit or the other JV Partners. In any event, as noted above, Lai Sr’s evidence on whether such expenses could be recouped was not consistent and it is indisputable from the terms of the Sichuan Agreement and the Guangzhou Agreement that the previous practice or agreement was that preliminary expenses would be treated as expenses for the project;

(9) Conversely, there is not an iota of documentary evidence to support the existence of the Alleged Oral Loan Agreement. For example (a) as pointed out by Mr Chen, SIHL has not disclosed any audited reports of SIHL to show that the Sum was recorded as a receivable and (b) where the 29/5/10 Document was provided to Lai Sr, there is no satisfactory explanation as to why Lin did not even require a simple IOU from Lin given the substantial amount involved;

(10) As set out above, Lai Sr’s evidence on the Alleged Oral Loan Agreement was plagued with inconsistencies. SIHL’s original case was that one of the express terms of the Alleged Oral Loan Agreement was the Sum was provided to Grand Dragon for onward lending purposes. As submitted by Mr Chen, that original case has the hallmark of constructing the Alleged Oral Loan Agreement based on the terms of the 29/5/10 Document. However, as noted above, it was accepted by Lai Sr that the onward-lending term was never discussed at the time of the formation of the Alleged Oral Loan Agreement.

8.HCA 500: Conclusion

8.1For the above reasons, I find that the Alleged Oral Loan Agreement did not exist. SIHL’s claim is accordingly dismissed.

9.HCA 2104: The disputed issue

9.1As stated above, the Enforcement Issue, namely, whether the Mainland Judgments are final and conclusive for the purpose of common law enforcement, is the only live issue between the parties. There is no dispute between counsel that the other requirements for common law enforcement (set out at, for example, Jiang Xi An Fa Da Wine Co Ltd v Zhan King [2019] HKCFI 2411 §52) are satisfied.

9.2As I understand Mr Yeung, he contends that the Mainland Judgments are not final and conclusive for the following reasons:

(1) He raises a systematic challenge, in that he contends that no Mainland judgment can ever been deemed final and conclusive by reason of the Retrial Procedure;

(2) Alternatively, on the facts, the Mainland Judgments are not final and conclusive because they are potentially subject to retrial under the Retrial Procedure due to the Service Issue.

9.3The Service Issue is this. As pleaded at Defence §§9(2) and (3), at the time when proceedings were commenced in the IPC on 29 March 2016, Lai Sr was residing in Hong Kong. Under the Provisions on the Service of Judicial Documents of Hong Kong and Macao-related Civil and Commercial Cases《最高人民法院關於涉港澳民商事案件司法文書送達問題若干規定》(“Service Provisions”), Article 9 thereof provides:

“人民法院不能依照本规定上述方式送达的，可以公告送达。公告内容应当在内地和受送达人住所地公开发行的报刊上刊登，自公告之日起满三个月即视为送达。” (emphasis added)

9.4Essentially, Article 9 of the Service Provisions provides that if service could not be effected by the methods provided in previous articles, service may be effected by a public notice (公告) published in a newspaper circulated in the Mainland and in the place of residence of the person to whom service is to the effected.

9.5In his application made to the court for retrial, Lai Sr pointed out the IPC only published a public notice in a newspaper circulated in the Mainland. The Lai Camp has adduced Mainland law evidence from Mr Wu Yingpeng (“WYP”), a lawyer qualified to practise in the Mainland. According to WYP, the Service Issue had deprived Lai Sr of his right to argue the case in the IPC proceedings.

9.6Lin has adduced Mainland law evidence from Mr Chen Keyu (“CKY”), also a practising lawyer in the Mainland. In the joint report of CKY and WYP (“Joint Report”), whilst the experts agree that the Service Issue may lead to a retrial, they disagree on the probability. CKY’s view is that although a retrial is possible, the likelihood is very low. Conversely, WYP takes the view that a retrial is possible.

9.7The issues for determination, mirroring the arguments advanced by the Lai Camp, were identified by the Court of Appeal in 2007. In 李佑榮 v 李瑞群 [2007] 2 HKLRD 749 (“Lee Yau Wing case”), the Court of Appeal observed as follows:

“[24] 本席認為本案最具爭議性的議題是內地的判決是否純是因為審判監督制度的存在而令判決不能成為最終及不可推翻的判決，抑或是需要視乎實際情況才可以決定有關的裁決是不是屬於這類的裁決。如果法庭要視乎實際的情況來作出判決，它應如何規範或界定這個情況？

[37] 無論如何，本席認為，香港法院是否應該 (1)由於該審判監督制度存在，絕對地否定內地法院的判決是”最終及不可推翻的判決”，或是 (2) 在什麼情況下有關判決可被當作為 “最終及不可推翻的判決”，這重要及影響深遠的決定，應由法院詳細考慮過雙方的法律專家意見(包括他們經受盤問過的證供後)才作出決定，法庭並不能在一簡易程序的申請中立下判斷。 ” (emphasis added)

9.8Subsequent to the Lee Yau Wing case, the Enforcement Issue has been the subject matter of a number of decisions in the context of interlocutory applications. HCA 2104 is the first occasion that the Enforcement Issue has reached the trial stage.

10.HCA 2104: The expert evidence

10.1As set out in the Joint Report, there is a large measure of agreement between the experts. I shall first set out the matters agreed between the experts.

(i) The matters agreed between the experts

10.2The principal Mainland statutory provisions which are relevant are those contained in《民事诉讼法》(“Civil Procedure Law”). In their initial reports, CKL made reference to the 2021 versions whilst WYP the 2017 version. In the Joint Report, the experts agreed that whilst the 2 versions have numbered the articles differently, the contents of the (corresponding) provisions are identical. In closing submissions, counsel have referred to the 2017 version.

10.3The experts agree that the Mainland Judgments are “final judgments that have entered into force” (己生效的终审的判决), for the following reasons:

(1) According to Civil Procedure Law Article 10[10], the Mainland adopts a two-tier adjudication system (兩审终审制度);

(2) According to Civil Procedure Law Article 155[11], a judgment by the Supreme Court or a judgment which cannot be appealed or has not been appealed during the prescribed time limit becomes legally effective;

(3) According to Civil Procedure Law Article 175[12], judgments and rulings of a people's court of second instance shall be final.

10.4In the present case, Lai Jr already appealed against the IPC Judgment and his appeal was dismissed. The HPC Judgment is therefore a final judgment against him. On the other hand, Lai Sr did not appeal against the IPC Judgment during the prescribed time limit and the IPC Judgment has therefore become a final judgment against him.

10.5The experts further agree that a Mainland judgment that has entered into force may be overturned by the Retrial Procedure (在内地可以推翻生效民事判决的程序是审判监督程序). There are the following avenues for the Retrial Procedure to be engaged: (1) an application by a party to the appropriate people’s court for a retrial (“Avenue 1”), (2) a retrial triggered by the trial supervision of the procuratorate (including supervision triggered by an application by a party or supervision on the procuratorate’s own initiative) (“Avenue 2”) and (3) the court initiating a retrial of its own motion (“Avenue 3”).

10.6In terms of Avenue 1, it is provided for by Civil Procedure Article 199, which is in the following terms:

“Any party that considers a legally effective judgment or ruling to be wrong may apply to the immediate superior people's court for retrial; as for the case where one party comprises of a large number of individuals or both parties thereto are citizens, the parties may apply for retrial of the case to the original people's court. Nevertheless, the application for retrial does not mean that the enforcement of the judgment or ruling is suspended.”[13] (Emphasis added)

10.7An application by a party for retrial made under Article 199 does not operate as a stay of execution (当事人申请再审的，不停止判决、裁定的执行).

10.8A party’s application for a retrial must meet one of the 13 conditions set out at Civil Procedure Law Article 200. Under Article 200, the people’s court shall conduct a retrial if one of the 13 stated conditions is met[14]. The 13 conditions have been described in a number of decided cases and they are essentially concerned with insufficiency of evidence, error in law, violation of statutory procedure which has the affected the correctness of the judgment or ruling and misconduct of judicial members in trying the case. In so far as relevant to these proceedings, it is WYP’s evidence that Conditions 9 and 10 are relevant to the Service Issue. Condition 9 refers to a case “where the party was deprived of his or her right to argue the case in breach of the law”[15] and Condition 10 refers to a case “where a judgment in default of a party appearing was entered without serving a summons”[16].

10.9In terms of Avenue 2, it is provided for by Civil Procedure Law Article 208. It states:

“Where the Supreme People's Procuratorate finds that a legally effective judgment or ruling made by a people's court at any level falls under any of the circumstances described in Article 200 of the Law or where a superior people's procuratorate finds that a legally effective judgment or ruling made by a subordinate people's court falls under any of the circumstances described in Article 200 of the Law; or the Supreme People's Procuratorate or a superior people's procuratorate finds that a mediation statement is against the interests of the State or the public, the Supreme People's Procuratorate or the superior people's procuratorate shall lodge an objection thereto.

Where a local people's procuratorate at any level finds that a legally effective judgment or ruling made by the people's court at the same level falls under any of the circumstances described in Article 200 of the Law, or finds that a mediation statement is against the interests of the State or the public, it shall lodge a procuratorial proposal to the people's court at the same level and file the proposal to its immediate superior people's procuratorate for record, or refer the case to its immediate superior people's procuratorate to lodge an objection with the people's court at the same level.

Where a people's procuratorate at any level discovers that a member of the judicial officers commits any violation during the trial procedure that is beyond the scope of the trial supervision procedure, it could submit a procuratorial proposal to the people's court at the same level.”[17]

10.10A party may apply to a competent people’s procuratorate under Article 209, which provides:

“Under any one of the following circumstances, a party may apply to the competent people's procuratorate for a procuratorial proposal or objection:

1. where the people's court rejects the retrial application;

2. where the people's court does not issue a ruling over the retrial application within the specified time limit; or

3. where the judgment or ruling of the retrial is obviously erroneous.

The people's procuratorate shall examine the retrial application within three months after the receipt thereof and decide whether to make a procuratorial proposal or objection, after which the parties are not allowed to apply to the people's procuratorate for a procuratorial proposal or objection again.”[18]

10.11Avenue 3 is provided for by Article 198, which states:

“If the presidents of people's courts at any level finds any verified error in a legally effective judgment, ruling or mediation statement and deems it necessary to have the case retried, they shall refer the case to the judicial committee for discussion and decision.

If the Supreme People's Court discovers any verified error in a legally effective judgment, ruling or mediation statement issued by a local people's court at any level, or if a people's court at a higher level finds any verified error in a legally effective judgment, ruling or mediation statement issued by a subordinate people's court, it shall have the right to bring up the case for trial or instruct a subordinate people's court to conduct a retrial of the case.”[19]

10.12In the present case:

(1) Lai Sr can no longer rely on Avenue 1 since his application for retrial had already been dismissed by the 2021 Judgment;

(2) Neither can Lai Sr rely on Avenue 2 in so far as Avenue 2 is sought to be invoked by an application by a party by reason of Article 209. This is because, following the 2021 Judgment, Lai Sr had already made an application to the Guangzhou procuratorate (广东省人民检察院), which application was rejected on 15 October 2021 on the basis that it was made out of time. Under Arctile 209, a party is limited to one application to the people’s procuratorate.

(ii) The disputed matters

10.13The first area of disagreement between the experts is whether the Retrial Procedure affects the enforceability of a mainland judgment. In this regard, I agree generally with WYP. Article 206 provides:

“When an order is made to retry a case in accordance with the procedure for trial supervision, a ruling shall be made to suspend the enforcement of the original judgment, ruling or mediation statement, with the exception of cases of claims of alimony, maintenance fee, child support, pension, medical expenses, and labor remuneration.”[20] (emphasis added)

10.14The effect of Article 206 is that where a retrial has been ordered, subject to the exceptions which do not apply in the present case (eg alimony etc), it has the effect of suspending the enforcement of the original judgment. However, it bears emphasis that the suspension of the enforcement takes place only after a retrial has been ordered. This is consonant with Article 199 (set out above) which provides that an application for a retrial by a party does not have the effect of suspending enforcement of the original judgment.

10.15The second area of disagreement between the expert is on the likelihood for a retrial of the Mainland Judgments under Avenue 2 (but only by the procuratorate’s own initiative since Lai Sr can no longer avail himself of the procedure) or Avenue 3. The experts agree that it is possible, but CKY opines that the probability is very low (可能性非常低) whilst WYP is of the view that it is possible (有可能).

10.16In this regard, there are two relevant factors.

10.17First, in terms of Avenue 2, the experts agree that, due to the limitation of the procuratorates’ resources (at all levels), they cannot possibly monitor all the judgments delivered by the Mainland courts. A judgment must therefore be brought to the procuratorate’s attention before it could consider invoking the Retrial Procedure. The experts gave examples on how a case can come to the procuratorate’s attention. According to WYP, a case may come onto the procuratorate’s “radar” where the litigant has submitted the relevant information or where the original judgment has generated significant media coverage.

10.18Secondly, the experts agree that the underlying merits play a role. In terms of Avenue 3, on the issue of a “verified error” under Article 198, the experts agree that the Mainland court would not initiate a retrial on “any” error. Whilst WYP opines that the error must be “serious”, CKY is of the view that the effort must be extreme and serious (極端嚴重錯誤).

10.19CKY’s view that the Retrial Procedure is improbable in the present case is premised on 2 reasons. First, as a matter of statistics, the Retrial Procedure has only been engaged in very limited number of cases. Secondly, the present case does not meet the conditions for the Retrial Procedure to be initiated by the procuratorate or the court since it does not involve an extremely serious error nor does it involve a matter of public interest.

10.20WYP’s opinion that the Retrial Procedure is still possible in the present case is premised on the observation that the Service Issue falls squarely under the rubric of Conditions 9 and 10 of Article 200. He therefore reasons that, once those conditions are satisfied, it is open to the procuratorate to initiate the Retrial Procedure under Avenue 2. In terms of Avenue 3, Article 198 does not restrict the court’s discretion to order a retrial only for cases involving extremely serious error or public interest. In any event, the Service Issue may involve matters of public interest since it concerns a decision where due process was denied.

10.21Although I prefer the evidence of WYP, I have nevertheless come to the conclusion that, on the facts of the present case, it is unlikely that the Retrial Procedure would be ordered by either Avenue 2 or Avenue 3 for the following reasons:

(1) In the present case, Lai Sr has already exhausted those avenues which could be initiated by a party. The HPC has rejected his application for retrial by way of the 2011 Judgment and the Guangzhou procuratorate has also rejected his application on 15 October 2021;

(2) In other words, in terms of Avenue 2, even according to WYP’s evidence, the issue has already come to the attention to the procuratorate. Whilst the Guangzhou procuratorate rejected Lai Sr’s application as it was made out of time, but at the same time, it did not decide to initiate the Retrial Procedure on the merits on its own initiative (which it was entitled to do). Whilst simply raising the possibility, it has not been suggested by WYP that the procuratorate (at the same or higher level) is likely to adopt that course;

(3) The same may be said about Avenue 3, the HPC has already rejected Lai’s application for retrial on merits by way of the 2021 Judgment. Although WYP has raised the possibility of the Supreme People’s Court intervening, he has offered no cogent analysis to support the contention that the Supreme People’s Court is likely to do so;

(4) Significantly, whilst the experts agree that there is no time limit imposed for Avenue 2 or Avenue 3, as pointed out by Mr Chen, substantial time has elapsed since the Mainland Judgments and the 2021 Judgment. Indeed, it is Lai Sr’s evidence that he made a further application on 16 August 2022 to the HPC again for retrial. It is common ground between the experts that such further application is impermissible under the Mainland law and it is unsurprising that this further application has not been entertained by the HPC.

10.22For the above reasons, I find that (1) Lai Sr has already exhausted the avenues to apply for a retrial available to a party and (2) it is unlikely that the court or the procuratorate would initiate a retrial on their own initiative.

11.HCA 2104: The relevant applicable principles

11.1In closing, counsel have provided very detailed submissions on the relevant case law and discussions on the statutory regime on enforcement of Mainland judgments, namely the Mainland Judgments (Reciprocal Enforcement) Ordinance Cap 597 (“MJREO”) which came into force on 1 August 2008 and the Mainland Judgments in Civil and Commercial Matters (Reciprocal Enforcement) Ordinance Cap 645 (“MJCCREO”) which came into force on 29 January 2024.

(i) The relevant case law

11.2I deal with what I consider to be the principal case law referred to by counsel below, largely chronologically.

11.3The starting point is Nouvion v Freeman (1889) 15 App Cas. 1. In that case, the nature of a “final and conclusive” judgment was discussed. Lord Hershell said at page 9:

“My Lords, I think that in order to establish that such a judgment has been pronounced it must be shewn that in the Court by which it was pronounced it conclusively, finally, and for ever established the existence of the debt of which it is sought to be made conclusive evidence in this country, so as to make it res judicata between the parties. If it is not conclusive in the same Court which pronounced it, so that notwithstanding such a judgment the existence of the debt may between the same parties be afterwards contested in that Court, and upon proper proceedings being taken and such contest being adjudicated upon, it may be declared that there existed no obligation to pay the debt at all, then I do not think that a judgment which is of that character can be regarded as finally and conclusively evidencing the debt, and so entitling the person who has obtained the judgment to claim a decree from our Courts for the payment of that debt” (emphasis added)

11.4Lord Watson said at page 13:

“The English cases to which I have already referred establish a more liberal rule in regard to the enforcement of foreign judgments than is to be found in the older authorities; but no decision has been cited to the effect that an English Court is bound to give effect to a foreign decree which is liable to be abrogated or varied by the same Court which issued it. All the authorities cited appear to me, when fairly read, to assume that the decree which was given effect to had been pronounced causa cognita, and that it was unnecessary to inquire into the merits of the controversy between the litigants, either because these had already been investigated and decided by the foreign tribunal, or because the defendant had due opportunity of submitting for decision all the pleas which he desired to state in defence. In order to its receiving effect here, a foreign decree need not be final in the sense that it cannot be made the subject of appeal to a higher Court; but it must be final and unalterable in the Court which pronounced it; and if appealable the English Court will only enforce it, subject to conditions which will save the interests of those who have the right of appeal…” (emphasis added)

11.5It is pertinent to note that Nouvion was concerned with a “ramate” judgment granted by the Spanish court. As set out in the headnote, in proceedings leading to a “ramate” judgment, the defendant can plead certain limited defences but cannot set up any defence affecting the validity of the contract. Either the plaintiff or the defendant, if unsuccessful in the such proceedings, may in the same Court and in respect of the same subject matter take ordinary or "plenary" proceedings, in which all defences and the whole merits of the matter may be gone into. In the "plenary" proceedings, the "remate" judgment cannot be set up as res judicata or otherwise. A “remate" judgment can be enforced by the plaintiff on giving security although either an appeal or "plenary" proceedings may be pending. A “plenary" judgment renders the “remate" judgment inoperative and requires restoration of any moneys paid under it.

11.6The above feature was dealt with by Lord Bramwell at page 15:

“There are however, my Lords, one or two other observations I should like to make. It was said that the argument I am now using would equally apply to all cases where there was a possibility of error being brought. Not so. There is no presumption that error may exist in the proceedings; the presumption is the other way : the presumption is that a Court of competent jurisdiction has given a right judgment. But there is no such presumption here; on the contrary, we learn that it is possible, not merely that what was decided in the Court may be nullified, but that there may be questions raised between the parties which could not be decided in the former proceeding. There is an essential difference, therefore, between the case where a Court of competent jurisdiction has entertained all the controversies between the parties which they could and chose to raise, and come to a conclusion, which is to be presumed to be accurate, and this case where there is no ground for saying that all possible controversies between the parties have been decided.” (emphasis added)

11.7Nouvion was considered in Chiyu Banking Corporation Limited v Chan Tin Kwun, HCA 11186/1995, 12 July 1996. Although Chiyu was decided in 1996, it appears that an avenue not dissimilar to Avenue 2 set out above was in place (Judgment pages 2 and 3). It is relevant to note that, in Chiyu, upon the defendant’s application for a retrial, the Fujian People’s procuratorate had presented a report to the Supreme People’s procuratorate requesting it to lodge a protest. The key takeaway is that, in that case, the procuratorate, at least at the local level, apparently considered that there were grounds for a retrial such that a report was presented to the Supreme People’s procuratorate.

11.8Cheung J (as he then was) said as follows (at pages 7 and 8):

“Based on the material before me, the supervisory function of the Supreme People’s Procuratorate and the protest system are not simply an appeal process. The Intermediate Court judgment is final in the sense that it is not appealable and it is enforceable in China, but it is not final and conclusive for the purpose of recognition and enforcement by the Hong Kong Courts because in the words of Lord Watson, it “is not final and unalterable in the court which pronounced it”. It is liable to be altered by the Intermediate Court on a retrial if the Supreme People’s Procuratorate lodge a protest in accordance with the Civil Procedure Law. If upon protest being made, rare the circumstances may be, a Chinese Court has to retry the case, then, clearly it retains the power to alter its own decision…

Although no protest has been lodged yet, the procedure had actually been invoked. This demonstrated that the judgment is not final and conclusive. To allow the present action to continue would not be satisfactory because the Plaintiff is not suing on the guarantee but on the judgment itself which is not final and conclusive. There is a possibility that the judgment may be varied if the application to the Supreme People’s Procuratorate is successful, and the debt for which the present judgment is sought to be used as conclusive evidence may have no existence at all”

11.9In Chiyu, the learned Judge acceded to the defendant’s application to stay the proceedings in Hong Kong pending the outcome of the decision of the Supreme Court’s procuratorate.

11.10The Lee Yau Wing case was concerned with an appeal against a decision by which summary judgment was granted. In that case, the plaintiff obtained a judgement in the Mainland against the defendant. The defendant’s appeal in the Mainland and the subsequent application for a retrial to the Mainland court were both unsuccessful. Following the dismissal of the retrial application, the plaintiff applied for and was granted summary judgment based on the Mainland judgment.

11.11The Court of Appeal, by a majority, allowed the appeal. I have already set out those issues which were identified by the Court of Appeal to be triable at §9.7 above. It is pertinent to note the following evidence which was before the Court of Appeal:

(1) Factually, the defendant did not apply to the procuratorate for a retrial (Judgment §21);

(2) The expert evidence was of the effect that the (a) the procuratorate was unlikely to initiate a retrial (Judgment §17(2)) and (b) the probability of the court initiating a retrial was remote (Judgment §17(3)).

11.12Cheung JA (with whom Yuen JA agreed) observed that the following issues could only be decided after trial:

(1) Whether the Hong Kong court should make an evaluative judgment on whether there was “proper reason” to initiate the Retrial Procedure (Judgment §26);

(2) Whether an analogy could appropriately be drawn with default judgment cases (Judgment §29).

11.13Chung J gave the dissenting judgment and Mr Chen relies heavily on the learned Judge’s reasoning. In essence, in his dissenting judgment, the learned Judge observed:

(1) The then criteria[21] permitting a procuratorate’s initiation of a retrial were (a) the main evidence to substantiate the original judgment or ruling was insufficient, (b) the law which was applied in the original judgment or ruling was incorrect, (c) the People’s Court was in violation of the statutory procedure which had affected the correctness of the judgment or ruling, and (d) the judicial members in trying the case committed embezzlement, accepted bribes, practised favouritism or made a judgment that perverted the law (Judgment §51 and 54);

(2) The above grounds were in substance ones which could have grounded an appeal in Hong Kong (Judgment §55);

(3) An appeal court in Hong Kong could also order a retrial (Judgment §56);

(4) As such, the 4 criteria which might lead the procuratorate to order a retrial would not render a Mainland Judgment not final and conclusive (Judgment §59);

(5) The fact that the retrial procedure could be initiated by third-party organ (the court or the procuratorate) in addition to the parties did not alter his conclusion as the case under consideration still had to meet the 4 criteria before the third-party organ would take any action (Judgment §64);

(6) Although there was no time limit imposed for the retrial procedure, the Hong Kong court also had the power to extend time (Judgment §65);

(7) It was established that a foreign judgment obtained in default of appearance and therefore liable to be set aside by the same court was capable to be enforced as a final and conclusive judgment in Hong Kong, referring to Nintendo of America Inc v Bung Enterprise Ltd [2000] 2 HKC 629 (Judgment §§71-72);

(8) A Mainland judgment which was subject to the retrial procedure was in substance different in nature from a “ramate judgment” considered in Nouvion (Judgment §§73-74);

(9) For the above reasons, the retrial procedure, on its own, did not have the effect of rendering a Mainland judgment not final and conclusive (基於以上各點，本席認定，內地判決不應純因有可能被頒令重審而被視為不屬“最終及不可推翻”的判決) (Judgment §75).

11.14The next case is Bank of China Ltd v Yang Fan [2016] 3 HKLRD 7 which was a decision on an application for a Mareva injunction in which the Enforcement Issue was discussed in detail by To J at §§36-54, in the context of whether the plaintiff was able to establish a good arguable case on the merits. The learned Judge conducted an extensive review on the case law. It is notable that the provisions of the Civil Procedure Code (Decision §45) are in materially similar terms to those considered in the present case.

11.15It is worthwhile to cite in fuller terms some of the more relevant passages:

“[36] Whether a foreign judgment is final and conclusive has to be determined in accordance with the law of the jurisdiction in which the judgment is sought to be enforced: Nouvion v Freeman. Under Hong Kong law, to be final and conclusive a judgment must, in the words of Lord Watson in Nouvion v Freeman, be final and unalterable in the court which pronounced it. The test is not whether the judgment is subject to appeal…

[48] [After referring to Chiyu] This is a clear ruling by the High Court that although the PRC judgment was not appealable, it nevertheless was not final and conclusive because the protest procedure had been invoked and there was a possibility that the judgment may be altered by the court pronouncing it upon re-trial. However, Cheung J is far from saying that the protest procedure by itself renders any PRC judgment not final and conclusive.

[49] Indeed, in his later decision in [the Lee Yau Wing case] in which the plaintiff also sued on a PRC judgment, Cheung JA sitting in the Court of Appeal expressly acknowledged that this issue has not been authoritatively determined by the Court of Appeal, and he cited five Court of Appeal decisions to that effect. He concluded in [23]–[27] by saying that whether a PRC judgment may be rendered not final and conclusive solely by reason of the protest regime or by the regime and some factual circumstances has not been authoritatively decided and is an important issue involving important public interest which could not be determined by interlocutory proceedings on paper without hearing oral evidence from PRC law experts…

[50] In Wu Wei (伍威) v Liu Yi Ping (劉一萍), the defendant sought to rely on a PRC judgment to support her application to stay the execution of a Hong Kong judgment against her. Tang V-P affirmed the Court of Appeal’ s decision in [the Lee Yau Wing case] that whether a foreign judgment is final and conclusive is an issue of important public interest involving complicated legal questions which could not be decided in interlocutory proceedings without hearing evidence from experts on PRC law.

[52] Despite the conclusions reached in Chiyu Banking Corp Ltd v Chan Tin Kwun, Lee Y au Wing v Lee Shui Kwan and Wu Wei (伍威) v Liu Yi Ping (劉一萍), the question whether a PRC judgment is final and conclusive, or more precisely whether a PRC judgment is rendered not final and conclusive by reason of the regime of protest by the procuratorate remains open.

[53] Though not so argued by the two experts, it is apparent that the protest regime and the adjudication supervision regime have undergone substantive changes since 1 January 2013... First, the people’s court which accepts the protest is usually one level higher than the court the decision of which is protested against. It has 30 days to decide whether to entertain the protest by ordering a re-trial or to dismiss the protest. It may or may not order a re-trial. If it dismisses the protest, that is the end of the protest. Second, if it orders a re-trial, it may conduct the re-trial itself or order it to be tried by a lower level court or the court protested... In that light, the protest regime is more like an appellate regime. The protest by the procuratorate is just another avenue of appeal, except that it is initiated by a non-party. But the result is no different from an appeal by a party. The protest is to be adjudicated by the higher level people’s court. The remedies, if successful, are no different from those available under the appellate system in the PRC. Those remedies are also similar to the remedies under our system. The appellate court may set aside the judgment of the original court, re-hear the case itself and reach its own decision or remit it to the court appealed or protested against to continue hearing with further directions or for re-trial de novo. There is no doubt that judgments of our courts under our system are final and conclusive. Thus, equally, it can be argued that PRC judgments under a system containing a protest regime as set out in art.211 is final and conclusive. My understanding of Lord Watson’s dictum in Nouvion v Freeman is that a judgment is final and conclusive if it is unalterable voluntarily (my emphasis) by the court pronouncing it. The court becomes functus officio and has no jurisdiction to reopen or amend its decision on its own volition. Hence, it is final and conclusive as far as the court pronouncing it is concerned. Under our law, the fact that the pronouncing court’ s jurisdiction is revived by an appellate court does not render its original decision not final and conclusive. Applying the same rationale, there is no reason why, if jurisdiction is revived by a protest by the procuratorate resulting in the same remedies available under the appellate system in that foreign jurisdiction, the original decision should be treated as not final and conclusive.

[54] … I am well satisfied for the purpose of the present interlocutory application that the plaintiff has discharged its burden of showing an arguable case that such judgment, if obtained, is final and conclusive for the purpose of the Ordinance.” (emphasis added)

11.16It may be immediately pointed out that there is a degree of consonance between the views expressed by To J in Yang Fan and Chung J’s dissenting judgment in the Lee Yau Wing case. The learned Judges are both of the view that the Retrial Procedure does not, on its own, render a Mainland judgment not final and conclusive, on the bases that the Retrial Procedure is in substance not dissimilar to an appeal albeit it may be initiated by a third-party organ such as the court or the procuratorate.

11.17The subsequent cases referred to by the parties do not materially add to the discussion summarized above.

(ii) The statutory regime in Hong Kong

11.18Counsel have made very detailed submissions on the discussions on the Legislative Council (“LegCo”) leading to the enactment of the MJREO and the MJCCREO. I hope I will be forgiven for not setting out those submissions in detail. The short point is that Mr Yeung relies on those materials in support of his proposition that MJREO and MJCCREO were enacted in recognition that Mainland judgments were not considered to be final and conclusive.

11.19I am unable to accept Mr Yeung’s submission. Indeed, he fairly accepted in his oral closing address that the discussions in LegCo, at their highest, only reflect the state of the law at the material time. As pointed out by G Lam JA in Huzhou Shenghua Financial Services Company Limited v Hang Pin Living Technology Company Limited [2025] 3 HKLRD 447, in the context of the MJREO, the state of the law is that it is uncertain whether a Mainland judgment is or is not final and conclusive given the Retrial Procedure:

“[63] Prior to the 2006 Arrangement, it had already been noted that there could potentially be disputes as to whether certain Mainland judgments were final and conclusive having regard to the trial supervision system in Mainland law which could lead to an order for retrial, as had arisen in the Hong Kong courts: see e.g. Chiyu Banking Corp Ltd v Chan Tin Kwan [1996] 2 HKLR 395, Lam Chit Man (trading as Yat Cheong Electric Co) v Lam Chi To (CACV 354/2001, 18 December 2001), Lee Yau Wing v Lee Shui Kwan (李祐榮訴李瑞群) [2007] 2 HKLRD 749 (decided in December 2005). Accordingly, by February 2006, draft provisions had been designed to address the common law requirements of finality, which eventually found their way, with modifications, into the 2006 Arrangement.

[66] Section 6(1) was specifically therefore enacted to address the common law requirement that the judgment is final and conclusive, and to avoid the disputes that might arise in that context given the special trial supervision system in Mainland law…” (emphasis added)

11.20On the other hand, I also do not accept Mr Chen’s argument premised on his reliance on McLoughlin v O’Brian [1983] 1 AC 410 at pages 429-430. His argument ran as follows.

11.21According to Mr Chen, the main takeaways from MJREO and MJCCREO are that:

(1) The Hong Kong legislature never considered the Retrial Procedure per se to preclude a Mainland judgment from being “final and conclusive” under common law;

(2) The Supreme People’s Court and the Hong Kong legislature decided that a Mainland judgment should be enforceable in Hong Kong under the statutory regimes despite the possibility of a retrial in the Mainland;

(3) If an order for retrial has been made, the Hong Kong court has a discretion, but is not obliged, to adjourn the application for registration of the Mainland judgment.

11.22Relying on McLoughlin, Mr Chen says that a conclusion that the Retrial Procedure per se does not undermine the final and conclusive nature of a Mainland judgment is consistent with, and supported by, Hong Kong’s statutory regime.

11.23I disagree with Mr Chen for 2 reasons.

11.24First, I do not read the passages relied on by Mr Chen as supporting the proposition that one of the aims in the development of the common law is to achieve consistency with the statutory regime. Indeed, Lord Scarman’s dicta at 429H-430D suggests the contrary:

“The appeal raises directly a question as to the balance in our law between the functions of judge and legislature. The common law, which in a constitutional context includes judicially developed equity, covers everything which is not covered by statute. It knows no gaps: there can be no "casus omissus." The function of the court is to decide the case before it, even though the decision may require the extension or adaptation of a principle or in some cases the creation of new law to meet the justice of the case. But, whatever the court decides to do, it starts from a base line of existing principle and seeks a solution consistent with or analogous to a principle or principles already recognised.

The distinguishing feature of the common law is this judicial development and formation of principle. Policy considerations will have to be weighed: but the objective of the judges is the formulation of principle. And, if principle inexorably requires a decision which entails a degree of policy risk, the court's function is to adjudicate according to principle, leaving policy curtailment to the judgment of Parliament. Here lies the true role of the two law-making institutions in our constitution. By concentrating on principle the judges can keep the common law alive, flexible and consistent, and can keep the legal system clear of policy problem which neither they, nor the forensic process which it is their duty to operate, are equipped to resolve. If principle leads to results which are thought to be socially unacceptable, Parliament can legislate to draw a line or map out a new path.” (emphasis added)

11.25Secondly, and in any event, it is clear from Huzhou Shenghua above that the MJREO (and by extension the MJCCREO) was specifically enacted to address the Enforcement Issue and potential disputes arising therefrom. I cannot see how it may be logically suggested that because the statutory regime has been put in place to address the Enforcement Issue under common law, the court should conclude, as a matter of principle, that the Enforcement Issue did not present any difficulties in the first place.

12.HCA 2104: The effect of the Retrial Procedure

12.1The first issue identified in the Lee Yau Wing case is whether the Retrial Procedure per se renders a Mainland judgment not final and conclusive. In my view, the Retrial Procedure does not have that effect.

12.2First, Mr Yeung relies heavily on Chiyu, in particular the Cheung J’s observation set out at §11.8 above. Insofar as Mr Yeung suggests that Chiyu should be read as an authority for the proposition that the Retrial Procedure per se renders a Mainland judgment not final and conclusive, I respectfully disagree. As has been observed in Yang Fan (cited at §11.15 above), Cheung JA himself expressly acknowledged that this issue has not been authoritatively determined. I further note that the order made in Chiyu was that the enforcement proceedings in Hong Kong should only be stayed pending the Supreme Court’s procuratorate’s decision whether to lodge a protest. Had the Enforcement Issue been decided in the manner suggested by Mr Yeung, one would have that the court would have dismissed the enforcement proceedings in Hong Kong in Chiyu.

12.3Secondly, Mr Yeung relies on Bobolas & Anor v Economist Newspaper Ltd [1987] 1 WLR 1101 for the proposition that if a case is subject to retrial, any rulings made or issues decided in the course of the original trial are not res judicata and are not binding at the retrial. He reasons therefore that Lord Herschell’s res judicata requirement cannot be satisfied (set out at §11.3 above). I do not agree with Mr Yeung. As pointed out by Mr Chen, Bobolas is in fact against Mr Yeung. It is clear that the proposition to be derived from Bobolas 1105A-D is only when a retrial has been ordered that any order made in the original trial ceases to be res judicata between the parties. It is not an authority for the proposition that the possibility of a retrial would by itself render the original judgment not res judicata.

12.4Conversely, I agree with Mr Chen’s analysis that the Retrial Procedure per se does not render a Mainland judgment not final and conclusive (mirroring closely but supplementing the analysis of To J in Yang Fan and Chung J’s dissenting judgment in the Lee Yau Wing case) for the following reasons. One must bear in mind that the Service Issue only concerns Lai Sr and therefore the Retrial Procedure is only applicable in Lai Sr’s case. The judgment under consideration is therefore principally the IPC Judgment.

12.5I am satisfied that the IPC Judgment is final and conclusive as the requirements set out in Nouvion are met:

(1) The proceedings in the IPC is in nature different from proceedings leading to a Spanish “ramate” judgment considered in Nouvion where certain issues were not permitted to be raised. As accepted by WYP, unlike proceedings leading to a “ramate” judgment, in the IPC proceedings, there were no restrictions to the arguments that the Lai Camp could raise and advance;

(2) In Nouvion, a judgment which is appealable is nevertheless considered final and conclusive (see also China NPL Holdings Ptd Ltd v Mo Haidan [2021] 1 HKLRD 344 §22). It is therefore relevant to consider whether the nature of the Retrial Procedure may be considered akin to an appeal. In my judgment, it can be so considered. It bears emphasis that until a retrial has been ordered, the Mainland Judgments are currently enforceable in the Mainland;

(3) As explained by WYP, a litigant has no right to relitigate a matter which as been determined by a Mainland judgment, and his avenues to challenge a first instance ruling (第一審) is by way of appeal or an application for a retrial;

(4) Litigants to a Mainland judgment do not have an unilateral right to retrial. The retrial of a Mainland judgment is conditional upon the satisfaction of one or more of the conditions set out under Article 200 (Avenues 1 and 2) or the exercise of discretion by an external organ such as the procuratorate or the court (Avenues 2 and 3). It bears emphasis that the exercise of the discretion by the external organ is premised on some form of error or violation by a judicial officer;

(5) The Retrial Procedure therefore operates in substance similarly to an appeal notwithstanding that the procedure may be invoked by a third-party organ. I agree with the analysis set out in the Chung J’s dissenting judgment in the Lee Yau Wing case set out at §11.13 and the passages in Yang Fan set out at §11.15 above;

(6) The next issue is what is meant by Lord Waston that the judgment must be final and unalterable in the court which pronounced it. Mr Yeung relies heavily on this feature, as he says that the Retrial Procedure entails the possibility of the original court altering a judgment which it had pronounced. I do not agree with Mr Yeung. Conversely, I agree with Mr Chen that Lord Watson’s reference to the court retaining a power to alter its judgment or order is a reference to the court’s power to alter a judgment or order which had been made without the court’s investigation of the whole merits of the matter (which is the case of a ”ramate” judgment), as was echoed by Lord Bramwell;

(7) In further support of the foregoing proposition, I agree with Mr Chen that an analogy with default judgment may aptly be drawn. In the context of a default judgment obtained in a foreign court, whilst it is liable to be varied or set aside by the same court which granted it, it may nevertheless be final and conclusive for the purpose of common law enforcement so long as it stands until it is set aside: Nintendo at page 633G and Fabiano Hotels Ltd v Profitmax Holdings Inc & Ors [2017] 6 HKC 414 §§20-40;

(8) I further agree with Mr Chen that the absence of any time limit on the Mainland court and the procuratorate to invoke the Retrial Procedure does not affect the analysis. As submitted by Mr Chen, under common law, the possibility of an appeal or a default judgment being set aside does not preclude a judgment from being final and conclusive. Applying the same principle and logic, the possibility of a Retrial Procedure being invoked in the future does not preclude a Mainland judgment from being final and conclusive under common law.

12.6For the above reasons, in my judgment, the Retrial Procedure per se does not have the effect of rendering a Mainland judgment not final and conclusive.

13.The present case

13.1I now deal with the second question identified by Cheung and Yuen JJA in the Lee Yau Wing case. Since I have decided that the Retrial Procedure per se does not have the effect of rendering a Mainland judgment not final and conclusive, I need to further consider under what circumstances would a Mainland judgment be considered not final and conclusive by reason of the Retrial Procedure.

13.2In my view, the paramount consideration is the likelihood of a retrial being ordered under the Retrial Procedure. This is a matter to be demonstrated by factual evidence or expert evidence or a combination thereof. Without being exhaustive, some of the relevant considerations are:

(1) The cogency of the Mainland judgment being challenged;

(2) Whether it can be shown that the conditions underpinning Avenues 1, 2 or 3 are satisfied (eg the 13 conditions set out in Article 200, a verified error under Article 198 or a violation by a judicial officer under Article 208);

(3) Whether the party has applied under the Retrial Procedure and, if not, the reason for not doing so;

(4) If a party has already made an application under the Retrial Procedure, whether the application has been decided and the outcome of the application (this is primarily a factual matter);

(5) If a party has not made or is no longer able to make an application under the Retrial Procedure, what is the likelihood of the Mainland court or the procuratorate initiating the Retrial Procedure of their own motion (this is primarily a matter for expert evidence).

13.3On the facts of the present case, in the light of the findings made above, I am of the firm view that the Mainland Judgments are final and conclusive for the following reasons:

(1) Lai Sr has already exhausted the applications which could have been initiated by a party and both have been successful;

(2) In particular, the 2011 Judgment expressly made a finding that the Service Issue did not have a proper basis and the application for retrial was accordingly refused. As pointed out by Mr Chen, Nouvion is an authority for the proposition that the resumption of correctness applies. The argument that Lai Sr was a resident in Hong Kong at the material time was raised squarely in his application for retrial dated 27 January 2021 and rejected by the HPC;

(3) Thereafter, on 15 October 2021, Lai Sr’s application to the procuratorate for a retrial was rejected on the basis that it was made out of time but the procuratorate did not initiate the Retrial Procedure on the merits on its own motion;

(4) Substantial time has elapsed since the 2021 Judgment and the procuratorate’s rejection of Lai Sr’s application for retrial.

13.4I am therefore satisfied, as I have found above, that the prospect that the Retrial Procedure will be engaged by either the Mainland court or the procuratorate on their own motion is only a theoretical possibility but factually very improbable.

13.5I am therefore satisfied that, on the facts of the present case, the Mainland Judgments are final and conclusive for the purpose of common law enforcement.

14.Conclusion

14.1For the above reasons, I dismiss the SIHL’s claim in HCA 500 and enter judgment in favour of Lin in HCA 2104 in terms of the draft judgment handed up by Mr Chen at trial as amended during closing submissions.

14.2In terms of costs, there is no reason why costs should not follow the event. I make a costs order nisi that SIHL should pay to Lin the costs of HCA 500 and the Lai Camp should pay to Lin the costs of HCA 2104, to be taxed if not agreed.

14.3Prior to the commencement of the trial, there was a concern that Lin might not be able to attend the trial to give evidence as there was then a restriction against Lin leaving the Mainland to attend the trial. On 25 February 2025, I acceded to Lin’s application for leave to use video-conferencing facilities (“VCF”) to give evidence at the trial, but subject to Lin in fact not able to attend the trial here in Hong Kong. In the event. Lin was able to attend the trial. The only outstanding issue is the costs of the VCF application. I agree with Mr Chen that the appropriate order is that the costs of the VCF application should be costs in the cause. For avoidance of doubt, as counsel have already made submissions on the costs order of the VCF application, the costs order is an order absolute.

Mr YEUNG Ming Tai and Mr Ray KWAN instructed by Messrs Foo, Leung & Yeung for the Plaintiff in HCA 500/2017 and the 1^st - 2^nd Defendants in HCA 2104/2020

Mr David CHEN instructed by Messrs Jones Day for the Defendant in HCA 500/2017 and the Plaintiff in HCA 2104/2020