Wynn Resorts (Macau) S.A. v. Mong Henry

HCA192/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 192 OF 2009

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Before : Deputy High Court Judge Bharwaney SC in Chambers

Date of Hearing : 18 May 2009

Date of Judgment : 29 June 2009

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J U D G M E N T

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1.This is an application by the defendant for a stay of proceedings on the ground of forum non conveniens.  The defendant seeks a stay of proceedings on the ground that the court in the Macau SAR is the more convenient and appropriate forum for the trial of this action.

2.The plaintiff owns and operates a casino and a resort in the Macau SAR.  The defendant was a patron of the casino operated by the plaintiff.  In or about October 2006, the defendant entered into a Credit Agreement with the plaintiff.  The credit requested for by the defendant at the time of entering into the Credit Agreement was HK$3,000,000.  The Credit Agreement also contained the defendant’s express agreement to sign credit instruments in the amount of the draw, before drawing on its line of credit, if granted.  The Credit Agreement further provided that Macau SAR law exclusively governed the terms of the credit line, advances or credit instruments and that the plaintiff could litigate any dispute involving the credit line, the debt or the payee in any court in Macau SAR and that the defendant submitted to the jurisdiction of any court in Macau SAR.

3.On 2 August 2008, the plaintiff advanced to the defendant a sum of HK$30,000,000 to gamble at the plaintiff’s casino, and the defendant signed a document, commonly known as a “Marker”, which recorded that HK$30,000,000 was payable by the defendant to the plaintiff. 

4.In these proceedings, the plaintiff claims that sum from the defendant less the sum of about HK$1,000,000 which had previously been paid by the defendant.  

5.It is pleaded in the plaintiff’s Statement of Claim that the loan of HK$30,000,000 made on 2 August 2008 was made pursuant to the Credit Agreement. 

6.By §11 of the Statement of Claim, the plaintiff brought action against the defendant in respect of 3 separate causes of action under the laws of the Macau SAR, namely, by suing under the Credit Agreement, by suing upon the Marker, and by suing on the debt represented by the Marker.

7.However, in his submissions before me, Mr Nicholas Hunsworth (“Mr Hunsworth”), who appeared for the plaintiff, disavowed any intention to sue on the Marker as a Promissory Note.  He limited the plaintiff’s claims to a claim under the Credit Agreement and to a claim for the repayment of debt evidenced by the Marker. 

8.It is not disputed that the defendant received the sum of HK$30,000,000 from the plaintiff on 2 August 2008 and that he signed the Marker for the same amount. 

9.Ms Catrina Lam (“Ms Lam”) who appeared on behalf of the defendant submitted that the principal issues likely to arise at trial included :

(1) whether the alleged loan was advanced to the defendant pursuant to the credit line granted by the plaintiff under the Credit Agreement;

(2) if the plaintiff was entitled to rely on the Credit Agreement to claim repayment of the alleged loan, whether the Credit Agreement and the Marker were null and void by reason of the plaintiff’s failure to comply with Article 8.2 of Ordinance No.5 of 2004;

(3) if the plaintiff was not entitled to rely on the Credit Agreement, whether the plaintiff could nevertheless rely on the Marker to enforce the alleged loan notwithstanding its non-compliance with the requirements of a promissory note as set out in s. 1208 of the Macau Commercial Code;

As the plaintiff has made clear that it is not suing on the Marker as a promissory note, this issue no longer arises.

(4) alternatively, whether the plaintiff can nevertheless enforce the Marker against the defendant as a debt instrument under s.677(c) of the Code of Civil Procedure.

10.I take, as a starting point, the principles summarised by Cheung JA in Pei Zheng Middle School & anor v China Pui Ching Education Foundation Ltd & ors [2006] HKCU 292 (CACV262/2005, 21 February 2006, unreported) as follows :

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

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

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

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

…”  [emphasis added]

11.I agree with Ms Lam’s submissions that Hong Kong is not the natural or appropriate forum or the forum having the most real and substantial and connection with the action.  That forum has to be Macau for the reason that Macanese law is the governing law of the relevant transactions and because all the relevant events took place in Macau.  In addition, the plaintiff is a company incorporated under the laws of Macau.

12.The main contest between the parties turned on the 2^nd limb of the question, namely, whether Macau was clearly or distinctly more appropriate than Hong Kong as a forum for the determination of this case. 

13.Ms Lam submitted that the fact that all the relevant events took place in Macau and the fact that the plaintiff is a company incorporated under the laws of Macau made Macau clearly or distinctly more appropriate than Hong Kong.  I do not agree.  Documentary evidence can be adduced in the courts of Hong Kong and witnesses can come to Hong Kong to give evidence, if required to do so.  The fact that the plaintiff is willing to submit to the jurisdiction of Hong Kong neutralises any weight to be placed on the fact that it is incorporated in Macau. 

14.The defendant has no connection with Macau apart from the fact that he gambles there.  He does have a connection to Hong Kong in that he stays in Hong Kong for about 60 days in a year and appears to have some interests in a property in Hong Kong in which he resides and which is owned by a BVI company of which he is the sole director.  He also holds at least two bank accounts in Hong Kong.  Any judgment obtained by the plaintiff in Hong Kong is therefore capable of immediate enforcement here.  On the other hand, a Macau Judgment is not directly enforceable:  the plaintiff would need to apply for summary judgment based on the Macau Judgment as a foreign judgment. 

15.Furthermore, the availability of Macau as a forum for the trial of this action does not make it clearly or distinctly a more appropriate forum than Hong Kong.  The fact that the defendant has voluntarily submitted to the jurisdiction of the Macau Courts by the express terms of the Credit Agreement and is willing to give an undertaking that he will submit to the jurisdiction of the Macau Courts is a factor which carries less weight when contrasted with the fact that he has a close connection to Hong Kong.

16.Further, the terms of the Credit Agreement, which expressly provide that the plaintiff may litigate any disputes against foreign defendants in Macau, do not prevent the plaintiff from suing the defendant outside Macau, and is not a factor which makes Macau clearly or distinctly a more appropriate forum than Hong Kong.

17.As Ms Lam developed her oral submissions, it became clear that the main point being made on behalf of the defendant, in support of the submission that Macau was clearly or distinctly the more appropriate forum, was that the case raised difficult issues of Macau law which the Macau courts were better equipped to deal with than the Hong Kong courts.  On this matter, I am guided by the observations of Recorder Geoffrey Ma SC, as he then was, in Rambas Marketing Co. LLC v Chow Kam Fai David [2001] 3 HKC 250 at p. 266F-267A :

“Conclusion on foreign law

In cases where substantial and difficult issues of foreign law are involved, the court may well be compelled to stay the proceedings where there is an appreciable risk that justice will not be done.  This risk may in certain circumstances be attributable to factors such as expense, but in the usual case would arise where the court was somehow concerned with the possibility that it might reach a wrong conclusion on an important aspect of foreign law.  In Credit Chimique, at p. 136, Lord Jauncey said : ‘In the present case the risk of the Scottish court reaching the wrong conclusion on one or more of the questions of law involved is by no means remote whereas it must be presumed that such a risk does not exist in the French court’.  The courts in Hong Kong (particularly the Commercial Court and the Admiralty Court), given the international identity and nature of the type of commercial litigation and litigants here, are often accustomed to dealing with aspects of foreign law.  It does not therefore follow at all that once it is shown that issues of foreign law arise, that this will necessarily be a powerful, much less a decisive, factor in favour of a stay.  On the other hand, however, it is unrealistic not to acknowledge the fact that complicated issues of foreign law may arise with which the Hong Kong courts will not feel itself confident to deal; it is all a question of degree : see Muduroglu Ltd v. T.C. Ziraat Bankasi [1986] QB 1225, 1246A-F (English Court of Appeal), per Mustill LJ.”

18.Ms Lam submitted that there was a real risk that injustice would result from a Hong Kong Court reaching the wrong decision on one or more issues of Macanese law.  She submitted that it would be far more satisfactory for complex issues of Macanese law to be decided by their own courts where those issues would be appealable as issues of law whereas the same would be treated as questions of fact decided on expert evidence with limited scope for appeal in Hong Kong.  In addition, she submitted that the Cambridgeshire factor (referred to in Spiliada Maritime Corp. v Cansulex Ltd [1987] 1 AC 460 at 485E-486C) did not arise in this case given that, unlike cases heard in Hong Kong involving Nevada law, there has been no adjudication by a Hong Kong court dealing with the Macanese law on casino gaming or credit betting.  Finally, she submitted that the trial of these issues in Hong Kong would require an exposition by experts in Macanese law, which would add considerably to the expense of the proceedings both in terms of time and costs. 

19.These submissions require me to focus on the issues of Macanese law raised in this case.  It is only by considering those issues that I can determine whether or not there is a real risk that injustice would result from a Hong Kong Court reaching a wrong conclusion on such issues. 

20.The first point of Macanese law which is raised by the defendant is that the plaintiff was obliged to submit a sample or proforma credit agreement to the Macanese Government for approval under Article 8.2 of Ordinance No.5 of 2004, failing which the Credit Agreement made by the defendant and the Marker signed by the defendant were rendered null and void by virtue of s. 287 of the Macau Civil Code.  In this connection, the defendant relied on a Certification Letter dated 8 April 2009 issued by the Macau Gaming Inspection and Coordination Bureau to support the construction that Article 8.2 applied to Credit Agreements and that the Bureau required approval of sample or proforma credit agreements as a matter of practice. 

21.The plaintiff’s case on this point is that, as a matter of statutory construction, Article 8 only applies to promoter contracts and agency contracts and has no application to credit agreements between the casino and the gambler. 

22.In support of their respective submissions, the defendant relied upon the legal opinion of one, Mr Miguel Cravo (“Mr Cravo”), and the plaintiff relied on the legal opinion of one, Mr Henrique Saldanha (“Mr Saldanha”).  I have had regard to their legal opinions which have been exhibited to the 2^nd Affirmation of the defendant and which were also contained in the Affidavits of Mr Cravo and Mr Saldanha filed in these proceedings.

23.Articles 1-8 of Ordinance No.5 of 2004 of the Macau SAR provides as follows :

“Article 1—Object

This law regulates the business of gaming or credit betting within the casino gaming areas in Macao Special Administrative Region (‘credit’).

Article 2—Credit

1.   Credit shall be established only where a credit entity transfers its ownership rights of the chips used for casino gaming to a third person, but there is no immediate payment of ready money in relation to such transfer.

2.   For the purposes of the above Clause, the following shall be considered as ready money :

(i)   cash;

(ii)  traveller’s cheques;

(iii) certified cheques;

(iv) cashier’s orders or cashier’s cheques;

(v)  money orders;

(vi) postal orders;

(vii)    deposits into bank of any transfer notes which can be directly converted into cash balance;

(viii)   deposits into bank pursuant to transactions such as bank transfer, fund transfer or setting-off between accounts;

(ix) Electronic Funds Transfer made by way of electronic payment devices;

(x)  any marketable notes offered by concessionaire which operates casino gaming or other forms of gaming (‘Concessionaire’) or sub-concessionaire which operates casino gaming or other forms of gaming (‘Sub-concessionaire’), without requiring any consideration, to gamblers or punters and accepted to be a payment device for the transfer as referred to in the above Clause;

(xi) any other conduct, transaction or device which is stipulated by way of approval by the Chief Executive as equivalent to ready money.

3.   For the purposes of Sub-clause (ix) of the Clause above, the following shall be considered as electronic payment devices ;

(i)   cards for making payment, including credit cards and debit cards;

(ii)  electronic money devices which make use of electronic software to save the amount onto a card, or electronic money devices which record the cash balance onto the saving device of a computer.

4.   If any creditor’s rights created pursuant to a transfer as referred to in Clause 1 are embodied in debt instruments, such debt instruments can be bearer securities, or order instruments, including order instruments issued in series.

Article 3—Credit Entity

1.   The following entities are conferred the qualification to engage in credit business :

(i)   Concessionaire;

(ii)  Sub-Concessionaire.

2.   A casino gaming promoter (‘Gaming Promoter’) is also conferred the qualification to, via contracting with a Concessionaire or Sub-Concessionaire, engage in credit business.

3.   If a credit entity is in material breach of the laws or regulations applicable to credit business, or if it has displayed an apparent want of technical capability to engage in credit business, the Government of Macao Special Administrative Region (‘Government’) may order that credit entity to suspend or terminate its engagement in credit business, or may impose conditions for its engagement in credit business, without prejudice to any proceedings in relation to administrative illegalities that should be initiated or any civil or criminal liabilities that should be borne.

4.   If a credit entity is ordered to terminate its engagement in credit business pursuant to the above Clause, it shall lose its qualification to engage in credit business.

5.   If a person who has been ordered to suspend or terminate its engagement in credit business under Clause 3 is a Gaming Promoter, then, depending on whether he is ordered to suspend or to terminate its engagement in credit business, the relevant Gaming Promoter shall be forbidden temporarily or absolutely to carry out any legal activity or to execute any contract in respect of credit business pursuant to Clause 3 of Article 5.

6.   A credit relationship can only arise :

(i)   between a Concessionaire or Sub-Concessionaire being a credit entity and a gambler or punter being a borrower;

(ii)  between a Gaming Promoter being a credit entity and a gambler or punter being a borrower; or

(iii) between a Concessionaire or Sub-Concessionaire being a credit entity and a Gaming Promoter being a borrower.

Article 4—Effect

Credits advanced under this law shall have the effect of creating legal debts.

Article 5—Non-transferability

1.   A credit entity shall not engage in credit business through another party or entity.

2.   Any conduct or contract the object of which is to transfer the qualification of the credit entity to a third person in any form or any name shall be ineffective.

3.   A management company with the right to manage a casino gaming operation or any other form of gaming operation of a Concessionaire (‘Management Company’), or a Gaming Promoter, may, by means of an authorisation contract or an agency contract, do legal acts or execute contracts in the name and for the interest of a credit entity as stated in Clause 1 of Article 3, but without prejudice to the applicability of the two Clauses above.

4.   If a Management Company or a Gaming Promoter is in material breach of the laws or regulations applicable to credit business, or if it has displayed an apparent want of technical capability to engage in credit business, the Government may order the relevant Management Company or Gaming Promoter to suspend, temporarily or absolutely, from doing any legal act or executing any contract in respect of credit business in accordance with the Clause above, without prejudice to the applicability of Clause 3 of Article 3; in the case of a Gaming Promoter, the Government may additionally order the relevant Gaming Promoter to suspend or terminate its engagement in credit business which it is otherwise qualified to engage in pursuant to Clause 2 of Article 3.

5.   Where the circumstances as referred to in Clause 3 arise, Articles 6 and 7 shall be applicable to a Management Company or a Gaming Promoter after necessary adaptation.

Article 6—Obligation to cooperate

A credit entity shall have a special obligation to cooperate with the Government.  Accordingly, upon the request of the Government, a credit entity shall produce all documents, information or evidence, and shall give any permission.

Article 7—General principle

A credit entity shall comply with all the laws and regulations applicable to credit business; any violation of such regulations shall be taken into account in determining whether or not it has the suitable qualifications to be a Concessionaire, Sub-Concessionaire or Gaming Promoter, without prejudice to the applicability of Clause 3 of Article 3.

Article 8—Contract

1.   The contract as stated in Clause 2 of Article 3 and Clause 3 of Article 5 must be executed in written form and in three original identical copies, and all the relevant signatures shall be verified at the scene by a notary public.

2.   Any contract, documents supplemental to the contract, and drafts amending those documents shall be approved by the Government.  The Government may order any provisions in the aforesaid drafts to be amended on the ground of principles of legality or public interest.

3.   Concessionaire or Sub-Concessionaire shall, without fifteen days after execution of contract, submit one original copy of the contract and copies of all the supplemental documents to the Gaming Inspection and Coordination Bureau of Macau (‘DICJ’).

4.   If there is any amendment to the contract or the supplemental documents, the Concessionaire or Sub-Concessionaire shall submit the amended copies to DICJ within fifteen days.

5.   The supplemental documents as referred to in Clause 3 and Clause 4 shall enclose a declaration which is signed by the legal delegate of the Concessionaire or Sub-Concessionaire and is binding on the Concessionaire or Sub-Concessionaire.  The signature and identity shall be verified by a notary public.  The declaration shall provide that the legal delegate shall with his honour undertake and declare that the information as contained in the relevant documents are accurate and up-to-date, and declare that those documents are copies of the originals.

6.   The contract shall include relevant provisions stating that the parties to the contract have agreed to surrender to be governed by any jurisdiction outside Macao Special Administrative Region, and shall be bound by the laws of Macao Special Administrative Region as currently applicable.  If it is a contract as stated in Clause 3 of Article 5, it shall include a provision stating that it has surrendered to appoint a delegate or an agent, depending on whether it is an authorisation contract or an agency contract.

7.   Any provision as contained in the contract, documents supplemental to the contract and any provision amending those documents which are inconsistent with the relevant drafts as approved by the Government shall be considered as ineffective.”

24.To my mind, it is a simple point of construction whether the reference to “any contract” in Article 8.2 is a reference to promoter contracts and agency contracts referred to in Article 8.1 or whether it also includes credit agreements between the Concessionaire or Sub-concessionaire and the gambler or punter. 

25.I do not rehearse the submissions made by Ms Lam and Mr Hunsworth for and against the proposition that Article 8.2 applies to credit agreements, nor will I determine the point.  I also leave open the question whether or not the Certification Letter dated 8 April 2009 issued by the Macau Gaming Inspection and Coordination Bureau is of assistance on the issue.  Notwithstanding that this is the first time that a Hong Kong Court has been asked to determine this issue of Macanese law, I find that the issue turns on a simple point of construction and is an issue which the Hong Kong Court is well able to deal with.  It is not an issue which gives rise to a real risk that injustice will result from the Hong Kong Court reaching the wrong conclusion on the matter.  The evidence of the experts on Macau law has already been filed in these proceedings and can be adduced without further expense if the parties dispensed with the need to cross-examine the experts.  Obviously, the matter would be dealt with on affidavits on the plaintiff’s intended application for summary judgment.  However, even if this case proceeded to a full trial and cross-examination of the experts was to be required at trial, the additional costs generated by the cross-examination of the experts would not, in my judgment, make Macau clearly or distinctly more appropriate than Hong Kong as a forum to adjudicate this dispute.

26.Given the fact that the plaintiff no longer pursues a claim on the Marker as a promissory note, are there any other issues of Macanese law which have to be considered in this case?

27.A substantial part of Ms Lam’s submissions centred on the issue of whether or not the Marker complied with the requirements of the Macau Commercial Code in respect of promissory notes.  However, these submissions fell away when Mr Hunsworth indicated that the plaintiff was not suing on the Marker as a promissory note but as evidence of the debt owed by the defendant.  Further, whether or not the Marker constituted a debt instrument for the purposes of s. 677(c) of the Code of Civil Procedure of Macau, which entitles the creditor to proceed to enforce his debt without first having to obtain a judgment, it is clear that the present proceedings are not enforcement proceedings pursuant to that provision but an action to obtain a judgment for the repayment of the loan made to the defendant.  The question of law as to the application of s. 677(c) of the Code of Civil Procedure to the Marker in question simply does not arise in these proceedings.

28.Finally, Mr Miguel Cravo does not raise any question of Macanese law on the issue of whether or not the Marker can be adduced as evidence of the debt owed by the defendant to the plaintiff.  He leaves the matter open in §24 of his Affidavit sworn on 13 May 2009 in which he said :

“Finally, as whether the Marker alone serves as a legally enforceable evidence of a debt and the promise of its repayment, it is submitted that such document cannot be construed as a debt instrument in accordance with section 677(c) of the Code of Civil Procedure…”

By §24 of the said Affidavit, I understand Mr Cravo to be saying that, leaving aside the question of whether or not the Marker alone serves as evidence of a debt and the promise of its repayment under Macanese law, such a document is not a debt instrument under s.677(c) of the Code of Civil Procedure. 

29.Accordingly, I conclude that the issues of Macanese law that arise in these proceedings do not give rise to a real risk that injustice would result from a Hong Kong Court reaching the wrong conclusion on them.

30.For these reasons, I am not satisfied that the defendant can establish to my satisfaction that Macau is clearly or distinctly more appropriate than Hong Kong as a forum for the adjudication of this dispute.  In the circumstances, I need not address the 3^rd and 4^th questions posed by Cheung JA in Pei Zheng Middle School.

31.For these reasons, I dismiss the defendant’s Summons for a stay of the proceedings and order that the defendant pays to the plaintiff the costs of the application, to be taxed, if not agreed. 

Mr Nicholas Hunsworth of Messrs JSM, for the Plaintiff

Ms Catrina Lam, instructed by Messrs Livasiri & Co., for the Defendant