HKCFI 980
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF FIRST INSTANCE
ACTION NO 513 OF 2019
||CHINA NPL HOLDINGS PTE LTD
||MO HAIDAN (莫海丹)
||CHEN HUA (陳華)
||ABLE SUCCESS HOLDINGS LIMITED
|Date of Hearing:
||21 November 2019
|Date of Judgment:
||3 June 2020
1. This action arises in respect of PRC judgment debts obtained against the 1st and the 2nd defendants (“D1” and “D2”) as guarantors in respect of loans entered into in the PRC by a PRC company with Industrial and Commercial Bank of China Ltd (“ICBC”), which judgment debts were subsequently assigned first to China Huarong and subsequently to the plaintiff (“P”), pursuant to further judgments duly published in the PRC.
2. The writ endorsed with a statement of claim was issued on 26 March 2019 and on the following day P obtained an ex parte on notice Mareva injunction against D1 and a Chabra injunction against the 3rd defendant (“D3”), D1’s nominee company and the holder of a property at Flat A, 38/F, Tower 6A, Imperial Cullinan, No 10 Hoi Fai Road, Kowloon, Hong Kong, which had recently been sold for approximately HK$56.5 million.
3. At the return date on 12 April 2019, D1 and D3, having confirmed that the sale of the property was to be effected by transfer of D1’s entire shareholding in D3, the Chabra injunction against D3 was discharged, by consent, and the Mareva injunction against D1 was continued pending the substantive hearing of D1’s discharge application, subject to terms permitting D1 to withdraw a lump sum of HK$1.3 million for her legal costs including in proceedings to take place in the PRC, and to withdraw HK$125,000 per month for ordinary expenses, which sum was increased to HK$170,000 from 1 June 2019.
4. From P’s perspective, the judgment debt remains outstanding and D1 and D2 remain liable to pay costs and interest under the PRC judgment debts.
5. P seeks to enforce the judgment at common law; alternatively based on the legal doctrine of obligation.
6. This matter was heard on 21 November 2019 (“the hearing”) but before judgment was handed down the court was notified in December 2019 of relevant developments in the PRC which D1 wanted to bring to the attention of the court. As a result new evidence was filed by D1 on 27 March 2020 pursuant to Au Yeung J’s Directions dated 15 January and 5 March 2020, comprising four Retrial Orders dated 24 December 2019 (“the Retrial Orders”) pronounced by the Guangzhou People’s Court. These, D1 submits, make a fundamental difference to the situation as pertaining at the hearing.
7. There is no dispute as to the basic facts.
8. D1 and D2 are the joint and several guarantors in respect of certain loan contracts (the “Loan Contracts”) entered into in the PRC between a PRC company (Guangzhou Zaihua Trading Development Co Ltd) (“Guangzhou Zaihua”) as borrower, and ICBC as lender, in 2014.
9. The guarantee between D1 and D2 and ICBC (the “Guarantee”) was dated 1 April 2014 and the fingerprints of D1 and D2 were affixed to the signature page together with their apparent signatures. D1 and D2’s joint and several liabilities under the Guarantee is capped at RMB 65,000,000 and the Guarantee covers any loans entered into between Guangzhou Zaihua and ICBC for a five-year period from 1 April 2014 to 1 April 2019.
10. ICBC obtained the PRC judgments against Guangzhou Zaihua, D1 and D2 in the People’s Court of Huangpu District, Guangzhou under the Loan Contracts and the Guarantee in the aggregate sum of RMB 80,922,042.24.
11. The judgment debt has been assigned by written judgments of the same court dated 15 July 2016 and 9 July 2018, respectively, from ICBC to China Huarong and from China Huarong to P.
D1’s application to discharge
12. D1’s submissions at the hearing was that she is the wife of D2, is not related to the borrower, and does not even know the borrower. She is a Hong Kong resident and it is her case that she never signed or saw the Guarantee and her signature on the Guarantee was forged and fabricated. In support D1 submitted that she was not in the PRC on the day the Guarantee was allegedly signed, the trial took place in her absence and without her knowledge and she was unaware of the PRC judgments and the fact of the assignment to P of the judgment sum.
13. It was submitted that the fact that D1 made no attempt to sell her property in 2015, when the PRC judgments were handed down, nor in 2018, at the time of the assignment to P adds weight to her submission that the sale when it eventually occurred, on 5 March 2019, was not made with a view to evading liability under the alleged Guarantee. Indeed, it was D1’s submission that when she first learned of PRC judgments as the result of these proceedings, she immediately lodged an application for re-trial in the PRC on 3 September 2019.
14. By virtue of the new evidence filed on her behalf, D1 submits that the Retrial Orders had the effect of terminating or suspending the original judgments pending the retrial proceedings. It is submitted that in the Retrial Orders it was held by the Intermediate People’s Court that D1’s case fulfilled the requirements under article 200 (1) and (2) of the Civil Procedure Law of the PRC namely that (1) there is new evidence which is sufficient to overturn the original judgments; and (2) the evidence on which the original judgments based was insufficient. The new evidence adduced including immigration records purported to show that D1 was not in mainland China on the date on which the Guarantee was purportedly signed and moreover that the signature on the Guarantee was purportedly forged as supported by forensics expert evidence.
15. There is no dispute in regard to the circumstances justifying the grant of Mareva relief. The circumstances are well established. P must demonstrate:
(1) that it has a good, arguable case on a substantive claim over which the court has jurisdiction;
(2) that there are assets within the jurisdiction;
(3) that the balance of convenience is in favour of grant; and
(4) that there is a real risk of dissipation of assets or removal of assets from the jurisdiction which would render P’s judgment of no effect.
Good, arguable case
16. P seeks to enforce the judgment debt at common law because it is common ground that the PRC judgments are not amenable to being enforced under the Mainland Judgments (Reciprocal Enforcement) Ordinance (Cap 597) and so I do need to consider this.
17. P seeks judgment against D1 in the sum of RMB 75,347,434.93 (or its HKD equivalent), being the amount due under the Guarantee, plus costs and interests under the PRC proceedings and an injunction restraining D1 from dealing with or diminishing the value of her assets up to that value, including but not limited to the proceeds of the sale of the property. P relies on the decision of Lisa Wong J in Jiang Xi An Fa Da Wine Co Ltd v Zhan King  HKCFI 2411, HCMP 1574/2017, 27 September 2019, where she sets out the relevant test for enforcement of foreign judgment in Hong Kong under the common law, at p 20 §52, as follows:
“ It is further acknowledged that the traditional criteria for the enforcement of a foreign judgment by action under the common law are that the judgment is:
(1) for a debt or definite sum of money;
(2) made by a court of competent jurisdiction over the parties and the subject-matter;
(3) between the same parties or their privies on an identical issue;
(4) final and conclusive on the merits;
(5) not impeachable according to the rules on conflict of laws of Hong Kong.”
18. D1 however submitted at the hearing that the PRC judgments are not final and conclusive because she did not have a proper chance to present her case on the merits since she was oblivious to the proceedings; it is submitted that she does not live at the address given for her in the judgments and that she has never been to China since 13 August 2014.
19. D1 relied for this purpose on a PRC expert Mr Hu Xiangqi who, in his first affidavit has opined that:
(1) D1 is entitled to appeal the PRC judgments to the Superior Court under Section 199 of PRC Civil Law;
(2) A re-trial would be granted if it is found that (1) there is new evidence, (2) the substantive evidence leading to the judgment was fabricated; or (3) the substantial evidence leading to the judgment has not been tested; and
(3) If the application for re-trial is refused, D1 still has recourse to the People’s Procuratorate under Article 209 of the Civil Procedure Law.
20. D1 submitted that there is evidence that (1) the...