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China Npl Holdings Pte. Ltd v Mo Haidan And Others

Judgment Cited authorities 21 Cited in 1 Precedent Map Related
Vincent
Judgment Date08 December 2020
Neutral Citation[2020] HKCA 1014
Judgement NumberCACV583/2020
Citation[2021] 1 HKLRD 344
Year2020
Subject MatterCivil Appeal
CourtCourt of Appeal (Hong Kong)
CACV583/2020 CHINA NPL HOLDINGS PTE. LTD v. MO HAIDAN AND OTHERS

CACV 583/2020

[2020] HKCA 1014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 583 OF 2020

(ON APPEAL FROM HCA 513/2019)

____________________

BETWEEN
CHINA NPL HOLDINGS PTE. LTD. Plaintiff
and
MO HAIDAN (莫海丹) 1st Defendant
CHEN HUA (陳華) 2nd Defendant
ABLE SUCCESS HOLDINGS LIMITED 3rd Defendant

____________________

Before: Hon Lam VP and Au JA in Court
Date of Hearing: 12 November 2020
Date of Judgment: 8 December 2020

________________________

JUDGMENT

________________________

Hon Lam VP (giving the Judgment of the Court):

A. Background and the Judgment below

1. The 1st defendant and 2nd defendant were joint and several guarantors for loan contracts made between a PRC company, Guangzhou Zaihua Trading Development Co Ltd (“Guangzhou Zaihua”) as borrower and the Industrial and Commercial Bank of China Ltd (“ICBC”) as lender in 2014.

2. Guangzhou Zaihua defaulted in payments and ICBC successfully obtained judgments against Guangzhou Zaihua, the 1st defendant and the 2nd defendant in the Basic People’s Court of Huangpu District, Guangzhou City, Guangdong Province (“the Huangpu Court”) on 30 November 2015 in the aggregate sum of RMB 80,922,042.24 (“the Original Judgments”). The 1st defendant did not appear in the proceedings. The judgments were entered by the Huangpu Court on the basis that she refused to attend without any valid reason. Her address as stated in the judgments was an address in Guangdong Province, viz 廣東省陽江市江城區城南下濠洲26號.

3. According to the 1st defendant, she did not reside in Guangdong at the material time and she had no notice of the proceedings.

4. The judgment debts were later assigned by ICBC to a third party who subsequently assigned the same to the plaintiff.

5. On 26 March 2019, the plaintiff issued a writ endorsed with a statement of claim against the defendants in Hong Kong seeking to enforce the Original Judgments under the common law. It sought judgment against the 1st defendant in the sum of RMB 75,347,434.93 (or its HKD equivalent), being the amount due under the guarantee, together costs and interests under the PRC proceedings and an injunction restraining her from dealing with or diminishing the value of her assets up to that value.

6. On the following day, the plaintiff obtained an ex parte (on notice) Mareva injunction[1] against the 1st defendant prohibiting her from:

(1) removing from Hong Kong any of her assets which are within Hong Kong, whether in her own name or not, and whether solely or jointly owned, up to the value of RMB 75,347,434.93 (or its HKD equivalent); or

(2) disposing of or dealing with or diminishing the value of any of her assets which are within Hong Kong, whether in her own name or not, and whether solely or jointly owned up to the value of RMB 75,347,434.93 (or its HKD equivalent). This prohibition includes the following assets in particular:

(i) the proceeds of any sale of the 1st defendant’s shareholding in the 3rd defendant; or

(ii) the property known as “Flat A, 38/F., Tower 6A, Imperial Cullinan, No.10 Hoi Fai Road, Kowloon, Hong Kong” held in the name of the 3rd defendant (“the Property”) or the net sale proceeds if the Property had been sold[2].

7. On 8 April 2019, the 1st defendant took out summons to discharge the Mareva injunction. Deputy High Court Judge Sherrington (“the Judge”) heard the application on 21 November 2019.

8. At the time of the hearing, the 1st defendant’s applications for retrial in the Intermediate People’s Court of Guangzhou (“the Guangzhou Intermediate Court”) were pending. Subsequently, the 1st defendant was granted leave to adduce as evidence the four retrial orders (“Retrial Orders”) dated 24 December 2019 issued by the Guangzhou Intermediate Court. By the Retrial Orders, the dispute between the 1st defendant and the plaintiff would be re-tried by the Guangzhou Intermediate Court. In the meantime, the Original Judgments were stayed or suspended.

9. After taking into account of the Retrial Orders and expert evidence of their effects, the Judge handed down judgment on 3 June 2020 discharging the Mareva injunction against the 1st defendant.

10. The Judge discharged the Mareva injunction on the basis that the plaintiff had failed to show a good arguable case that the Original Judgments are final and conclusive judgments in light of the Retrial Orders.

11. The Judge accepted the 1st defendant’s submissions[3] and held that where a retrial had been ordered any rulings made or issues decided in the course of the original trial were not “res judicata”. He went on to say at [42]:

“ 42. It seems to me there is a clear distinction between a judgment of a foreign court where there is an appeal pending which I accept might be regarded as final and conclusive, notwithstanding the ongoing appellate process in the overseas jurisdiction and the position, as here, where a retrial has been ordered in the overseas jurisdiction such that the original judgment has been set aside, the findings are not binding on the court hearing the retrial and there is therefore no question of the matters being ‘res judicata’.” (our emphasis)

12. Based on the evidence of the 1st defendant’s expert Mr Hu, the Judge held that in the present case “there was no res judicata arising from the PRC proceedings”:

“ 43. I cannot see how it can be said that a judgment in the second situation is final and conclusive; I accept the evidence of Mr Hu that there is no ‘res judicata’ arising from the original proceedings in the PRC and in the circumstances it would be contrary to common sense as well as to the established principles of Hong Kong Conflict of Laws to regard it as such for enforcement purposes in Hong Kong.”

13. Further, the Judge rejected the plaintiff’s submission that the correct approach was to order a stay of the proceedings pending the determination of the retrials in the PRC as it would be unjust to subject the 1st defendant to a stay or a continuing injunction in its current form. Given his conclusion, the Judge did not find it necessary to decide on the question of risks of dissipation (although this issue was argued substantively before him).

B. The appeal

14. Leave to appeal was initially refused by the Judge. On 30 October 2020, the plaintiff obtained leave from this Court to appeal against the judgment.

15. When we granted leave, we also directed that the appeal be heard on an expedited basis. We heard the appeal on 12 November 2020 and reserved our judgment.

16. In the Notice of Appeal, the plaintiff (represented by Mr Chua SC leading Mr Huges) advanced four grounds of appeal:

(1) There was a good arguable case that the Original Judgments are final and conclusive unless and until set aside (“Ground 1”);

(2) Foreign law must be specifically pleaded and proved (“Ground 2”);

(3) The Judge misapplied some authorities and the disputes between parties’ PRC law experts are unsuitable for summary determination (“Ground 3”); and

(4) It was just and appropriate to continue the injunctive relief (“Ground 4”).

17. By a Respondent’s Notice of 4 November 2020, the 1st defendant (represented by Mr Khaw SC leading Mr Chan) sought to affirm the Judgment on the following additional grounds:

(1) In view of the legal effects of the Retrial Orders under PRC law as set out and explained in Mr Hu’s evidence (which is accepted by the Judge), the Original Judgments (albeit not having been set aside) are not res judicata under PRC law and cannot be regarded as final and conclusive by either the PRC court or the Hong Kong court;

(2) Nouvion v Freeman [1889] AC 1 does not support any general proposition that a foreign judgment that cannot be abrogated or varied by the same court which issued it and can only be questioned by a higher court is final and conclusive. Whether a foreign judgment is final and conclusive is a foreign law-specific question;

(3) Apart from the position under PRC law as stated above, the Judge should have ruled that at common law, the fact that the execution of the Original Judgments have been stayed or suspended under PRC law is sufficient to deprive them of any finality or conclusiveness;

(4) In any event, the court should be cautious in considering if a Mareva injunction should be granted in the present case for (i) given that the Intermediate People’s Court of PRC will conduct the retrial, any tentative assessment of the questions of finality and conclusiveness of the Original Judgments would necessarily be subject to the outcome of the retrial; and (ii) there is a likelihood that the present proceedings in Hong Kong may never be revived. Further, according to Mr Hu’s evidence (which is not contradicted), after the retrial, regardless of whether the Original Judgments are repealed, amended, corrected or affirmed, it is the new judgment that gives effect and authority to the validity of such decision;

(5) Insofar as it was necessary for the Judge to consider if there was any risk of dissipation of assets, there were and ought to have been sufficient reasons for him to conclude that the plaintiff failed to establish any such risk;

(6) Further, the plaintiff cannot be allowed to make use of the Mareva injunction for the purpose of making itself a secured creditor. Since the plaintiff is resident outside Hong Kong (i.e., in Singapore), there would be an additional difficulty for the 1st defendant to enforce the plaintiff’s undertaking as to damages, in the event that the injunction turned out to be wrongly granted. The plaintiff has also failed to explain why it chose to wait until March 2019 to apply for the Mareva injunction when it was aware of the 1st defendant’s intended sale of the property back in January...

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1 cases
  • Arnold Manheimer v Zhili Trading Co., Ltd And Others
    • Hong Kong
    • Court of First Instance (Hong Kong)
    • 6 December 2022
    ...a holistic consideration of all the circumstantial materials that are indicative of risk. See China NPL Holdings Pte Ltd v Mo Haidan [2021] 1 HKLRD 344 at §72 (Lam 18. The plaintiff acknowledged that he has no personal knowledge of why the money was transferred from the 2nd defendant to the......

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