La Dolce Vita Fine Dining Group Holdings Ltd v Zhang Lan And Another

CourtCourt of First Instance (Hong Kong)
Judgment Date23 April 2020
Neutral Citation[2020] HKCFI 622
Subject MatterConstruction and Arbitration Proceedings
Judgement NumberHCCT35/2019
HCCT35/2019 LA DOLCE VITA FINE DINING GROUP HOLDINGS LTD v. ZHANG LAN AND ANOTHER

HCCT 35/2019

HCCT 36/2019

(heard together)

[2020] HKCFI 622

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTRUCTION AND ARBITRATION PROCEEDINGS

NO 35 OF 2019

____________

IN THE MATTER of the enforcement of arbitration award dated 28 April 2019 made by the China International Economic and Trade Arbitration Commission
(Pursuant to sections 84 and 92(1)(b) of the Arbitration Ordinance (Cap 609) and Order 73 rule 10 of the Rules of the High Court (Cap 4A))

____________

BETWEEN
LA DOLCE VITA FINE DINING GROUP HOLDINGS LIMITED Applicant

and

ZHANG LAN 1st Respondent
GRAND LAN HOLDINGS GROUP (BVI) LIMITED 2nd Respondent

____________

AND

HCCT 36/2019

CONSTRUCTION AND ARBITRATION PROCEEDINGS

NO 36 OF 2019

____________

IN THE MATTER of the enforcement of arbitration award dated 28 April 2019 made by the China International Economic and Trade Arbitration Commission
(Pursuant to sections 84 and 92(1)(b) of the Arbitration Ordinance (Cap 609) and Order 73 rule 10 of the Rules of the High Court (Cap 4A))

BETWEEN

LA DOLCE VITA FINE DINING COMPANY LIMITED Applicant

and

ZHANG LAN 1st Respondent
GRAND LAN HOLDINGS GROUP (BVI) LIMITED 2nd Respondent
QIAO JIANG LAN DEVELOPMENT LIMITED 3rd Respondent
(formerly named as SOUTH BEAUTY DEVELOPMENT LIMITED
(Heard Together)
Before: Hon Mimmie Chan J in Chambers
Date of Hearing: 3 April 2020
Date of Decision: 23 April 2020

______________

D E C I S I O N

______________

Background

1. On 14 March 2018, this Court found the 1st Respondent (“Zhang”) to be in contempt (“Contempt Judgment”), for breach of an injunction and asset disclosure order made by the Court on 26 February 2015 (“Injunctions”) in aid of an arbitration between Zhang and the Applicant in these proceedings. On 5 March 2019, Zhang was committed to prison for 12 months for her contempt of court (“Committal Order”).

2. On 28 April 2019, arbitral awards were made against Zhang, Grand Lan Holdings Group (BVI) Ltd (“R2”) and Qiao Jiang Lan Development Ltd (“R3”) (“Awards”) in CIETAC arbitration proceedings between the Applicant and the Respondents in these proceedings (“Arbitration”), for payment by Zhang and R2 of US$50,434,209 and interest, and payment by Zhang, R2 and R3 of US $92,029,457.28 and interest. On 29 July 2019, this Court granted leave to the Applicant to enforce the Awards in Hong Kong (“Enforcement Orders”). The Enforcement Orders were in the usual form, providing that the Respondents may apply to set aside the Enforcement Orders within 14 days of service of the Enforcement Orders on them.

3. On 15 November 2019, the Respondents applied by their summons to the Court (“Summons”) to set aside the Enforcement Orders, and alternatively to stay the Summons pending an application to the supervisory court on the Mainland to set aside the Awards. The Summons was supported by an affirmation made by Zhang on behalf of all the Respondents. The Applicant, in turn, applied on 12 December 2019 for a Hadkinson order against Zhang and for security to be furnished by R2 and R3 as a condition for the stay of the Summons and the setting aside of the Enforcement Orders which the Respondents seek. The order sought by the Applicant (“Hadkinson Order”) seeks to impose conditions to the following effect:

“Until such time as (Zhang) has fully complied with paragraph 2 of the (Injunction)(as extended by the orders of Justice Chung on 6 March 2015 and Justice G Lam on 22 April 2015) and given full written disclosure of all her assets of an individual value of HK$500,000 or more (whether in or outside Hong Kong, whether in her own name or not and whether solely for jointly owned, giving the value, location and details of all such assets), the Respondents’ summonses dated 15 November 2019 shall not be heard”.

Whether Hadkinson Order should be made against Zhang

4. The principles relating to Hadkinson applications have been set out by the Court of Appeal in Hong Kong in CWG v MH [2014] 4 HKLRD 141, at paragraph 12 of the judgment, where Yuen JA formulated the questions to be asked by the court, on the civil standard of proof, to be:

(1) Is the party against whom the order is sought in contempt?

(2) Is there an impediment to the course of justice?

(3) Is there any other effective means of securing compliance with the Court’s orders?

(4) Should the court exercise its discretion to impose conditions having regard to that question?

(5) Is the contempt willful (is it contumacious and continuing)?

(6) If so, what conditions would be proportionate?

Offensive or defensive?

5. In opposition to the application for the Hadkinson Order, Zhang sought to argue that despite the Court’s finding of her contempt, the Hadkinson Order should not follow. First, it was argued that the rule that a person who is in contempt cannot be heard applies only to voluntary applications when the person comes to the court and asks for something, and not to cases in which all that he is seeking is to be heard in respect of matters of defence (Hadkinson, at p 290). Counsel relies on the judgment in Motorola Credit Corp v Uzan [2004] 1 WLR 113, where it is stated at paragraph 55 of the judgment:

“... we bear in mind that the defendant’s appeals are essentially defensive in nature. Their stance in this jurisdiction has been one of resistance to a series of restrictive and intrusive orders sought by the claimant in foreign proceedings, rather than a voluntary invocation of the powers of the English court for their own benefit.”

6. On behalf of Zhang, Counsel argued that she is simply seeking by her Summons to resist the Applicant’s application to enforce the Awards in Hong Kong, at least before the conclusion of the Mainland proceedings commenced to set aside the Awards. As such, Zhang’s application is merely defensive in nature.

7. I reject this argument. The application made by Zhang to set aside the Enforcement Orders is a voluntary application made by her, seeking from this Court the relief of having an order made by the Court to be discharged on grounds the onus of which is on her to establish, and invoking the exercise of the Court’s discretion to stay the enforcement of the Court’s order. As Leading Counsel for the Applicant highlighted, the Enforcement Orders in this case were made under s 92 (1) (b) of the Arbitration Ordinance (“Ordinance”) and Order 73 rule 10 RHC. Arbitral awards are enforced almost “mechanistically” in Hong Kong (PetroChina International (Hong Kong) Corp Ltd [2011] 4 HKLRD 604, Xiamen v Eton Properties Limited & Anor [2009] 4 HKLRD 353 (CA)), allowed on ex parte basis, so long as the provisions of ss 93 and 94 of the Ordinance are satisfied for a Mainland award. The standard form order of the Court gives leave to a respondent to apply to set aside the ex parte order for enforcement within the time specified in the order, and s 95 of the Ordinance sets out all the grounds on which enforcement of a Mainland award “may” be set aside. As the Court of Final Appeal has made it clear, the Court has a residual discretion to enforce the award notwithstanding any ground being made out (Hebei Import & Export Corp v Polytek Engineering Co Ltd (1999) 2 HKCFAR 111).

8. But for Zhang’s Summons, the Awards are enforceable in Hong Kong as a judgment of the Hong Kong Court, pursuant to s 92 of the Ordinance. Her application is a voluntary invocation of the powers and discretion of the Hong Kong Court to seek relief for her own benefit.

9. The question is whether she should be permitted to do so, when she is already found and held to be in contempt of Court.

Right to be heard

10. Next, it was argued for Zhang that she should not be deprived of her right to be heard, as to whether her actions and specifically her failure to disclose her assets constituted a breach of the Injunctions. Reliance was placed on the judgement in Hadkinson itself, and on para 50 of the judgment in Motorola:

“Whether or not a party is in contempt of court by refusing to obey an order irregularly made, or one consequence upon and/or ancillary to an order so made, the circumstances will be rare indeed where it can be right to shut him out from arguing an appeal or application to appeal against that order made in due time.”

11. Zhang had the full opportunity to, and did, argue before the Court whether she had been in breach of the Injunctions and was in contempt of court. There was a full hearing of the committal for contempt proceedings, when she was represented by Leading Counsel. As Ms Sit pointed out for the Applicant, this case is totally distinguishable from the cases cited by Mr Wang for the Respondents when a Hadkinson Order is sought after an order for compliance, but without contempt proceedings having been commenced and determined against the person who failed to comply with the initial order of the court. Here, the Injunctions (including the mandatory disclosure order) were granted in February 2015, and the Contempt Judgment on the basis of Zhang’s failure to comply with the Injunctions was in March 2018. There are already findings of contempt against Zhang, and it is no longer an issue of whether Zhang had been given or should be given the opportunity to be heard on an allegation of non-compliance. As Ms Sit highlighted, in the context of the right to be heard, and whether there was willful contempt, the issue of Zhang’s contempt is beyond dispute, and already determined by the Court.

12. It is not disputed, that there is an appeal by Zhang against the Contempt Judgment, which was lodged by her...

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