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Lin Chien Cheng v Hui Chi Keung

Judgment Cited authorities 3 Cited in Precedent Map Related
Vincent
Judgment Date31 October 2019
Neutral Citation[2019] HKCFI 2686
Year2019
Judgement NumberHCA2680/2018
Subject MatterCivil Action
CourtCourt of First Instance (Hong Kong)
HCA2680/2018 LIN CHIEN CHENG v. HUI CHI KEUNG

HCA 2680/2018

[2019] HKCFI 2686

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2680 OF 2018

________________________

BETWEEN

LIN CHIEN CHENG (林建成) Plaintiff
and
HUI CHI KEUNG (許自強) Defendant

________________________

Before: Mr Recorder Manzoni SC in Chambers
Date of Hearing: 22 October 2019
Date of Judgment: 31 October 2019

________________________

J U D G M E N T

________________________

1. In this action the plaintiff sues the defendant for enforcement, at common law, of a PRC judgment in the sum of RMB 43,976,302.04 (“the PRC Judgment”).

2. The plaintiff seeks summary judgment on its claim, and in addition also seeks an injunction freezing the assets of the defendant pending payment.

3. There is no dispute that for the purposes of common law enforcement of a foreign judgment the foreign judgment has to be:

(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 its merits; and

(5) not impeachable according to the rules on conflict of laws of Hong Kong.

(see for example JSC BTA Bank v Ablyazov [2014] 5 HKC 209, [27].)

4. In this case, there is no dispute about most of those matters save for the question of whether the PRC Judgment is final and conclusive on its merits.

A. BACKGROUND

5. The PRC Judgment arose in this way. By an agreement dated 20 December 2005 the parties, together with various other individuals, agreed to incorporate and invest in a company in the PRC for the purposes of development of a real estate project in Jiangsu Province. It was agreed that the defendant would hold the PRC company as the sole shareholder on trust for himself and all other parties. The company was to operate as an investment vehicle to develop the land into a residential area.

6. Disputes arose between the parties and, according to the plaintiff, the defendant ultimately refused to distribute to the plaintiff his share of the profits of PRC company from the sale of the residential units. On 5 May 2014 the plaintiff commenced legal proceedings against the defendant in the Intermediate People’s Court of Yangzhou, Jiangsu Province for, amongst other things, damages arising from the alleged breach of the various contracts. The Intermediate Court rendered a judgement on 31 October 2017 requiring the defendant to pay the sum of RMB 44,112,600, with interest for late payment in accordance with PRC law.

7. The defendant appealed against that decision on 24 January 2018 to the Higher People’s Court of Jiangsu Province, which is an appeal court within the PRC judicial system. The appeal was dismissed and the defendant was ordered to pay a (revised) sum of RMB 43,976,302.04 with interest for late payment within 10 days of the date of the judgement.

8. On 14 November 2018 the defendant applied to the Supreme People’s Court 3rd Circuit Court for “review” of the PRC judgment under the “Adjudication Supervision System” which exists under PRC law.

9. The most significant issue in this case for the purposes of Summary Judgment is whether the review under the Supervision System prevents the PRC judgment from being determined as final and conclusive the purposes of common law enforcement.

B. ANALYSIS ON SUMMARY JUDGMENT

10. The plaintiff relies upon the expert declarations of Mr Zhu Daxiang, and the decision of To J in Bank of China Ltd v Yang Fan [2016] 3 HKLRD 7 at [53], to support his proposition that the decisions are final and binding and that the supervision system does not alter that.

11. In addition, the plaintiff contends that there is no real dispute as to the position in the PRC as to the law. What the plaintiff suggests is that there is agreement as to what the PRC law states, but the dispute is whether, as a matter of Hong Kong law, that renders the judgment final and conclusive. The plaintiff contends that because this court is in a position to determine that issue based upon what are essentially (it says) agreed facts as to PRC law, the issue is suitable for determination under Order 14.

12. In my view the plaintiff’s reliance on Bank of China Ltd v Yang Fan to support any proposition that the PRC Judgments are to be considered as final and conclusive notwithstanding the supervision system is misplaced. That case did not hold that despite the supervision system operating PRC judgments are nonetheless final and conclusive. All that it decided was that the existence of the supervision system does not necessarily render a judgment as not final and binding. That is a very different proposition. In fact, To J expressly held, at [54], that he was bound by the Court of Appeal decisions that “in view of its complicated nature and public importance, that question could not be determined in interlocutory proceedings without hearing evidence from expert witnesses.”

13. The Court of Appeal decision referred to by To J was that in Lee Yau Wing v Lee Shui Kwan [2007] 2 HKLRD 749 at 751, in which a majority held that a summary judgment granted on a similar issue was to be set aside because:

“ The issue of whether the ‘trial supervision’ system per se rendered a PRC judgment inconclusive and not final was an issue of public importance and involved complicated legal questions that could not be determined in the absence of trial.”

14. In my view I am bound by that conclusion as well.

15. The plaintiff also relies upon a decision of DHCJ R Pang SC in Liquidation Committee of Guangxi Non-ferrous Metals Recycling Co Ltd v CNA Metals (Asia) Ltd HCA 519/2017, unreported, 13 December 2017, in which, at [5] the Deputy Judge stated, in relation to To J’s judgment:

“ The plaintiff’s response is that this is a final and conclusive judgment, and the plaintiff relies on the judgment of To J in Bank of China Limited v Yang Fan [2016] 3 HKLRD 7, where To J reviewed the authorities in Hong Kong, and particularly those which considered the protest or the review procedure in the mainland, and came to the conclusion that despite the review procedure, the judgment or a judgment in the mainland which has been appealed is a final and conclusive judgment.”

16. With respect to the Deputy High Court Judge, I do not read the decision of To J in that way. In my view he did not positively decide that a judgment in the mainland was a final and conclusive judgment despite the review procedure. All he decided was that the review procedure did not mean that the judgment was not final and conclusive. The use of double negatives is always confusing, but as I understand the decision all it was stating is that the matter remains open, to be decided after having heard expert witnesses, and it could not be stated one way or the other whether a judgment was final or binding.

17. More recently, in Jiang Xi An Fa Da Wine Co Ltd v Zhan King [2019] HKCFI 2411, Hon Lisa Wong J reviewed the authorities in the context of an application for an injunction under section 21M of the High Court Ordinance, particularly between paragraphs 85 and 89 and concluded at [89] and [90] that:

“ 89. In short, there is no definite authority that the existence of the ‘trial supervision’ procedure would deprive a PRC judgment of its otherwise final and conclusive character. Rather, the matter has to be proved at trial at which evidence of material PRC law would have to be adduced by the parties and assessed by the court in the actual enforcement proceedings.

90. I am satisfied that the Prospective PRC Judgment may be enforced in Hong Kong within the meaning of s 21M(1)(b) of the [High Court Ordinance] notwithstanding (1) the common law prohibition on the recognition and enforcement of foreign non-monetary judgment; or (2) the existence of the ‘trial supervision’ system under the Civil Procedure Law of the PRC.”

18. At paragraph 65 of the same judgment the learned judge emphasised that what she was deciding was whether the applicable PRC judgment in that case was a judgment which “may be enforced in Hong Kong” (emphasis in the original). She was not deciding in any sense that a PRC judgment was final and conclusive for the purposes of a common law action. All she was deciding was that such a judgment might be enforced despite the existence of the “trial supervision” system. She did so on the basis that there was no definite authority that the existence of such a procedure would deprive a PRC judgment of its otherwise final and conclusive character.

19. I do not agree with the plaintiff that there is no factual issue in this case such that it ought to be decided on this application. There may be little factual difference between the parties as to what the law in the PRC actually says, but there is a significant difference between the parties as to its effect. Whilst the question of whether the PRC Judgment is final and conclusive is ultimately one to be decided under Hong Kong law, it is inevitably significantly influenced by the law in the PRC and the effect of those laws on the PRC Judgment. In order to make a proper determination of that issue it is necessary, as well as sensible and proper, to have a trial in which this difficult question can be fully ventilated with experts, and full and detailed submissions made.

20. In all the circumstances, I am satisfied that I am bound by the Court of Appeal decision in Lee Yau Wing v Lee Shui Kwan, to the effect that on such an important matter where there is no definitive authority, this matter must go to trial.

21. Accordingly I reject the application for summary judgment.

22. I note that the defendant has also raised an issue concerning whether interest is in fact payable on the judgment sum as alleged by the plaintiff...

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