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Shanghai Gopher Asset Management Co Ltd v China Base Group Ltd And Another

Judgment Cited authorities 4 Cited in Precedent Map Related
Vincent
JurisdictionHong Kong
Judgment Date22 November 2022
Neutral Citation[2022] HKCA 1724
Year2022
Subject MatterMiscellaneous Proceedings
CourtCourt of Appeal (Hong Kong)
Judgement NumberCAMP31/2022
CAMP31/2022 SHANGHAI GOPHER ASSET MANAGEMENT CO LTD v. CHINA BASE GROUP LTD AND ANOTHER

CAMP 31/2022

[2022] HKCA 1724

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO 31 OF 2022

(ON AN INTENDED APPEAL FROM HCA 1299 & 1300/2019)

-----------------------------------

BETWEEN
SHANGHAI GOPHER ASSET MANAGEMENT COMPANY LIMITED
(上海歌斐资产管理有限公司)		 Plaintiff

and
CHINA BASE GROUP LIMITED 1st Defendant
LO CHING
(羅靜 also known as 罗静)		 2nd Defendant

-----------------------------------

(Consolidated by the Order of Mr Registrar S Kwang dated 18 November 2019)

Before: Hon Barma JA and G Lam JA in Court

Dates of Written Submissions: 21 January and 4 February 2022

Date of Judgment: 22 November 2022

___________________

J U D G M E N T

___________________

Hon Barma JA (giving the Judgment of the Court):

Introduction

1. This is a renewed application by the plaintiff, made by a summons dated 21 January 2022, seeking leave to appeal against the judgment of DHCJ Le Pichon (“the Judge”) dated 28 October 2021 [2021] HKCFI 3216 (“the Judgment”). The plaintiff also seeks leave to appeal against that part of the decision of the Judge dated 7 January 2022 [2022] HKCFI 114 (“the Decision”), by which the Judge varied the costs order nisi made in the Judgment so as to order the plaintiff to pay the defendants’ costs on an indemnity basis.

2. By the Judgment, the Judge dismissed the plaintiff’s appeal against the decision of Master Jonathan Wong dated 29 January 2021 granting leave to the defendants to amend their summons dated 6 May 2020 (pursuant to their summons dated 25 January 2021) and staying the consolidated action in favour of the People’s Court in Pudong New District, Shanghai. The Judge also made an order nisi that the defendants’ costs of the appeal to her should be paid by the plaintiff.

3. Subsequently, the plaintiff applied to the Judge for leave to appeal against the Judgment while the defendants applied to vary the costs order nisi.

4. On 7 January 2022, the Judge handed down the Decision, by which she (1) refused to grant leave to the plaintiff to appeal against the Judgment, with indemnity costs to the defendants (see [3] to [19] and [32(1)] of the Decision), and (2) varied the costs order nisi so as to provide that the defendants’ costs in the appeal before her were to be assessed on an indemnity basis (see [20] to [31] and [32(2)] of the Decision).

Background

5. The dispute that is the subject matter of these proceedings arose from an Equity Pledge Agreement and Guarantee dated 19 June 2019 (“the EPA”) signed by the 2nd defendant in Pudong New District, Shanghai, the People’s Republic of China (“PRC”), on behalf of both defendants.

6. The factual and procedural background was helpfully summarised at [3] to [14] of the Judgment, as follows:

“3. The plaintiff, a company incorporated in the Mainland, is a subsidiary of Noah Holdings Limited (‘Noah’) which is listed on the New York Stock Exchange. Its chairman and CEO is Wang Jingbo (‘Ms Wang’).

4. [The 1st defendant] is a BVI company with wholly-owned subsidiaries, namely Guangdong Zhongcheng Industrial Holding Company Ltd (‘GZ’) and Guangdong Chengxing Holding Group Company Limited (‘GC’), Mainland trading companies that regularly supply goods to Beijing Jingdong Century Trading Company Limited (‘JD’), with JD being the procurement entity affiliated with JD.com, a business-to consumer online retailer.

5. GZ and GC entered into a factoring agreement on 16 January 2018 with the plaintiff (‘the factoring agreement’) to finance this trading business under which the plaintiff would purchase and obtain an assignment of the account receivables due from JD to GZ and GC at a discount.

6. [The 1st defendant] holds approximately 62.8% of the issued shares (‘the shares’) in Camsing International Holding Limited (‘Camsing’) a Cayman Islands’ company listed on the Hong Kong stock exchange. [The 2nd defendant] is the ultimate beneficial owner of [the 1st defendant].

7. Disputes arose between the plaintiff and GZ and GC in early June 2019 when JD failed to meet its payment obligations.

8. On or about 17 June 2019, Ms Wang invited [the 2nd defendant] to Noah’s office in Shanghai to discuss JD’s various payment defaults and on 18 June 2019 [the 2nd defendant] travelled to Shanghai to meet Ms Wang.

9. It is [the 2nd defendant’s] case that she was subjected to duress and coerced by Ms Wang into signing the EPA on behalf of the defendants. The parties to the EPA are (1) [the 1st defendant], (2) the plaintiff, (3) GZ and GC and (4) [the 2nd defendant].

10. [The 2nd defendant] was arrested by the Shanghai police the following day for allegedly forging sale and purchase contracts with JD to obtain funding from the plaintiff and has been remanded in custody ever since.

11. The plaintiff commenced an action in the Shanghai Financial Court against JD, GC, Suzhou Chengjun Marketing Co Ltd and [the 2nd defendant] in respect of the account receivables due from JD in connection with the factoring agreement (‘the Shanghai proceedings’).

12. On 19 July 2019 the plaintiff issued two writs in similar terms (respectively, HCA 1299 and HCA 1300/2019), one against each defendant. No orders for service out were obtained by the plaintiff.

13. The procedural history thereafter is particularly relevant to one of the issues arising, (namely, whether the defendants have submitted to the jurisdiction) and it will be set out in greater detail in that section.

14. For present purposes, suffice it to say that

(i) the two actions were consolidated by consent on 18 November 2019;

(ii) on 6 April 2020, the defendants’ solicitors (‘TNC’) served the stay summons (which sought an order staying the action based on §11.2 of the EPA being an exclusive jurisdiction clause for all disputes to be referred to Shanghai) on the plaintiff’s solicitors (‘ZL’), pending re-opening of the Registry due to Covid-19 closures;

(iii) the stay summons was filed on 6 May 2020 when the Registry reopened;

(iv) on 25 January 2021, the defendants took out an amendment summons to replace the word ‘Shanghai’ in the stay summons with the words ‘the People’s Court of Pudong New District, Shanghai’ (‘the Pudong court’); and

(v) Master Jonathan Wong allowed the amendment on 29 January 2021 and stayed the action, culminating in the present appeal.”

The hearings before the Judge

7. There were three main issues in dispute before the Judge.

8. The first was whether clause 11.2 of the EPA amounted to a valid exclusive jurisdiction clause, which had the effect of obliging the parties to submit their disputes, if not resolved by negotiation, to the People’s Court (a court in the PRC) in the place where the EPA was signed (that being Pudong New District, Shanghai). That clause (as set out in [15] of the Judgment) was in the following terms:

“Any dispute, controversy or claim arising out of or in connection with this Agreement, including the validity, invalidity, breach or termination of this Agreement shall be settled by both parties through negotiation. If the negotiation fails, both parties shall submit such dispute, controversy or claim to the people’s court with competent jurisdiction for trial in the place where this Agreement is signed, …”

9. As to this, the Judge held (at [32] of the Judgment) that clause 11.2 of the EPA was an exclusive jurisdiction clause. In coming to this conclusion, the Judge had regard to expert opinion on PRC law adduced by the parties, predominantly focused on the proper construction of Article 34 of the PRC’s Civil Procedure Law (“the CPL”), which provides for the right of parties to a contract to choose the forum or court in which their disputes are to be litigated (see [17] to [31] of the Judgment).

10. The second main issue was whether the consolidated action should be stayed in light of the exclusive jurisdiction clause.

11. In respect of this issue, Mr William Wong SC, who appeared for the plaintiff before the Judge (but not before us), submitted that the action should not be stayed even if clause 11.2 was an exclusive jurisdiction clause, on the basis that the court should not grant a stay unless there was a subsisting dispute between the parties. He contended that the defendants had failed to put forward a credible defence, having regard to the quality of the evidence relied upon (which consisted of evidence by the defendants’ solicitors as to what they had been told by the 2nd defendant, who was under detention in the Mainland), and that where the defendants have failed to put forward a credible defence, there is no dispute that requires adjudication (see [33] to [35] of the Judgment)...

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