KO NGA CHUN v. COMPANHIA DE DESENVOL VIMENTO WUI SAN LIMITADA AND ANOTHER

HCA 277/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 277 OF 2012

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D E C I S I O N

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Introduction

1. On 1 March 2013, Master Ho dismissed the application made by the 2^nd defendant Mr Suen Wai Man (“Suen”) for a stay of these proceedings on forum non conveniens.  This is Suen’s appeal against the Master’s decision.

2. The claim made by the plaintiff Mdm Ko Nga Chun (“Mdm Ko”) against the defendants is that, by an agreement for sale and purchase made on 18 January 2007 between the 1^st defendant Companhia De Desenvolvimento Wui San Limitada (“Company”) and Empresa De Fomento E Investimento Kong Cheong (Macau) Limitada (“Kong Cheong”), the Company agreed to purchase and Kong Cheong agreed to sell a piece of land in Macau (“Land”).  The Company is incorporated in Macau.  Suen is the majority shareholder and Administrator of the Company. 

3. Disputes arose between the Company and Kong Cheong over the sale and purchase of the Land (“Land Transaction”), as a result of which the certificate of transfer was not executed by Kong Cheong for the transfer the Land to the Company.  Kong Cheong was at the material time beneficially owned by Mdm Ko’s father.  Mdm Ko claims that in March 2007, Suen asked her to be the intermediary in the dispute between the Company and Kong Cheong, and that at a meeting in Hong Kong which took place in November 2008, it was orally agreed between Suen and herself (“Oral Agreement”) that she would assist the Company, so that the certificate for transfer of the Land could be signed by Kong Cheong in favor of the Company.  Mdm Ko claims that in return, the Company and Suen agreed to pay her a fee of HK $95 million (“Fee”) if the certificate of transfer was successfully signed.

4. Mdm Ko claims that the Oral Agreement is evidenced by a Chinese agreement dated 10 January 2009 (“Written Agreement”), which provides for the Company’s payment of the Fee to Suen, and as Suen asked for further time to make payment of the Fee which was due, the Written Agreement provided for Suen’s issue in his name of 3 cheques which were post-dated 30 April 2009, 31 August 2009 and 30 November 2009 for the amounts of HK $15 million each, and a cheque post-dated 31 July 2011 for the amount of HK $50 million, the cheques totaling $95 million, as security for due payment of the Fee by instalments.

5. According to Mdm Ko, the certificate for transfer of the Land was duly signed on 10 January 2009, but Suen has only made payment of a sum of HK$10 million, and defaulted in making payment of the balance of the Fee due under the Oral Agreement.  Save for payment of the HK$10 million as aforesaid, Suen’s cheques were not honoured upon their presentation for payment.  Mdm Ko accordingly claims the outstanding Fee in the sum of $85 million, and alternatively seeks payment of the total sum of HK$80 million under the 3 cheques dated 31 August 2009, 30 November 2009 and 31 July 2011.

6. Suen denies having met Mdm Ko or having discussed or made any agreement with her.  On his case, he had orally agreed with Mdm Ko’s father, Ko Kan (“Ko Senior”), at the end of 2008, that they would discontinue the proceedings which the Company had commenced against Kong Cheong in December 2007, and the proceedings which Kong Cheong had on its part commenced against the Company in July 2008.  These were proceedings which were instituted in Macau.  Suen also claims that he had orally agreed with Ko Senior in January 2009 (“Suen’s Oral Agreement”) that Ko Senior would procure the delivery of vacant possession of the Land to the Company and the discharge of all judicial charges on the Land, in return for which Suen agreed to pay Ko Senior HK$105 million in stages.  HK$10 million was to be received by Ko Senior on the day that Kong Cheong executes the certificate of transfer of the Land, and the balance of HK$95 million was to be paid by 4 installments on 30 April 2009, 31 August 2009, 30 November 2009 and 31 July 2011.  According to Suen, he issued 4 post-dated cheques for the HK$95 million as security for payment, which cheques were not to be banked by Ko Senior without his prior consent.

7. Suen accepts that the certificate of transfer of the Land was duly executed on 10 January 2009, but according to Suen, Ko Senior asked Suen to pay him HK$7 million only, and for the balance to be paid by Suen to the court in Macau to settle the legal costs of the Macanese proceedings.

8. In respect of the Written Agreement, Suen claims that this was a sham which was produced by Ko Senior when Suen gave him the 4 post-dated cheques.  On Suen’s case, the name of Mdm Ko which appears in the Written Agreement had been left in blank in the Written Agreement when it was first produced to Suen.  Suen claims that he was told by Ko Senior that the Written Agreement was required “to facilitate (Ko Senior’s) works” under Suen’s Oral Agreement, and was “only a pretext to facilitate (Ko Senior)’s discussion with the creditors of Kong Cheong”.  On Suen’s case, he only signed the Written Agreement as a result of these fraudulent misrepresentations made by Ko Senior.

9. According to Suen, the Macau Court of First Instance is clearly and distinctly the more appropriate forum for the resolution of the dispute between Mdm Ko and the defendants in these proceedings.  His oral agreements with Ko Senior were all made in Macau, and the Written Agreement (a sham, according to Suen) was signed in Macau.  The cheques were delivered by Suen to Ko Senior in Macau.  The Company was incorporated in Macau and conducts its business in Macau.  Suen is a Hong Kong permanent resident, but his primary residence is Macau and he spends most of his time in Macau.  Kong Cheong (with which the Company contracted to buy the Land) is a company incorporated in Macau.  The sale and purchase agreement made between the Company and Kong Cheong for the Land Transaction is governed by the law of Macau.  The judicial charges to be discharged by Ko Senior pursuant to Suen’s Oral Agreement related to the legal proceedings between the Company and Kong Cheong commenced in Macau, which proceedings were (on Mdm Ko’s case) to be settled by the execution of the certificate of transfer, for which she was to be paid.  Suen also claims that the witnesses to his payment of HK$7 million to Ko Senior are in Macau.

10. The Company has not yet been served with these proceedings.

11. Suen was served with the Writ issued in these proceedings in Hong Kong.  The cheques issued by Suen were drawn on his account maintained with a bank which carries on business in Hong Kong.  They were paid into Mdm Ko’s bank account in Hong Kong, and were presented in Hong Kong for payment in Hong Kong. 

Applicable legal principles

12. The parties are not in dispute as to the legal principles applicable to Suen’s application for a stay of these proceedings.

13. The principles set down in The Spiliada [1987] AC 460, for the stay of proceedings on the ground that some other forum is the appropriate forum, are summarized in paragraph 11/1/10B of Hong Kong Civil Procedure 2014.  The court will choose that forum in which the case can be tried more suitably for the interests of all the parties and for the interests of justice.  Upon an application for a stay of proceedings, the burden of proof lies on the defendant to show that the court should exercise its discretion to grant a stay.  The defendant is required to show not merely that Hong Kong is not the natural or appropriate forum for the trial, but that there is another available forum which is clearly or distinctly more appropriate than the forum in Hong Kong.  In considering whether there is another forum which is more appropriate the court will look for that forum with which the action has the most real and substantial connection, eg in terms of convenience or expense, availability of witnesses, the law governing the relevant transaction and the places where the parties reside or carry on business.  If the court concludes that there is no other available forum which is more appropriate than the Hong Kong court, it will normally refuse a stay.  If however, the court concludes that there is another forum which is prima facie more appropriate, the court will normally grant a stay unless there are circumstances militating against a stay, eg if the plaintiff will not obtain justice in the foreign jurisdiction.  The fact that the granting of a stay of Hong Kong proceedings may deprive the plaintiff of a legitimate personal or juridical advantage available to him under the Hong Kong jurisdiction will not, as a general rule, deter the court from granting a stay if it is satisfied that substantial justice will be done to all the parties in the appropriate forum.

14. In The Lanka Mauditha [1991]1 HKLR 741, at 744, the court summarizes the three-stage process involved, as follows:

“(I) Is it shown that Hong Kong is not only the natural and appropriate forum for the trial, but that there is another available forum which is clearly or distinctly more appropriate than Hong Kong…

(II) If the answer to (I) is yes, will a trial at the other forum deprive the plaintiff of any legitimate personal or juridical advantages. The evidential burden here lies on the plaintiff.

(III) If the answer to (II) is yes, a court has to balance the advantages of (I) against the disadvantages of (II)… Depravation of one or more personal or juridical advantages will not necessarily be fatal to the applicant provided that the court is satisfied that notwithstanding such loss substantial justice will be done in the available appropriate forum… Proof of this...  rests upon the applicant for the stay.”

15. In this case, it is relevant to bear in mind that foreign law is a matter of fact that must be pleaded and proved by expert evidence.  In the absence of evidence, the court assumes that the content of the foreign law is the same as Hong Kong law, and simply applies Hong Kong law to the relevant issue (Hong Kong Civil Procedure 2014, volume 1 paragraph 11/1/10O).  If the issue of foreign law is raised in a forum non conveniens application, but there is no evidence of the foreign law, the court can assume that the relevant principles of the foreign law are the same as those of Hong Kong law, and can proceed on the basis that the Hong Kong courts are as well equipped as the foreign court to deal with the matter.

Is the Macau court clearly or distinctly the more appropriate forum?

16. In this case, I am not satisfied by Suen that Macau is clearly or distinctly more appropriate than Hong Kong as the forum for the trial of this action.  In this regard, I have borne in mind that the question of appropriateness is from the point of view of the trial of the action, with regard to the nature of the controversy in dispute, and the factual circumstances of the case.  The issues for trial in this case are whether there was an oral agreement made between Mdm Ko and Suen, as she alleges, or an oral agreement made between Suen and Ko Senior, as Suen alleges, and whether the cheques issued by Suen should be honored.  On Mdm Ko’s case, the Written Agreement is evidence of her Oral Agreement with Suen for his payment of the Fee, secured by the cheques issued by Suen.  On Suen’s case, the Written Agreement is a sham, signed upon misrepresentations made by Ko Senior.

17. Even if Suen’s Oral Agreement was made in Macau, and the Written Agreement was signed in Macau, as Suen claims, Suen has not produced any expert evidence to state that there are features of the law of Macau which are different to Hong Kong law, and which are applicable to the determination at trial of whether any agreement was made between Mdm Ko and Suen, or between Suen and Ko Senior.  The fact that the agreement made between the Company and Kong Cheong in respect of the Land Transaction is governed by the law of Macau is not relevant to the issues in dispute for determination at trial.  That agreement and the proceedings relating to the Land were already settled, with the execution of the certificate of transfer by Kong Cheong, which is not in dispute.  Whether, when and by whom the alleged oral agreements were made; if there was an oral agreement made between Suen and Ko Senior on Suen’s case, whether Ko Senior had made misrepresentations to induce the signing of the Written Agreement, and whether Ko Senior was entitled to payment of the sum of HK $105 million; are all questions of oral evidence and credibility, as to whether the trial judge believes Mdm Ko, or Suen, against the background of the factual dispute.  The Hong Kong court is perfectly capable of determining this, with or without expert evidence on Macanese law to the limited extent of its relevance to the background facts.  The interpretation and effect of the agreement for the sale and purchase of the Land is irrelevant in the trial of the claims made in these proceedings.  Nor do I see any relevant issue which arises as to the effect of the proceedings in Macau, and which cannot be understood by the Hong Kong court and applied to the facts to be determined at trial.

18. Suen is a Hong Kong permanent resident.  Even if his primary residence is Macau and he now spends most of his time in Macau (as he claims), with the ease and convenience of travel between Hong Kong and Macau, I do not accept that the Macanese court is clearly or distinctly the more appropriate forum to try the matter, by virtue only of the residence of Suen and/or his witnesses in Macau.

19. Importantly, a key issue for trial is Mdm Ko’s claim against Suen under the dishonored cheques.  These cheques were drawn by Suen on a bank with a place of business in Hong Kong.  They were paid into a bank account in Hong Kong and presented for payment in Hong Kong.  I cannot see how it can be said that Macanese law is applicable (Moulis v Owen [1907] KB 746), or that Macau is clearly and distinctly the more appropriate forum to try the claim on these cheques.  Evidence as to conditions which are different from the written terms expressed in the cheques, and evidence as to terms purportedly imposed by Suen as to payment under these cheques, are inadmissible at trial.  It is trite that a bill of exchange is to be treated as cash and to be honored unless there is some good reason to the contrary, and it is only in exceptional circumstances that a court will deprive a plaintiff of judgment on a claim based on a cheque (Fielding and Platt, Ltd v Najjar [1969] 2 All ER 150, 152 and Sun Wah Aluminium Windows & Curtain Wall Company Limited v Panyu Fantasy Film City Limited operated as Sammyland HCA 3119/2002, Sakhrani J unreported, 17 October 2003).  Suen has failed to show that the law of Macau is different so far as a claim on a dishonored cheque is concerned.

20. Not being satisfied that there is another available forum which is clearly or distinctly more appropriate than Hong Kong to try this matter, the second stage of the consideration set out in The Lanka Muditha does not arise for consideration.

Conclusion

21. For the above reasons, I dismiss the appeal and the application by Suen to stay these proceedings for trial in Macau.  I make an order nisi that Suen is to pay Mdm Ko’s costs of the appeal, with certificate for counsel.