LIQUIDATION COMMITTEE OF GUANGXI NON-FERROUS METALS RECYCLING CO LTD v. CNA METALS (ASIA) LTD

HCA 519/2017

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 519 OF 2017

______________________

______________________

________________

J U D G M E N T

________________

1.   The plaintiff applies for summary judgment against the defendant. 

2.   The basis of the plaintiff’s claim is a judgment obtained in the Intermediate Court of the Guangxi Zhuang Autonomous Region, in the sum of US$346,816.87, with interest on 29 October.  This judgment was upheld on appeal by the Guangxi Zhuang Autonomous Region Higher People’s Court on 28 September 2016. 

3.   The defendant has filed a defence to the plaintiff’s claim, there is no substantive defence to the plaintiff’s claim per se, but the defendant claims to set off the sum of US$2,934,752.97 representing loss suffered by the defendant in respect of the plaintiff’s breach of a contract in respect of 34 containers of goods. 

4.   In response to the application for summary judgment in this case, the defendant in the affirmation of Mr Yuen Kwok-hei raises two issues.  The first one being whether the judgment of the Higher People’s Court of the Guangxi Zhuang Autonomous Region is final and conclusive, the reason being that it is alleged that there is a procedure that the People’s Procuratorate may review the judgment of the People’s Court under the judgment supervision procedures, therefore that judgment was not final.

5.   And secondly, whether there is set off between the plaintiff and the defendant.  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. 

6.   Secondly, the plaintiff says that the defendant was not entitled to set off claims under the contract, in particular in relation to the 34 containers as raised in the affirmation of Mr Yuen, because that contract was not a contract between the plaintiff and the defendant, it was a contract between the plaintiff and its wholly owned subsidiary, Top Lucky Enterprises Limited.  One further issue was raised, and that is that the question of set off, has been decided by the judgment of the Wuzhou Intermediate People’s Court of the Guangxi Zhuang Autonomous Region dated 29 August 2017, where the same claim was made and rejected by the court. Although the plaintiff recognises that there is an appeal pending from that decision, the plaintiff says that the institution of parallel proceedings for the same claim is an abuse of process, and therefore that it should not be a triable issue as between the plaintiff and the defendant in these proceedings. 

7.   The defendant appears by counsel, Mr Leonard Chow. His position is set out in a letter dated 5 December 2017 from the plaintiff’s solicitors, namely that in view of the judgment made by the Intermediate People’s Court in Wuzhou on 29 August, they are instructed not to oppose the summons any further, but they are not in a position to consent to the summons.  Mr Chow has confirmed his instructions, and has taken no other part in the proceedings today. 

8.   On issue 1, I am persuaded by Mr Wong that the approach adopted by To J is the correct approach, that the existence of the review procedure in the mainland courts does not mean that judgments in the mainland courts are not final and conclusive, for the reasons expressed in To J’s judgment, and I will say no more about that. 

9.   However, on issue 2, I do not agree that the agreement as between, or relied on as forming the set off, or forming the basis of the set off by the defendant was an agreement purely between the defendant and Top Lucky.  The defendant says that Top Lucky was acting as the plaintiff’s agent, plaintiff says that Top Lucky was acting on its own.  However, in the Wuzhou Intermediate Court judgment of 29 August 2017, it is recited as the plaintiff’s opposition or response to the defendant’s argument that:

“對於被告主張的原告尚欠三十四個貨櫃的貨款1,860,000美元，原告予以認可”.

10.   In other words, the plaintiff admitted to the lack of payment for the balance of those 34 containers, which is exactly what the defendant claims.  However, the plaintiff in those proceedings took a position that this balance of payment had already been accounted for in its claim, which was dealt with in that judgment of 29 August 2017. 

11.   The whole tenor of the position taken by the plaintiff in that particular case was not to draw any distinction between the plaintiff and Top Lucky, but to adopt that contract as the plaintiff’s and the plaintiff being in the position as principal with Top Lucky its agent.

12.   I consider that the plaintiff cannot approbate in one jurisdiction and reprobate in another, it is not open, therefore, to the plaintiff to take the argument that it was not the principal to the contract to which the defendant claims a set off. 

13.   Further, in respect of the claim for an abuse of process, what the defendant is claiming and has pleaded is not a counterclaim, but is merely a set off, and the fact that proceedings have been taken by the defendant in the mainland to establish its entitlement to those sums is not an abuse of process, all the defendant is saying is that it is entitled to set off those sums. 

14.   What is important, of course, is that the defendant’s claim has been rejected by the court in the mainland, and how that rejection affects the position here.  The rejection of the claim in the mainland was because of the acceptance of the plaintiff’s claim, and the plaintiff’s allegation that it had already taken account of the balance due to the defendant in the plaintiff claim itself. That has not been raised before me in this court, and I am not in a position to adjudge whether that claim is made out or not or whether that claim can be made out with a certainty or not.  All I do know, and all that I can discern is that the plaintiff has admitted that it has not paid the balance due for the 34 containers.  There may or may not be a very good reason as to why the plaintiff has not, but I am not currently in a position to deal with that argument. 

15.   The principles on a summary judgment is that in order for a court to grant summary judgment, the court must be satisfied that not only that is there no defence, but there is no fairly arguable point to be argued on behalf of the defendant.  In other words, there is no triable issue, and the test at the summary stage is whether the defendant’s assertions are believable, not whether they are to be believed. 

16.   I consider that in the circumstances of this case, there is just a triable issue.  There is an appeal pending on the question of set off on 29 August claim, that appeal, which has been lodged has not been struck out or summarily dismissed.  No judgment has been rendered despite the appeal having been lodged on 28 September 2017. 

17.   So I cannot be sure that the issues or the defence raised by that claim of set off is moonshine or practically moonshine, or not capable of reasonable belief.  In the circumstances, I grant leave to the defendant to defend the action but without prejudice to the plaintiff renewing or making another Summary Judgment application upon the conclusion of the appeal proceedings in the court in the mainland in the “广西壮族自治区梧州市中级人民法院” in relation to the claim number(2014)梧民三初字第6号.  So if the appeal in the mainland court is dismissed, the plaintiff is at liberty to bring another application. 

(Discussion re costs)

18.   Costs in the cause, save that the costs of today’s hearing be the plaintiff’s costs in the cause, because the defendant has not taken any part in the proceedings at all. 

19.   Of course, if it happens that the matters raised in the affirmation are relevant and will cause the judgment, at the end of the day, to be in the defendant’s favour, then of course the defendant would probably be entitled to the costs of the preparation of the affidavits and so on.  But counsel and solicitors who represent the defendant, their presence today has not assisted the court in any way. 

20.   So my thinking is that there should be costs in the cause save that the costs of today be the plaintiff’s costs in the cause, and I so order.